Understanding Division Of Property In A California Divorce

Whether it is amicable or hostile, going through a divorce comes with unique challenges. One considerable challenge is how properties, assets, and debt will be divided between the two parties. 

While some couples will be able to decide how to divide their assets, most will require the support and assistance of a lawyer, arbitrator, or judge. 

Each state follows its own set of laws, with some following community property laws and others following equitable distribution laws. California follows community property rules. Under this law, all income, assets, and debts acquired or earned during the marriage are equally divided between domestic partners or spouses, even if only one party was working during divorce or separation.

Today, we will take a closer look at division of property in California and cover the factors that will be considered when determining distribution of assets, debts, and property.

Essentials That Are Considered When Dividing Property During A Divorce

A knowledgeable, experienced divorce lawyer provides valuable insight and guidance while going through a divorce. Many issues may arise during a divorce, and having legal guidance to steer you in the right direction and make sure you are not taken advantage of is crucial.

It is also essential to understand your state’s laws and prepare to negotiate during this stressful time. Let’s look at some of the factors that the court will consider and that you need to be aware of.

Factor #1: The Difference Between Separate Property And Community Property

Which debt and property are communal or separate? 

Separate property applies to any assets, property, or debt acquired before the couple began their marriage or domestic partnership. Inheritances or assets that are acquired as a gift during the marriage are also considered separate property. 

Earnings on a separate property and any increase in value of assets or separate properties are also not divided in a divorce as long as the owner can provide proof with documents and financial records.

Marital property applies to any property, assets, or debt acquired after the marriage or domestic partnership began.

The ways that separate properties and assets become communal are:

  • When a premarital bank account begins being utilized by both parties, if the spouse makes deposits to it.
  • When both parties make payments on a mortgage or other expenses.
  • When both parties contribute to a retirement account, even if it was established before the relationship or marriage.
  • When a business is established before the marriage that is continued and contributed to by both parties.

During or before marriage, assets can be changed from separate property to community property. To do this, it must be in writing and clearly state the intentions and desires of both parties. Simply changing the title of the properties or assets is not enough.

Regarding the division of properties, assets, and debts, the date of separation is the determining factor to ending communal property and debt. The date of separation is when one party decides to end the marriage or relationship, not the date that one party moves out of the communal or marital home. All properties or assets acquired after this date are considered separate, even if the divorce is not finalized. (Cal. Fam. Code § 2622.)

Factor #2: The Value Of All Assets And Properties

What is the value of the community property? If both parties can not agree, the court will assign a monetary value to each asset or property. California law requires the net value of assets is split equally, which does not necessarily mean that the actual physical division of assets is identical. 

In California, assets can be divided by assigning each item to the party that will receive it. One party can “buy out” the other party or by selling properties and assets and then dividing up the money. One party may keep the home while the other party keeps the business or another piece of real estate, as long as the two are equal in value.

Factor #3: Calculating Accumulated Debt

You may have car loans, mortgages, credit cards, or other loans to consider. It is essential to include all of these to ensure an equitable division of assets and financial responsibilities. 

Creditors will continue to collect on any jointly owned debt even after a divorce as the agreement or divorce order is not binding on creditors. Under the circumstances that one party “owe” debt that you both own, you may request that a lien be placed on their separate party to secure repayment of any debt they are responsible to pay

The best practice is to resolve all community debts before or when the divorce is finalized.

Factor #4: Transmutation Of Property And Assets

Transmutation is the process by which property changes from separate property to community property or vice versa. This happens when:

  • Property is given as a gift from one party to another
  • An agreement is reached by both parties
  • Marital and separate parties change to commingling properties
  • A property is jointly titled in the names of each party

As you can see, determining the division of properties, assets and debts can be a legally complicated and potentially stressful issue. Consulting an attorney to support and guide you through the divorce process will help you navigate these challenges, and is essential to the best outcome possible for your case.

Trust Hann Law Firm 

At Hann Law Firm, we take a personal approach to everything we do. From our first consultation, we’ll listen to your needs and concerns. Listening to our clients is at the heart of our success in the courtroom. When you work with us, we’ll address your specific challenges, prepare diligently for the best possible outcome, and create a personalized approach to help achieve your goals.

This kind of care takes more time, but the results of our personalized approach speak for themselves. While other firms see a case number and a bottom line, we see each client as a human being who deserves justice. We know your case is important to you, and we’ll take it just as personally. You – and your case – matter to us. 

Contact us today for your free consultation.

How Spousal Support Is Determined In California

If you’re in California and going through a divorce, you’re likely wondering what the outcome will be as it pertains to alimony payments, also called spousal support. Typically, the higher wage earner pays a regular amount to their ex-spouse, who makes less, but there are multiple aspects at play in the determination process. Many factors go into determining if alimony is valid, how it’s calculated, and what it means for you as the payor or recipient.

This article will cover elements of alimony determination and discuss the possibility of modification down the road.

Length Of The Marriage

In the state of California, alimony reflects the complex reality of the divorcing couple as well as how long they were married. Spousal support often lasts for half the length of the marriage in the case that the marriage lasted less than ten years.

For longer marriages, there is generally no time limit on the support order. Instead, the higher-income earner needs to show the lower-income earner no longer needs the support. This is done either through an amicable agreement between both parties, or as it often does, through litigation if an agreement can not be reached.

There are some related terms that you need to know regarding alimony arrangements and how payments are made.

Pendente Lite 

This is temporary spousal support. Pendente lite is Latin for “during litigation.” This means there is a temporary arrangement before the divorce is finalized and a long-term support arrangement is established. This is intended to help both parties maintain the same lifestyle they enjoyed during their marriage and is calculated on a specific set of guidelines.

Long-Term Support

Long-term or permanent spousal support is an order agreed to by both parties or ordered by the court as part of the final divorce resolution. Long-term support is generally ordered for marriages that lasted longer than ten years. It entitles the lower-wage earner to a specified amount of years of alimony payments, or—in some cases—even lifetime payments.

Temporary Support Calculation

While there are determining factors to calculate temporary support, there is a specialized software program that family law attorneys and judges use to calculate the amount. This software automatically generates an estimated support figure based on:

  • Each spouse’s income
  • Health Insurance deductions
  • Any other taxable earnings

While an attorney can typically give you an accurate estimate, they cannot make a guarantee as to what the final amount will be. Keep this in mind when consulting your attorney regarding spousal support terms and amounts.

Long-Term Support Calculation 

Calculating long-term support is a bit more of an involved process. There is no calculator to give an amount, and certain factors must be considered to come to an agreeable amount. If you and your spouse can’t agree on an amount and length of time for the support, a hearing is held, and a judge decides the support and length of time.

The factors considered while calculating long-term support are:

  • Supported spouse’s ability to obtain a job that would negate the need for support. This ability is based on the job market, time and expense required to acquire education or training to develop new skills, and the possible need for retraining or education to be more marketable or become employed
  • The extent of the supported spouse’s inability to be employed because of long periods of unemployment during the marriage for domestic and childcare duties
  • How much and if the supported spouse contributed to the paying spouse’s education, training, career, or licenses
  • The paying spouse’s ability to pay considers their earning capacity, earned and unearned income, assets, and standard of living
  • The financial needs of both spouses’ based on the marital standard of living
  • Both spouse’s debts and assets – this includes separate property
  • The length of the marriage
  • The supported spouse’s ability to work outside the home without interfering with the care of dependent children
  • The age and health of both spouses

There may be other considerations a judge considers, but these are the primary considerations used when determining the amount and length of time for long-term support.

Modifications Of Spousal Support

There are specific circumstances where you can file to modify your spousal support agreement. In California, the following are qualifying events that can be cited to petition to modify spousal support:

  • Payor loses job
  • Payee obtains a comparable job making close to the same amount as the payor
  • Either party gets remarried
  • The payee receives an inheritance

There is no set-in-stone rule determining how long spousal support lasts, but many factors play a part in calculating the amount, length of time, and modifications.

Consult A Lawyer For Help

At Hann Law Firm, we take a personal approach to everything we do. From our first consultation, we’ll listen to your needs and concerns. Listening to our clients is at the heart of our success in the courtroom. When you work with us, we’ll address your specific challenges, prepare diligently for the best possible outcome, and create a personalized approach to help achieve your goals.

This kind of care takes more time, but the results of our personalized approach speak for themselves. While other firms see a case number and a bottom line, we see each client as a human being who deserves justice. We know your case is important to you, and we’ll take it just as personally. You – and your case – matter to us. Contact us today for your free consultation.

Common Mistakes Made During Divorce Proceedings to Avoid in California

Are you contemplating divorce or already going through divorce proceedings? If so, we know how tough it can be and we understand it is an emotional time in your life. It’s no easy feat to have your marriage under a microscope. 

Every divorce is unique, making the divorce proceedings different from couple to couple. Emotions will be at an all-time high during this time, so mistakes are bound to happen. With a bit of guidance from your family and your lawyer, you are better prepared for what is to come. 

Our attorneys at Hann Law Firm have written this helpful guide to the 6 most common mistakes we see in California divorce proceedings.  

6 Mistakes You Should Avoid During Your Divorce Process in California

Being prepared and having proper legal representation is the best way to avoid any misunderstandings or mistakes during the divorce legal proceedings. No matter how the proceedings may go, it is best to be upfront with everything you have and know. 

Mistake #1: Failing to Identify Your Separate Property

The state of California is a community property state. Any assets obtained during the duration of the marriage will be distributed between the couple evenly. However, assets that were acquired before the marriage are considered separate property in the divorce process. 

Just because you acquired assets such as boats, cars, properties, and the like before you got married does not mean you should not disclose these assets to the court. It is required by California law that you disclose all separate assets. 

Note: Even though California is a community property state, some assets that started as separate assets can transmute into community assets during the marriage. Typically, these assets are privately-held businesses and retirement accounts. 

Mistake #2: Failing to Obtain an Accurate Valuation of Key Assets

The courts will want to know the exact value of your retirement account, your 401(k), vacation homes, jewelry, collectibles, vehicles, boats, and any other assets you have. You must get the accurate value of these assets. The courts do not want you to guess or estimate the value. An actual value is needed to ensure equal distribution to both parties during the divorce.

When Should Assets be Valued? 

Many individuals do not quite understand when assets should get valued. According to California family code 2552, assets should get valued within 30 days of getting a notice from the other party. The final value of assets will take place before the trial starts. 

Mistake #3: Not Following Court Orders

When you get a court order during your divorce process, the order is signed by the court’s power. The standard mandates that you will receive during a divorce case are to pay alimony or child support. 

If you refuse to comply with the orders set for you by the judge, you can be:

  • Found in contempt in Court
  • Put in Jail
  • Required to Pay Fines
  • Required to Pay Spouse’s Legal Fees

The court will do everything in its power to enforce all court orders throughout the divorce process. If the other party is not obeying the court orders, your legal counsel can contact the judge to implement them on their level. 

Mistake #4: Speaking Ill of your Partner in Front of Your Children

When a divorce takes place, children are often the real victims in the situation. This is especially true for children who have to witness a bitter divorce and custody battle.

Even if you are upset, angry, or frustrated at your partner throughout the divorce process, fight the urge to speak any ill-will of your partner in front of the children. 

If you are found talking negatively to the kids about your partner, the courts can and will use that against you during a custody battle. Share your frustrations with your lawyer or family members, not your children.

Mistake #5: Running Off with the Children

When you are going through a divorce, you and your spouse will have equal custody of the children. One spouse will not have more custody of the kids if there are no court orders or a temporary restraining order in place. 

Neither party will be allowed to take the children across state lines unless they have permission from the other party. Neither party will be entitled to keep the kids away from the other party as well.

Mistake #6: Failing to Have All Proper Documentation

You must have all of the required documents when starting the divorce process. The documents you need to start the divorce process in California are: 

If you have children, you will also need the following document: 

While these forms can be daunting to fill out, these documents are where you can work with a family law attorney to ensure that you’ve covered all your bases. If you fail to fill these out in their entirety, you may be setting yourself up for your spouse, accusing you of hiding assets and other financial information. 

Are You Ready to Speak to a Divorce Lawyer?

Whether you’re still considering divorce or are already starting the process, you need a knowledgeable, experienced, and compassionate attorney in your corner. Our team at Hann Law Firm is here to help fight for you in many different areas of California law, such as divorce (including same-sex divorce), family law, personal injury, criminal defense, business law, and general litigation. Contact us and learn how we can put our expertise to work for you.

Tips For Making It Through Work While Going Through A Divorce

Californians going through a divorce may be struggling to handle their day-to-day responsibilities, like getting their kids to school or performing at work. This is completely normal, but it can also be problematic if it is not handled appropriately.

While it is not a great idea to discuss all of the intimate details of a divorce with coworkers, some bosses can be accommodating of individuals employees whom they know are going through a rough personal time. Employees going through a divorce should assess whether they can trust their boss or HR with the knowledge that they are going through a divorce and see if they can get a temporary reprieve on certain larger and more urgent assignments.

If telling someone at work about the divorce is not an option, employees should at least try to take a personal day off from work to recuperate if they begin to feel overwhelmed. It is important to take time away from work to spend either alone or with loved ones for emotional support when going through a divorce. Throwing oneself into work and becoming a workaholic is likely to backfire in the long run.

Given the prevalence of divorce, it is possible that coworkers who know about an employees divorce may be inclined to give unsolicited advice. Here, it is important for a newly-single employee to keep personal boundaries and to filter out unwanted advice. Keeping a healthy mindset is very important when going through a divorce, and individuals may want to explore things like therapy to help them get to a place where they can forgive their exes and move on. However, even if forgiveness can be achieved, it may still be necessary to go to the mat to battle over items of property or assets. A family law attorney can help individuals with these more difficult aspects of a separation.

A Billionaire Uses Trusts To Hide Money In His Divorce

If you are getting divorce in California and there are assets involved, what is happening to Marie Bosarge should frighten you. The wife of a billionaire may be completely shut out of receiving her share of a very large marital estate because her husband legally moved nearly all of their assets to a state that promotes extreme secrecy and protection for the assets of the super-wealthy.

Couples will exchange information about assets

Each divorcing couple will have a point in the process where they need to exchange information about their property and its valuation. In a divorce, this is known as the marital estate, and it is divided between the parties based on the agreement that they will reach. One of the real dangers in a divorce is that one spouse will either hide assets or deliberately undervalue them to end up with more for themselves.

Ed Bosarge took advantage of the laws of one state

Most times, courts will have a very negative reaction to this practice. However, Ed Bosarge moved practically all of his money to South Dakota before the divorce had begun. He was obviously preparing for the divorce but had told his wife that he had the assets there to avoid paying taxes. South Dakota law did not require Ed Bosarge to inform his wife that he had switched beneficiaries of the trusts to someone other than her. Now, she is largely prevented from touching the money and has had to sue her husband because the marital estate has been reduced to $12 million.

When there are assets at stake in a divorce, you need a divorce attorney on your side to make sure that you receive what you deserve in the asset division process. If your spouse is engaging in any type of questionable behavior when it comes to marital property, your attorney may fight to learn more about their assets and will follow the money trail. If they discover hidden assets, they could bring it to the attention of the judge for their action.

Keeping The Family Home In Divorce Is Getting Easier

Everyone knows how prohibitively expensive California real estate is, and that presents an obstacle when spouses are trying to keep their homes after a divorce. However, out of the recent economic chaos comes an opportunity for these spouses. Retaining the marital home has gotten slightly easier as conditions have changed. So long as it makes economic sense, spouses stand a better chance of accomplishing their goal.

The current economic displacement has slashed real estate prices. For most homeowners, this is a source of consternation. However, for those who need to purchase a home or part of it, this presents an opportunity because it reduces the amount of money that one spouse needs to pay the other. In addition, the mortgage rates have plunged to historic lows, meaning that refinancing can drastically lower monthly payments.

Then, a spouse needs to consider whether buying out the other spouse is an economically viable course of action. In many cases, real estate is a sound investment and owning a home is a great way to gain exposure to this asset class. However, it is also best not to concentrate all of one’s financial resources in one area. Nonetheless, this is an advantageous time to purchase an interest in real estate as prices historically increase for this asset and it is on sale for a discount right now.

Keeping the home is not always a given because the other spouse may want to remain in the home themselves. A divorce attorney could be helpful to handle negotiations with the other spouse to figure out the terms of the divorce agreement that pertains to the home. If there is no agreement, the attorney may take the matter to a hearing in court where they would seek to persuade the judge to let their client keep the home.

Student Loan Debt In A California Divorce

With nearly 45 million Americans burdened by student loan debt, there is no question that a large number of California residents take out student loans before getting married or during marriage. Given that the average age at which individuals first get divorced is 30, many divorcing couples are likely to have to have a significant amount of student debt on the table.

If someone incurs student debt before entering into a marriage, that debt would be the person’s separate property, and the spouse would not be liable for same. One exception to this is if both spouses consolidated pre-marital student loans into one loan in both partners’ names. However, if someone takes out a student loan during marriage, this is not the case.

In equitable distribution states, a spouse is only liable for debt incurred by the other if he or she cosigned the loan. In most community property states, a student loan taken out by either party during marriage is community property, meaning that both spouses are equally responsible to repay the debt. Though California is a community property state, it does have one exception to the general rule. If a spouse’s name is not on a student loan taken out during a marriage, and if the couple gets a divorce within 10 years of marriage, then the non-borrower spouse will not be responsible for repaying the loan.

When a couple in California gets a divorce, it can be difficult to account for and valuate all assets and debts, especially if a separate property asset increases in value due to efforts made by the spouses during marriage. A family law attorney may help clients valuate community property and assess whether certain assets and debts are separate or community property.

Education Makes A Difference In Divorce Rates

You may be wondering what are some statistical patterns that would make a California divorce more or less likely. One of the common themes now present in the data is that couples with higher education levels are less likely to get divorced. This is the reverse of the situation that persisted in the early part of the last century.

There are several reasons why a couple with more education may be more likely to have an enduring marriage. One of the major contributing factors is that people who take time to get more education will often delay marriage until after they receive their degree. This enables them more time to grow as a person before committing to a spouse. Education also correlates to higher income levels. Many divorces result from tensions and fights over money. With more resources, there are fewer fights to be had.

The differences between survival rates of marriages of women who have college degrees versus those without are stark. A woman with a college degree is almost twice as likely to avoid divorce than one with a high school diploma. In general, there is a declining divorce rate which is a net positive for society. However, those who decide to get divorce must bear the same amount of strain as ever in a divorce proceeding.

Regardless of the level of education, the actual divorce is still difficult. There are financial and other family law issues that must be settled. These issues can be even more pressing in a divorce where both spouses have a college degree because there are more assets at stake. A family law attorney may help his or her client obtain the highest share of the marital estate as possible under the circumstances by either negotiating an agreement or litigating the case if necessary.

What Happens To A Business In A Divorce

When California couples are going through a divorce, they may have to decide what will happen to a business in a divorce which they both have ownership interests. They may want to continue running it, or one person might want to buy out the other.

It can be difficult for people to keep running a business together after a divorce, but they might choose this option because they both enjoy it or because there is likely to be a large profit later. Couples in this situation should make sure they have a buy-sell provision . This helps ensure that the stock held by the minority owner does not become illiquid. In other situations, both individuals may continue as owners because one lacks the liquidity to buy out the other. If this happens, one person may continue as the manager while the other still has ownership but is not involved in operations.

Couples in this situation might need a put/call option that allows the operator to purchase the other spouses share later. They may also want provisions that give the other person some veto rights to prevent the operator spouse from making fundamental changes to the business. If one spouse is able to buy out the other, the spouse leaving the business might want to be protected from any future claims against the business.

In California, a community property state, most property acquired since the marriage is considered shared property and is supposed to be split equally in a divorce. This could mean that one person can claim a significant portion of the other spouses business even if that persons involvement in the business is minimal. If one person owned a business or other property prior to the marriage, the amount of appreciation the asset has had since then may be subject to division.

More Older Couples Are Calling It Quits

Couples over the age of 50 are getting divorced at an increasing rate in California and across the U.S. According to one study, the rate of gray divorce doubled nationwide from 1990 to 2010, even though the overall divorce rate decreased.

One reason for the growing rate of gray divorce may be that women today feel more of a sense of independence than they did a few decades ago, and they have an easier time walking away from a bad marriage. Things that women may have tolerated in older generations, such as adultery, are no longer considered acceptable by many wives.

According to one therapist, the main reason for couples getting divorced at an older age is emotional detachment. Since people are now living well into their 80s and 90s, they may decide they do not want to spend their golden years with someone with whom they no longer have a spark. It can also become more apparent to couples that they have grown apart after their children have grown up and left the house and stopped being the focus of attention. Of course, at least a portion of the divorces occurring among older couples are those of second or third marriages, which were statistically less likely to succeed in the first place.

Though getting divorced at an older age may mean that couples do not have to worry about things like child custody or support, they still need to determine how to separate their assets. In California, a community property state, all marital property must be split 50-50, including things like retirement assets, which can present a challenge if a portion of those assets was acquired before marriage. Individuals going through a divorce may want to consult with a family law attorney to discuss their situation.