After you decide to get a divorce, you will now have to make many crucial decisions. For example, you and your spouse will need to decide on the division of marital assets and property. While you were married, you will typically purchase many items together as a couple and share assets.
Now that your marriage is coming to an end, ownership of the purchased or acquired items is not always clear. While you were married, ownership of these items were never a consideration, but now that has changed due to the divorce.
So, marital property is described as:
- Any items purchased or acquired by a couple during their marriage is generally be considered “marital property” in the state of California.
The issue of dividing marital property and debts in a divorce can quickly become a hotly debated issue, so you need to make some effort to understand the California's marital property laws in order to prepare for negotiation with your spouse.
Clearly, making decisions on dividing marital property is just one of many issues you will have to consider.
You will also have to decide on a child custody arrangement and support, along with whether your spouse will need to pay alimony.
When you and your spouse have determined you will go your separate ways and pursue a dissolution of marriage, you will need to sit down with each other and decide how the property and debts you have accumulated while married will be split. Clearly, these are not always easy decisions.
In order to give you a better understanding on division of marital property in a California divorce, our Los Angeles family law lawyers are providing an overview below.
California is a Community Property State
You first need to understand what will be expected when you divide your marital assets.
California is a community property state, which means each spouse is legally entitled to half of the marital property as defined under California Family Code § 2581.
This includes all assets and liabilities that are considered as community property, which is almost everything you and your spouse have acquired since getting married.
There are a few exceptions, such as gifts that were given to one spouse, but you will be responsible for proving they are separate property.
Many divorcing couple are able to reach a mutual agreement on dividing their property and debts, such as who will keep the house in a divorce.
If an agreement can't be reached, then the family law court will make the decisions.
There are several steps to the process of dividing marital assets:
- Decide whether the assets, property, or debts are community property or separate
- Make an agreement on the value of the community property
- Make an agreement with your spouse on how to divide the property
When you going through the divorce process in California, you will need to make a list of all of the property you own, both community and separate.
You must be thorough when disclosing your assets during a divorce. If you fail to fully disclose your assets, debts, or property, you could face sanctions from the family law court.
What's the Difference Between Community and Separate Property in California?
Under California divorce laws, there are two major principals to remember:
- There is a strong presumption that assets accumulated during the marriage are community property, meaning equally owned by both spouses.
- Property owned by a one spouse before marriage, or acquired by gift or inheritance during their marriage is separate property in California.
Separate property also normally includes earnings or increase in value of separate property if it can be proven with financial documents.
In simple terms, separate property belongs to the spouse who owns it and is not typically divided in a California divorce.
Under California Family Code § 2622, property spouses acquire before a divorce, but after date of separation, is separate property.
It should be noted there are some types of assets that are partially community and partially separate, such as retirement accounts that one spouse made contributions both before and after the marriage.
Couples can make an agreement before or during marriage to change an asset that from separate property into community property, or vice versa.
What Are California Divorce Laws on Division of Marital Property?
Under California law, you are not required to have an actual physical division of marital assets, rather it requires the value of the marital assets to be divided equally.
In order to determine “property value,” the spouses can reach their own agreement or the family law court will assign a monetary value to each item of property.
After you agree to a value of the property, then you and your spouse will either:
- Make an agreement to divide the money equally, or
- Ask the family court to do it for you
California law allows spouses to have the option to divide assets by designating specific terms. One spouse may choose to buy out the other's spouses shares of a marital asset to sell them.
Spouses also have the option to hang on to all their assets until the divorce has been finalized, which is typically the choice when they have children together and living in the same home.
It should be noted that divorcing couples have to assign all their debts accumulated during the marriage, such as:
- Mortgage loans
- Personal loans
- Vehicle loans
- Credit card debt
Most divorcing couple are unaware that creditors will still make efforts to collect for items that were jointly owed.
If the court decides to assign a debt to one spouse, the other spouse could ask the judge to put a lien on that spouse's separate property as security for payment of the debt.
What is Transmutation of Property in a California Divorce?
Dividing marital assets in a California divorce can get complicated when one spouse claims that property was “transmuted” from type of property to another.
In simple terms under the context of California divorce laws, “transmutation” means to change form or character.
This means that during the division of property in a divorce, the character of a property can change through transmutation by one of the following ways:
- Property was changed from community property to separate property
- Property was changed from separate property to community property
- Property was changed from one spouse's separate property to the other spouse's separate property (California Family Code § 850)
Transmutation can be accomplished in many different ways, such as reaching an agreement with your spouse or commingling marital and separate properties.
Dividing The Property in a California Divorce
If you don't have a prenuptial or postnuptial agreement, you are legally entitled to receive half of the community property owned by you and your spouse.
Some items are easy to divide, such as two vehicles, while other items will start an argument quickly.
It's in your own best interest to reach an agreement with your spouse on the division of property. Otherwise you are forcing the family law court to make a decision for you that might not turn our as expected.
The most common hotly contested items that are divided in a California divorce include:
- Family home
- Employee retirement benefits
- Family dog
- Rare coins or gems
- Expensive chinaware
You and your spouse might both want keep the family home, or one spouse might want to sell it and split the profits.
If the court awards you the family home, your spouse must receive back property that is equal in value. When you making preparations for your divorce, you need to take time and prioritize your marital assets.
Contact a Los Angeles Divorce Lawyer for Help with Dividing Marital Assets
It's important to note that while you have made the decision to get divorced, you should try to maintain peaceful and honest communication with your spouse to make the difficult process easier.
If you attempt to hide assets or make false claims about your income, you could be setting yourself up for a long and expensive divorce process.
You need to understand that reaching a mutual agreement with your spouse on dividing marital assets will give you best chance at keeping the property you want. Don't force a family law court to make the decision for you.
If open and honest communication with your spouse is not an option, then you might consider divorce mediation or a collaborative divorce process.
If you need more information or legal representation to prepare for your divorce, call our law firm to review the details.
Our California Certified Family Law Specialists have many years of combined experience and are dedicated to helping you obtain the best possible outcome.
Furman & Zavatsky are Los Angeles divorce and family law lawyers representing clients throughout Southern California, including LA County, Ventura County, Simi Valley, and the San Fernando Valley.
Our office is located at 15821 Ventura Blvd #690 Encino, CA 91436. Contact our firm for a free case consultation at (818) 528-3471.