Understanding Property Division in a Divorce
In a divorce, one of the main issues that must be handled involves dividing the property and debt of the marriage. The division can be done through a settlement agreement, or the courts can be asked to properly divide the assets and debts of the marriage.
However, it helps to understand how the process works and what factors play into determining how this division is made, including:
- 1. Deciding whether the property or debt is separate or marital property;
- 2. Determining the value of the marital property; and
- 3. Deciding how to properly and equitably divide the property and debt.
Classification of Property
Under California law, a strong presumption exists that any assets or debts that a couple accumulates while they are married are community property.
If a spouse earns property before the marriage by himself or herself or acquired the property by gift or inheritance, that property is normally considered to be separate property. Other property that is separate includes property that was purchased with or exchanged for other separate property, income earned from selling that separate property or an increase in value of the separate property.
However, the owner must be able to prove separate ownership with clear documentation and financial records.
In addition, if the spouses acquired property or debt after the date of separation but before the divorce is finalized, that property is normally considered separate property.
Keep in mind that the date of separation is not always the date that one spouse leaves the other or moves out of the home. The court will look for an act of one spouse actively ending the relationship. It can be the date the spouse moves out, but it can be another date, depending on the circumstances of the case.
The official date of separation becomes a problem when one spouse has racked up a large amount of debt or has earned an unusual amount of money. If the parties cannot agree on this date, the court will look at all of the evidence regarding how the relationship ended.
Before the parties get married or during the marriage, the couple can agree to change an asset that is considered separate property into community property, but this agreement needs to be in writing. Many parties choose to enter into a prenuptial agreement before getting married to help classify separate property clearly.
If they choose to change this classification later, it can be done through a later written agreement. However, simply changing the title of the property is not enough to change the classification.
Another way the classification of property can be changed from separate to community is when assets are combined or commingled. If the couple has been together for a long period of time following getting married, it is possible that the original property has been combined with other assets making it more of a community asset.
For instance, if one of the spouses had a premarital bank account before getting married but later adds money from both individuals to the account, it can be hard to argue that the account has not remained a separate property account.
It can be tricky to distinguish between separate and community property. If the court is charged with making this determination, it is important that the proper evidence is submitted. Speak with a family law attorney to discuss the facts of your case.
Assessing Property Value
Once the property is classified as either community or separate property, the next step is to assign a monetary value to the property.
The parties can agree on how much the asset is worth, and if the spouses cannot agree, an appraisal can help in making this determination for items of significant value, such as real property, antiques, jewelry and artwork.
Expert witnesses may also be needed to put a value on retirement assets, including pensions and other financial accounts.
Dividing the Property
After the property has been classified and given a value, it is then divided between the two spouses. As is the case with other parts of the process, the spouses can come to an agreement on how the property is divided.
They can also come to an agreement on whether one spouse buys out the other spouse on certain property of value, such as a family home or business.
In addition, the couple must take all debts that were accrued during the marriage and assign those to either spouse. If the debt goes along with an asset that is separate property, that debt would go to that spouse.
The parties can make this agreement, or the court can be left with the determination.
Contact Voss Law Today!
If you are going through a divorce and have questions regarding property division, contact us today to discuss the best options for your case. Consultations are always free. Call us today at 323-333-4481.