How is property divided in a divorce in California?
California law allows you and your spouse to decide how your property will be divided during your divorce. Under community property laws, the assets and debts both you and your spouse acquire during your marriage belong equally to the both of you. Because of this, you and your spouse have equal say in how those assets and debts are divided. While some couples can agree on property division, other couples must seek the help of the court to have the decision made by a judge or arbitrator.
3 Steps to Property Division
Whether you and your spouse are able to agree on property division or you need the court to handle it, there are three important steps to the process:
- Determining if your property is marital or separate
- Agreeing on the value for marital property
- Deciding on how that property will be divided
Community Property vs. Separate Property
Most people assume that any assets or debts gained during a marriage is considered community property. But that’s actually not the case. Property owned by a spouse before the marriage, or property gained through an inheritance or gift during the marriage, is considered separate property. Separate property can also include:
- assets exchanged or purchased with separate property,
- value increased on separate property, and
- earnings gained on separate property.
The above is true as long as the owner of the property can prove their claim through financial records or any other documents.
California law also states that property acquired by a spouse before the divorce and after the date of separation is separate property. Keep in mind that the date of separation is not always the date by which one spouse moves out from the marital home. Instead, this date is the day when one spouse clearly demonstrates their intention of ending the marriage.
When one spouse acquires an unusual amount of money or spends a significant sum before the divorce, the date of separation becomes more complicated. If you and your spouse cannot agree on the exact date, the court will decide it after analyzing all relevant evidence. Generally, courts lean more towards deciding on a later date, rather than an earlier date. This is so that the court determines more of your property as community property.
Changing an Asset From Separate Property to Community Property
Under the law, you and your spouse can agree to change an asset from separate property to community property either before or during your marriage. The same applies to changing community property into separate property. However, these agreements need to be in writing, and they also need to clearly state the intentions of both parties.
There are many different types of assets that can be both community and separate. These type of assets include:
- retirement accounts where one spouse contributed towards both before and after the marriage, and
- business accounts one spouse opened before the marriage and maintained after.
Determining Property Value
Spouses or the court can attribute a monetary value to each owned asset. You can get the help of an appraiser to accurately determine the value of real property. Or you can seek the help of a C.P.A for determining the value of financial assets, such as a retirement account.
Dividing Your Property
You and your spouse can divide your assets by assigning items to each other. You can do this by “buying out” one spouse’s share of assets, or by selling your assets and splitting the proceeds. Or you and your spouse can agree to continue to own property together. However, most couples won’t find that decision attractive.
Along with your assets, you must also assign debts acquired during the marriage. Keep in mind that splitting debts will not stop creditors from seeking to collect on either spouse. The best practice would be to pay off any marital debts before you finalize the divorce.
How Is Property Divided in a Divorce in California? Ask a Divorce Attorney
If you have questions about property division in a divorce, contact the Law Offices of Rick D. Banks today.