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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.

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