When it comes to property and debt division, California is a community property state. Essentially, all marital property and debt is divided equally between the spouses. In California, the division of assets and liabilities will be a key part of a Divorce or Legal Separation. When dividing property, other assets and debts during a divorce in California, there are several issues to consider:
- Separate property - Defined as property acquired before the marriage, or gifts or inheritance acquired during the marriage, separate property is not typically divided during a divorce.
- Marital property - Marital property includes any assets acquired or income earned by a married person while living with a spouse. Each spouse normally receives one- half of the community estate.
- Debt - All community debt acquired during the marriage is split equally among both spouses, no matter who incurred the debt. This rule is subject to certain exceptions however, and a qualified attorney should be consulted if one party unfairly accumulated debt.
- Pension plans - Principal accrued on a pension plan during a marriage is subject to division. In most cases, the employed spouse must pay the other spouse a percentage of his or her pension check upon retirement, or a lump sum distribution from the account at the time of the final judgment.
- Employment benefits - Like pension plans, benefits accumulated by an employee benefit plan, such as a retirement or profit sharing plan, is subject to division upon dissolution.
- Family home/Real Estate - Typically, one party will continue to live in the family home, maybe with the children, and may be required to “buy out” the interest of the other spouse. In other cases, the family residence, or other real estate owned by the parties, is generally divided evenly, or sold and the proceeds split, subject to reimbursement for down payments or other separate property contributions.
- Business or Professional practices – The value of a business or professional practice must be considered when divorcing, as the value thereof may be a community asset. These values are often difficult for a lay person to ascertain, and in those cases, the court may order a forensic accountant to review the records of a business or practice and report the value thereof to the court.
Although in most cases property division will be as equal as possible, there are potential factors that the court may take into account that may affect the division of assets. For example, if one party attempted to intentionally misappropriate property to deny it to the other, or in certain economic situations, or for equitable reasons, an asset may be awarded to one spouse and not the other. This is an area of property division that requires the services of a skillful attorney to ensure appropriate division of property outside the normal 50/50 rule.
An experienced Family Law attorney is well versed in issues of property division. Your attorney can help you identify and protect community assets, not only to maintain your desired standard of living, but to support you in the future after the divorce.
Be sure to contact the Law Office of Debra A. Smith if you have questions concerning property or debt division. We are experienced in these fields and can offer you insight and financially astute assistance in these areas, many times making the difference between a highly desirable settlement and a lackluster settlement that leaves you with little or no assets.