California is a community property state, so dividing property is simple, right?
Most likely you already know that California is a community property state. Property acquired during your marriage is presumed to be community property unless you can trace the source of the funds used to purchase the property to a separate property source (money or assets you had before your marriage or from an inheritance or gift you received during your marriage).
Also from the date of your marriage until the date of your separation you and your spouse’s earnings and the property purchased with those earnings are community property. Generally this rule also applies to debts incurred during the marriage.
If you are getting divorced, each spouse is entitled to one half of the community assets and responsible for one half the community debts incurred.
Sounds simple right? Sometimes it is, but it is often anything, but simple.
You must know your rights under California law in order to protect your interests and obtain an equitable result in your divorce.
Here are a few examples of things that affect the characterization of property as separate or community and the division of the value of those assets.
Date of Separation. The date of separation is generally that date one spouse decides they no longer want to be married and act in accordance with that desire. Determining this date is often easy and not disputed between the parties. The date of separation is important for two reasons. First, the date of separation is the date your marriage stops for the purposes of determining the length of your marriage which affects spousal support. Second the date of separation is the date you stop accruing community property. After the date of separation what you and your spouse earn is separate property.
If the date of separation is disputed, it could have a significant impact on your community property assets or debts which could result in a substantial amount of litigation to resolve.
Marital Agreements: Did you sign a pre-nuptial agreement before you married or enter into a post-nuptial martial agreement during your marriage that effects the characterization of property? If you did, the agreement may or may not be legally valid and may require litigation to determine the validity of your agreement.
Transmutations: Married persons can contractually change the characterization of property from separate to community and from community to separate. Did you own a house before you were married and after marriage put your spouse on title? If you did, you may have transmuted your separate property to community property. Did you put property into a family trust plan? Again, if you did you may have unintentionally changed the characterization of the property.
Use of Separate Property: Did you use your separate property that you had from before the marriage or from an inheritance or gift you received during the marriage to purchase community property? If you can trace your separate property money to the purchase you are entitled to be reimbursed for the amount of separate property you contributed, plus your community share of the asset. But, you must be able to trace your contribution to the purchase. Did you commingle your separate property funds with community funds? Again, you may be entitled to reimbursement if you can successfully trace your separate property.
Use of Community Funds: Did you own a house before marriage? After marriage if the community paid for your separate property house’s mortgage, the community has acquired an interest in your house. To divide the property in your divorce the separate and community interests must be determined.
Businesses: If either you or your spouse owns a business, the value of the business and the community’s interest in the business will need to be determined which can be an expensive process and result in a great deal of litigation costs.
Retirement Plans: Typically, dividing retirement plans in a divorce is not a difficult issue or process. But not always. What if the community interest in your plan is only 25%, but on retirement you selected a 75% or 100% survivor annuity? What if your spouse retired and is receiving retirement benefits after your date of separation? What if you or your spouse had contributed money to your 401(k) or IRA before marriage?
Your divorce could involve many other property issues, including personal injury awards, worker’s compensation payments, stock options and educational loan debt as examples.
You need an experienced family law attorney to help you protect your rights and reach an equitable settlement or if necessary protect your rights in court.
Contact my law office to schedule an initial consultation to discuss your case and take the steps necessary to protect your rights and property.