Division of Marital Property

Dividing Community Property in Divorce

If you are going through a divorce, it is important to understand your rights in regards to marital property division. Hanson, Gorian, Bradford & Hanich can provide the counsel and representation that you need. Our family law team includes a Certified Family Law Specialist, of which there are only around 30 in the Riverside area. Attorney Danica Hanich is a Certified Family Law Specialist with the California Board of Legal Specialization. She can provide the expert advice and guidance that you need.

Understanding Property Division in CA

California is a community property state, which means that any property, assets, or debts acquired by either party during the marriage will be considered marital property, subject to division and distribution unless otherwise specified by a prenuptial agreement or postnuptial agreement. State law also states that marital property is to be divided evenly rather than equitably. Some states divide property by the principle of equitable distribution, which operates on more of a fairness principle than an even split.

This division may put one spouse into a financial bind post-divorce, because their ex ended up with more. This is where spousal support comes into play. When one spouse makes a better income than the other spouse, that spouse will likely be required to pay monthly amounts to the lower-income spouse in order to support them. In this way, an uneven property division will not have an adverse effect.

While there are a few exceptions to this rule. In general, all marital property will be divided evenly in the event of a divorce. This does not mean each and every asset must be split and divided, but rather, the total value of your marital assets, minus any debt, must be divided and distributed equally. While this concept may seem cut-and-dry, determining what is separate property and what is marital property can sometimes be complex.

Declarations of Disclosure

Couples in California must submit detailed financial statements to each other within 60 days of filing for divorce. The purpose of submitting such disclosures is to help put “all the cards on the table,” so to speak, so that both parties are on the same page and can more quickly and efficiently work towards an agreement regarding the distribution of their assets and debts.

Declarations of disclosure are comprised of the following forms:

• Preliminary Declaration of Disclosure: This is essentially a checklist that states that the required documents are attached. This form references the following SAD and IED forms as well as requires the spouse completing the form to attach the most recent two years’ tax returns. Any additional information about business opportunities or obligations that may have arisen during the marriage that are not included in the following forms must be included.
• Schedule of Assets and Debts (SAD): This is a four-page long form that requires the spouse completing the form to provide all relevant information regarding any items they have an ownership interest, even if their name is not on the asset or obligation. This includes real estate, personal property, jewelry, vehicles, bank accounts, investment accounts, retirement accounts, items in safe deposit boxes, business interests, stocks and bonds, and all debts. Many assets and debts listed on the SAD must be backed up by supporting documents.
• Income and Expense Declaration (IED): The IED is another four-page form that requires the spouse to disclose current information regarding their income and expenses. This includes information about the spouse’s employer, current earnings, tax filing status, degrees and licenses, commissions, overtime, benefits, net value of all property and liquid assets, monthly expenses, and attorney’s fees. If the spouses have children, information about the amount of time the child spends with each parent is also included.

If additional information is needed, it is obtained during a process known as discovery. This can involve depositions, interrogatories, requests for production of document, requests for inspection, and subpoenas. Our firm’s attorneys are highly experienced with approved methods of discovery and can walk you step by step through this process.

Marital vs. Individual Property in CA

Once all assets and debts are made known, they are then separated into two categories: marital and individual property. In general, marital or community property is everything that the spouses acquired during the course of their marriage unless an agreement was made otherwise. For example, money you earned at work and put into a joint account is considered marital property, as is anything that was purchased using these funds. Community property is usually divided equally between spouses.

Individual or separate property only belongs to one spouse. Separate property is anything that a spouse owned before marrying their spouse or was acquired after the date of separation, including money earned. Any inheritances or gifts acquired by one spouse during marriage are also considered separate property, as are any assets purchased using separate property.

Separate property can become marital property, however, if it is comingled with marital property. For example, if a spouse’s separate savings account can become marital property if their spouse deposits money into it during the marriage. Similarly, a separately owned house can become marital property if both spouses pay its mortgage or other related home expenses, such as utilities or repair costs.

Dividing Debts During Divorce in California

Debts are subjected to the same rules as assets and must be classified as being community or separate. Both spouses have an equal obligation to all community debts, even if it was only incurred by one of the spouses. For example, if your spouse were to rack up a considerable amount of credit card debt during your marriage, even if the card is only in their name, the debt belongs to you too.

Debts can also be separate, though this is rare. Credit card debt incurred after the date of separation is considered separate. If you are unsure whether your debt is community or separate, we urge you to contact our office and discuss your concerns with one of our skilled attorneys today.

How to Protect Assets in Divorce

1. Catalogue valuables: Heirlooms, jewelry, and more should be inventoried as thoroughly as possible. Mark down who gave you an item, when they gave it, and why, and store that information with a photograph of it.
2. Stay put: Unless you are facing a domestic violence situation, you should remain in your family residence until the divorce finalizes. This can help the court recognize the importance of your property to you as well as increase your chances of winning child custody rights. The absent parent is usually not the winning parent.
3. Check property status: If you are going to be the one to keep a family car or piece of real estate, you need to know if there are any liens or loans against them. Get a copy of all pertinent records before the divorce finalizes.
4. Copy it all: Speaking of getting copies of lien records, you should also be getting copies of any and all financial records. The last thing you need is for your spouse to withdraw a sizeable sum right before the divorce without you ever realizing it until it is too late.
5. Honest business practices: If you and your spouse shared a business together, things can get even more complicated. Do not attempt to hide anything about your business. Oppositely, if they hide anything from you, there are legal steps you can take to legally discover them.
6. Going solo: Life doesn’t stand still after divorce, or even during it. Cancel joint credit card accounts that could be an area of concern. When you open up any additional accounts in the future, do so just in your name.
7. Will work: Did you prepare a last will and testament? Congratulations for having the foresight! But now you need to go back and adjust it accordingly. Divorcing does not automatically discredit someone from inheriting your assets and property after you pass away. You need to remove them from your will and trusts manually.

Splitting the Home, 401(k) and Other Assets

Property division gets complicated when it comes to large items such as a family home, a retirement fund or even stocks and bonds. One common question that divorcing couples face is "Are there any exceptions?" Say, for example, that a husband owned a home prior to marriage, but the wife made a majority of the mortgage payments because the husband lost his job or moved out of the home. This may be a case in which a court would unevenly split the price of the home. The home may even be granted to the wife in this situation if she was granted custody of the children, and the court deemed that the children should stay living in the home. Individuals may wish to cash out their 401(k) or other accounts so that they cannot be subject to division. Once divorce paperwork is filed, it is illegal to attempt to hide or conceal any assets. At this point, everything is up for division.

These situations can get increasingly more complicated if there are special exceptions to the rule. For example, say you owned a business prior to marriage, but your business' assets grew significantly in value while you were married: Are the increased assets considered marital property or separate property? A knowledgeable Riverside divorce attorney can meet with you to explain your rights under state property laws and help you exercise those rights in court or during mediation. By procuring the services of our family law firm, you can trust that we will do our best so that you keep what you are entitled to keep.