Divorce is not always straightforward, especially when property division becomes involved. In California, property division is based on separate and community property, but determining which assets fall into each category can become complicated. This blog post will discuss the difference between separate and community property, what makes an asset separate or community, and provide examples of each. We also discuss when to seek professional help from a California property division lawyer to ensure fair asset allocation in a divorce settlement.

 

Defining Separate and Community Property

 

Separate property is any assets acquired prior to marriage or after legal separation. These assets are typically owned and controlled solely by one spouse and are not subject to division during divorce proceedings. Community property refers to assets acquired during the marriage, including income, property, and debt, which are considered owned equally by both spouses.

 

What is the Difference between Separate and Community Property in a Marriage?

 

The critical difference between separate and community property is the degree to which each spouse has legal ownership and control. Separate property remains under one spouse’s sole ownership and control, whereas both spouses have an equal right to control community property. In the event of a divorce, separate property assets belong exclusively to the spouse who owns them, while community property assets are divided equally between the divorcing spouses.

 

When Does an Asset Become Separate or Community Property in California?

 

The general rule is that property acquired during a marriage is community property, while property acquired before marriage or after legal separation is separate property. However, certain factors can complicate this standard. For example, property acquired with separate property funds during the marriage can become community property. Similarly, a business started before marriage can become community property if it grows and increases its value during the marriage.

 

Examples of Separate Property in a Marriage

 

Examples of separate property include assets owned before marriage, inheritances or gifts received during the marriage from an individual to one spouse, personal injury settlements awarded to one spouse, and property purchased with separate funds during the marriage.

 

Examples of Community Property in a Marriage

 

Examples of community property include homes, vehicles, debt, bank accounts, investments, businesses, and retirement benefits datable during marriage.

 

Gifting Between Spouses – Is it Separate or Community Property?

 

Gifts between spouses are considered separate property and are generally not subject to division during divorce proceedings. However, gifts are often complicated by the property’s source and each spouse’s intent.

 

When to Seek Professional Help for Determining Separate vs Community Property

 

Determining which assets are separate or community property can become challenging, especially if the couple owned a business, real estate, stocks and bonds, or other investment assets. Moreover, when a divorce becomes increasingly contentious, dividing property and assets fairly can be challenging. If you suspect that your spouse may be hiding or concealing assets or are concerned about property division, seeking a knowledgeable California property division lawyer for assistance is highly advisable.

 

At the Law Offices of Judy L. Burger, we specialize in family law, including property division. Our California property division lawyers have a proven track record of representing clients dealing with complex assets and valuations. We understand the stress and emotional turbulence often associated with divorce proceedings, and we are dedicated to helping our clients navigate the property division process. You can trust our knowledge and expertise to ensure a fair property division settlement. Contact us today to schedule a private appointment. 

Divorce can be an emotional and challenging experience. It can be even more complicated when dividing assets and property. Property division can vary from state to state, and California is no exception. This blog post will explore the basics of property division in California divorce cases, including what constitutes marital and separate property, community property, and how complex property division can be in California law cases. 

 

The Basics of Property Division in California Divorce Cases

 

In California, property division in divorce follows the principle of community property, which is where all assets and debts accrued during the marriage are equally owned by both spouses. This means it’s a 50-50 split. However, there are exceptions to this rule. Gifts or inheritances given specifically to one spouse or property owned before the marriage or after separation are not included in the split and are considered separate property. 

 

Defining Marital and Separate Property

 

When distinguishing between marital and separate property, it’s important to know some key differences. Marital, or community, property is typically everything that you and your spouse acquired or earned during the marriage. This can range from everything from the house you bought together, the income you both earned, to the debts accumulated during this period. On the other hand, separate property includes any assets or debts that one spouse acquired before the marriage, during the marriage as a gift or inheritance specifically to them, or after separation. Furthermore, any property that the spouse declares to be separate property is also considered as such. So, the key differences are the timing and the specific circumstances under which the property was acquired.

 

What is Community Property, and How Does it Get Split in a Divorce Case?

 

As mentioned earlier, community property comprises all assets and debts acquired during the marriage. This includes income, assets purchased by either spouse during the marriage, stock options, retirement accounts, and real estate purchased during the marriage. In most cases, community property is divided equally between the spouses, but the court will also consider factors such as each spouse’s earning capacity, their contribution to property acquisition, and their financial needs. 

 

How Complex Can Divorce Property Division Be in California Law Cases

 

The complexity of property division in California can depend on the nature of the assets involved. Valuing and dividing real estate, business interests, investments, and retirement accounts can be complex and require the assistance of financial experts. In some cases, the court may order the sale of assets to divide the value of community property equally. 

 

Strategies to Help Make the Process Easier

 

Divorce and property division can be stressful and emotionally draining. Here are some strategies to help make the process easier: 

 

• Hire an experienced attorney who specializes in divorce cases and is knowledgeable about California’s property division laws.
• Gather and organize all financial documents and records, including tax returns, bank statements, and investment account summaries.
• Consider alternative dispute resolution methods like mediation or collaborative divorce, which can help avoid going to court and reduce costs.
• Be willing to negotiate and compromise with your spouse. Divorce is never easy, but it helps to be open-minded and willing to work towards a mutually beneficial agreement.

 

Divorce and property division can be complex and emotionally draining. At the Law Offices of Judy L. Burger, we have experienced divorce attorneys specializing in California’s property division. Our team is knowledgeable about California family law and will help ensure a fair distribution of assets. We also offer various dispute resolution methods, making the process as stress-free as possible for our clients. Contact us today to schedule a private appointment. 

Owning and operating a family business can be a full-time commitment for a married couple. Should the pair decide to divorce, dividing this type of asset and its obligations can be complicated, especially if both parties want to continue running the enterprise. Depending on how and when the business was formed, it may or may not be considered community property. Here is more on understanding California community property and business ownership.

Business Ownership and Community Property

When a California couple forms a business while married, the entity will be considered their jointly owned (community) property. Consequently, if the two divorced, each would be entitled to their half or community ownership interest.

Dividing a Community Property Business

A business that is a community-owned asset can be divided in a number of ways during divorce, such as:

Paying One Spouse—If one spouse wants to continue operating the enterprise, they could pay the other spouse the value of their community share. This may involve making a direct payment or balancing the division of other marital assets to compensate the spouse for their share.

Shared Ownership— When both want to continue operating the business, the spouses could arrange to share ownership of the entity. This may involve one spouse having stock or exclusive authority to manage or make operational decisions.

Selling the Business—The parties may determine that it’s best for them to sell the business. In that case, they can work with their divorce attorneys to determine the most equitable way to sell their enterprise and divide the proceeds.

Close the Business—If the business is not marketable, and one can’t afford to pay the other for their community share, the parties may determine that it is best to divide the remaining obligations and close the enterprise.

Business Ownership and Separate Property

In a California divorce, outside of certain exceptions, assets a spouse acquired before marriage are considered to be their separate property. When a property is determined to be separate, it belongs to the spouse who owned it coming into the marriage and is not subject to division. However, separate property can be transmuted into community property through a prenuptial or postnuptial agreement.

When one spouse owns and operates a separate property business during marriage, the enterprise will remain their asset during divorce. However, the court can examine the other spouse’s community contribution to the business. For instance, if the owner used community funds to improve or market the business or the other spouse worked to support the success and management of the enterprise, the court may determine that the non-owner spouse is entitled to compensation from the community.

Business Valuation and Divorce

Once it has been determined that the business asset is a community or separate property, it will need to be valued. Depending on the circumstances, business valuation during divorce can become complicated and contentious. For example, the spouse who wants to retain the business will often want it to be given a lower estimate. By contrast, the other spouse may contend that the business has a high dollar value. Resolving this kind of disagreement can be challenging.

During a divorce involving a community property business, the each party will hire their own accounting professional to prepare a business valuation.  This type of business valuation will ordinarily involve a review and neutral assessment of the company’s assets and liabilities, accounts payable, inventory, and profitability. Once each party’s valuation is complete, the parties can use the financial data to determine how to equitably divide their respective interest in the business.

Determining how to divide interest in a community property business during divorce can be complex, and it’s essential that you work with an experienced California divorce attorney throughout the process. Your divorce lawyer can help you determine the best way to value all of your marital assets and equitably divide your interest.

Contact an Experienced California Divorce Attorney

The attorneys at the Law Offices of Judy L. Burger are experienced California divorce attorneys who can help you before, during, and after your divorce. We assist clients along California’s Northern to Southern Coast, including San Francisco, Beverly Hills, Marin, San Jose, Gold River, San Diego, Santa Barbara, Ventura/Oxnard, and surrounding communities. Call us at 415-293-8314 to schedule a private appointment or visit our website.

 

When a military couple divorces, they will contend with many of the same issues as non-military couples. As in any divorce, in California, the parties must divide their shared (community) property. However, there are unique considerations with respect to certain military benefits. Here is more on dividing military benefits in California. Continue reading →

State divorce laws govern divorce settlements. Generally, state laws allow either community property or equitable distribution schemes when dividing a couple’s assets. However, only nine states use community property law: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. If you live in a community property state, it’s important to understand how property division will work if you or your spouse files for divorce.

Separate vs. Community Property

The basic rule of thumb is that a couple’s community property and debts are split 50-50 during a divorce. However, not all of a married couple’s assets are divided. Property can be either separate or community.

• Most assets and debts accumulated by either spouse during the marriage are considered community property.
• However, assets and debts brought into the marriage by one person usually remain the separate property of that person.

Separate property usually does not enter into the divorce property division equation.

Although this sounds simple, determining whether something is separate or community property can be complicated.  Separate assets brought into the marriage may be used in a way that make them community property. An inheritance received during a marriage is separate property but mixing the inherited property with community property could change it for the purposes of property division.

Marital Settlement Agreement or Court Decision?

During the property division phase of a divorce, the couple can negotiate how property is split. Their agreement does not have to be 50-50, but the division should be fairly equal. Otherwise, a judge may not sign off on the couples’ marital settlement agreement.

When calculating property division, a couple will:

• review financial disclosures, including the Schedule of Assets and Debts;
• make sure both parties agree on community property and debts;
• compare property valuations and debt to make sure they agree;
• propose a roughly equal net share of property and debts for each spouse.

Special consideration may be given to retirement plans, debts with complicated terms or high interest rates,

If a couple cannot agree on the split, a judge may make the tough decisions for them. Also, remember that property remains separate or community until the judge signs your final divorce order.

Make Sure Your Property Division Goes Smoothly

Talk to an experienced California divorce attorney today. Please call us at (415) 293-8314 to schedule a confidential appointment with one of our attorneys.

Please call us at 415-293-8314 to discuss your case. The attorneys at the Law Offices of Judy L. Burger assist clients with divorce matters in San Francisco, Beverly Hills, Marin County, Santa Barbara, Ventura/Oxnard, San Jose, San Diego, Gold River (Sacramento), and surrounding communities.