In a California divorce, dividing property is an essential part of the process and is often hotly contested, especially when it involves the family home. Remaining civil and friendly with your spouse during ongoing divorce proceedings is almost always the best option but not always realistic.
Unfortunately, many divorces get ugly fast, with both spouses making allegations against each other. The stress of divorce often leads to emotional outbursts and hard, long-lasting negative feelings toward each other, but it doesn't have to be that way.
The first step in dividing property in a California divorce is classifying the property type. This will determine how it's handled when the divorce has been finalized.
In a divorce, properties are typically considered either separate or community property, often called “marital property:”
- Separate property refers to property owned by one spouse before they were married;
- Community property refers to property that was acquired during the marriage.
Separate property can also include property one spouse received as a gift or inheritance from someone outside the marriage. Any spouse who owns individual property can generally do anything they want, such as sell it or give it away.
On the other hand, marital property is subjected to equitable distribution by the California family court during the division of assets. Marital property can be divided in two ways when couples get a divorce:
- By mutual agreement by both spouses (preferred),
- By the family court judge.
Readers should note that if the family court is forced to divide property in a California divorce, their primary goal is to equally divide 50/50 between both divorcing spouses.
There are cases where the court might decide on another form of equitable division that is better than a simple 50/50 split. In this article by our California divorce lawyers, we will examine this topic in more detail below.
Can You Sell Your Assets to Keep It Out of Dividing Property?
No. The courts are well-aware of that little trick. Spouses in a divorce can't decide to sell any assets that would fall under the umbrella of marital community property to avoid equally dividing property in their divorce. Don't do it.
Suppose a spouse decides to sell a marital asset before the property division process? In that case, the sale proceeds will become marital property.
Any spouse who is thinking about selling their half of the community property before the divorce is final should consider the history of the California family courts.
Typically, judges look unfavorably at spouses attempting to avoid their legal obligation to distribute assets equally. If you consider transferring property during a separation from your spouse, you better be very careful.
Of course, some modifications are necessary and routine, such as updating a beneficiary or selling a separate property when there is an agreement in place.
Don't forget that community property falls under the family court's jurisdiction. You are treading on thin ice if you are selling or making substantial changes to any assets falling under marital property.
The better option is that before you decide to make significant changes to your financial situation or community property, you should first consult with an experienced divorce lawyer at our law firm.
What Are Some Common Examples of Community Property?
As noted, community property is the property that either spouse acquires during their marriage. For example, wages earned by spouses and any income received from community property assets. The most common examples are:
- Checking account,
- Savings account,
- Credit cards,
- Stocks, bonds, and mutual funds
- Salary and wages,
- Retirement accounts,
- 401(k) plan,
- Investment accounts.
Any property acquired by husband or wife before marriage, after separation, and through gift or inheritance will typically be considered separate assets.
Can You Sell Your House During a Divorce in California?
It depends. Getting a divorce has its stress level, but when dealing with potentially selling the family home, the divorce can get more complicated.
If you have decided to sell the house and then equally divide the equity, some decisions will need to be made. For example, the first step is to determine the ownership of the house. As discussed, all property acquired during the length of a marriage is considered community property in California, including the family home.
If you purchased the house after you were married, you should expect a 50/50 split between spouses. This means you can't just decide to sell the home on your own and keep the assets because you are not the sole owner.
If, however, the title to the home is under one spouse's name, or the home was purchased before getting married, then it's considered separate property owned by one spouse. This means you can sell the home or do anything you want.
However, readers should note that it's not always this simple because of financial contributions made (mortgage payments) by the non-owner spouse. This means they could have established some interest in the home.
Should You Sell the Home or Buy-Out?
If you reach a mutual agreement with your spouse to sell the home, you will need to locate someone to buy it through a mortgage broker and evenly divide the assets from the sale. You need to hire an impartial realtor.
If you want to keep ownership of the house after the divorce has been finalized, there is the option of buying out your spouse, but this can get complicated and often a hotly debated issue. Why?
One of the main reasons is property appraisal and joint financial contributions into the home during the marriage. There are also tax implications that must be considered.
Selling your home during a pending divorce can be a straightforward process if it's not community property. When you file a divorce petition or are served with divorce papers, family law restraining orders are normally issued that say neither spouse can't sell or transfer the family house.
If you need assistance with your divorce, contact our legal professionals to review all the details and options. We can answer your questions and offer guidance as you seek the best outcome in your California divorce.
Furman & Zavatsky are California divorce and family law attorneys located in the San Fernando Valley area of Los Angeles County. We offer free initial consultations by calling (818) 528-3471, or you can fill out the contact form.