Getting a divorce is stressful and navigating through the process is often complex. California is a community property state that considers assets (including income) obtained while married as part of the community estate. Generally, upon divorce, the couple divides the community estate 50/50. This often proves difficult to accurately place a value and decide who gets what property in the final divorce decree.
Prenuptial agreements are now fairly common as they allow married couples to get past the legal requirements of property division. They allow couples to make decisions on how to divide property division in advance and not be obligated to the traditional 50/50 property split. Even with a prenuptial agreement, the judge still has to approve how property is divided in a divorce.
Many of the disputes in divorce revolve around deciding whether an asset is community property or separate property, which is not subject to division. California spouses have some options for dividing property which they should be aware of. After assets have been identified and valued, there are a few options to start the property division process.
Our California divorce attorneys at Furman & Zavatsky LLP have experience in helping our clients with issues of property division. If you are considering getting a divorce, you will have to decide issues such as child support, spousal support, and child custody, and how to fairly divide all your assets.
We need to first review the details of your divorce in order to determine the best course of action. Contact our law firm based in the San Fernando Valley section of Los Angeles County if you have questions.
Divide Your Property with a Property Settlement Agreement
Spouses do not have to wait for a judge to divide their property. Instead, they can do so themselves by drafting a property settlement agreement and signing it.
The property settlement agreement will identify which spouse takes which property during the divorce as well as who is responsible for the debts. Once the judge signs off on the agreement, it is a binding order.
Property settlement agreements are an effective way to resolve any dispute quickly. Your divorce will go much quicker and probably be less expensive. Generally, though, they are only effective when spouses have few community assets. High net worth individuals more often fight over property since there is so much more to divide. It should be noted that if one spouse receives an inheritance, it's considered separate property and doesn't have to be shared.
Nevertheless, you can try to reach an agreement by signing up for mediation, where a neutral third person will listen to the disagreement. A mediator doesn't decide a dispute like a judge does. Instead, he or she listens and tries to get everyone to find common ground.
Use a Prenuptial Agreement to Divide Property
As stated above, before even getting married, you can divide your future community property in a valid prenuptial agreement. A prenuptial agreement can do any of the following:
- It can identify what property will be considered “community property” and what will be considered “separate property.” For example, you might want the wages you earn while married to be considered separate but any assets purchased to be community property. A judge will then divide what you have identified as the community property.
- You can state how much property one spouse will get upon divorce. Usually, this is the less wealthy spouse. For example, you can agree that in the event of divorce the wife will leave with only $2 million and her personal effects (jewelry, gifts, etc.) In this situation, there is nothing for the judge to divide.
- You can also waive or set alimony payments which, although not technically community property, certainly impacts how much it will cost to divorce.
The key is to make sure the agreement is valid, which means it cannot have been signed under duress or coercion.
The dependent spouse, for example, should have his or her own attorney and negotiate changes so the document is not too one-sided. Don't spring a prenup on your fiancée an hour before the wedding but instead give him or her plenty of time to review and consider whether to sign.
If you have questions about whether an agreement is valid, meet with a Los Angeles divorce lawyer.
Liquidate Assets, if Necessary
Once you or a judge divides the property, questions often arise about how to physically divide assets. If you have a pile of cash, then this is easy. Each spouse opens a bank account and takes 50% of the cash.
But other assets are not so easy to divide. For example, you might own a home together. In theory, you could both still live in the home, but this is not a realistic option. If the home is worth $400,000, then each spouse has a right to $200,000 in equity. You have some options for dividing it:
- If you have other community property, one spouse can take less. For example, the husband might take the entire home and the wife gets other community assets in an offsetting amount.
- If you don't have other community property, one spouse could assume more of the community debts in an offsetting amount.
- You can also sell the house and divide the proceeds.
If couples don't want to purse selling their assets, they have the option of pursuing a more detailed process by allocating items of similar value. For example, if one spouse is seeking to have sole ownership of a $50,000 retirement plan, the other spouse would then be entitled to property of similar value.
Couples also have the option of assuming debts in lieu of assets. For example, one spouse could make an agreement to accept responsibility for a portion of the couple's debt in exchange for a larger portion of the marital property.
Retirement accounts are also tricky to divide. Your Los Angeles divorce lawyer will need to request a Qualified Domestic Relations Order (QDRO), which allows the account to be split without incurring any kind of tax penalty.
Contact Our Los Angeles Divorce Attorneys For Help
Property division is usually one of the more complicated aspects of a divorce, especially if you have compiled different assets. The best way to protect your rights and reduce the expenses of a divorce is to meet with an experienced Los Angeles divorce attorney.
Contact our law firm at 818-528-3471 or submit an online contact form. We will be happy to meet with you for a free initial consultation.
Furman & Zavatsky LLP
15821 Ventura Blvd #690
Encino, CA 91436