Joint Bank Accounts and Divorce
Property Division, California Divorce, Debt

Joint Bank Accounts and Divorce

Divorce can be a complex and emotional process, especially when it comes to finances. One important aspect that many couples need to address during a divorce is the status of their joint bank accounts. Understanding the implications of joint accounts can help ensure a smoother transition for both parties. Certified California Family Law Specialist Judy L. Burger reviews this issue and offers some guidance.

Understanding Joint Bank Accounts

A joint bank account is a financial account shared by two or more individuals. This type of account enables both parties to deposit, withdraw, and manage funds. While joint accounts can simplify finances during marriage, they can lead to complications during divorce.

Here are some critical factors to remember regarding divorce and joint bank accounts:

  • Ownership of Funds: California follows community property laws, so most assets and debts acquired during the marriage are considered community property. This means both spouses typically have equal rights to the funds in a joint account, regardless of who initially deposited the money.
  • Access to Accounts: Upon filing for divorce, it is essential to understand that both parties generally retain access to joint bank accounts until a court order dictates otherwise. This can lead to potential conflicts, particularly if one spouse withdraws a significant amount of money. To mitigate this risk, closing joint accounts or agreeing on a set amount each party can withdraw may be advisable.
  • Financial Records: Accurate financial records of transactions from joint accounts are important. This documentation can be crucial during the divorce process, especially when determining the division of assets. Consider keeping copies of bank statements and transaction receipts.
  • Risk of Seizure: Funds in a joint account may be subject to seizure by the government to fulfill any outstanding obligations. This can include back taxes, child support payments, or other court-ordered garnishments.

You should note that these factors do not just apply to bank checking and savings accounts. They also apply to joint investment, retirement, and other accounts. Get more advice about joint financial accounts from Certified Family Law Specialist Judy L. Burger before your divorce.

Steps to Take When Navigating Joint Accounts in Divorce

Don’t wait until divorce proceedings are underway or disagreements arise before considering how to handle marital assets. CA Property Division Attorney Judy Burger offers the following recommendations:

  1. Communicate: If possible, communicate clearly with your spouse about the handling of joint accounts. Establishing open lines of communication can help reduce misunderstandings and conflicts during the divorce process.
  2. Open Separate Accounts: If you haven’t done so already, it may be wise to open individual bank accounts. This allows you to establish financial independence and manage your funds separately from your spouse moving forward.
  3. Seek Legal Guidance: Consulting with CA Divorce Attorney Judy L. Burger can clarify your rights regarding joint accounts. She can guide you through the process and help ensure that your interests are protected.

When dividing joint accounts during divorce, the court typically aims for an equitable distribution of community property. This can include splitting the funds into joint bank accounts and determining how any debts associated with these accounts will be handled. However, this is not as straightforward as it sounds. Some funds in the joint account may not be community property, and a spouse may request that those funds be separated and given to them.

Property Divisions with Joint Bank Accounts

Navigating joint bank accounts during a divorce can be challenging. Being informed about your rights and responsibilities is crucial. You can better manage the complexities of joint accounts during your divorce by communicating openly with your spouse, maintaining thorough financial records, and seeking professional advice.

If you are facing a divorce and need assistance with financial matters, reach out to CA Divorce and Property Division Attorney Judy L. Burger. She can provide the support and guidance necessary to protect your financial interests during this transitional period. Contact one of our eight California offices directly by phone or request a consultation through our contact form.

 

Exploring Inheritances and Community Property Rules in a CA Divorce
California Divorce, Property Division

Exploring Inheritances and Community Property Rules in a CA Divorce

Navigating the complexities of community property and inheritances in a California divorce can be challenging. Understanding how these assets are treated under California law is crucial for anyone going through a divorce involving inheritances and community property.

Certified Family Law Specialist Judy L. Burger explains how community property rules affect inheritances in a California divorce.

Community Property

California is one of the few community property states in the United States. In community property states, most assets and debts acquired during the marriage are considered community property, belonging equally to both spouses, regardless of who acquired them.

Community property includes income earned during the marriage, real estate purchased during the marriage, other assets acquired, and debts incurred by either spouse during the marriage. In the event of a divorce, community property is typically divided equally between the spouses, although there can be exceptions based on specific circumstances.

Inheritances and Separate Property

Inheritances and gifts received by one spouse are considered separate property in California. This means that if one spouse receives an inheritance or gift during the marriage, it is generally not considered community property and belongs solely to the recipient.

However, commingling separate property with community property can complicate matters. For example, if an inheritance is deposited into a joint bank account or used to purchase a marital home, it could lose its status as separate property and become subject to division as community property.

Transmutation is the process by which separate property becomes marital or community property. This can occur when separate property is mixed with community property or when both spouses agree to treat certain separate property as community property. Transmutation can also happen through a written agreement signed by both spouses.

How Can You Protect An Inheritance?

It’s crucial to ensure that an inheritance remains distinct from marital assets to safeguard it from being considered communal property. This may require placing the inheritance in a separate account, refraining from mixing it with communal assets, and maintaining thorough records of the inheritance and its utilization. Another way to protect an inheritance given to one spouse is to place it into a trust.

Individuals can also consider signing a prenuptial or postnuptial agreement to safeguard inheritances from property division during a divorce. These legal agreements provide clear guidelines for property division and outline how inheritances will be handled in the event of a divorce. By defining the property statuses and the rights and responsibilities of each spouse, these agreements can protect inheritance rights.

The court may exercise its own discretion in cases involving fairness and equitable distribution. Even if an inheritance is considered separate property, the court has the power to modify the allocation of assets to ensure a just outcome. This may involve assigning a more significant share of other marital assets to the spouse who did not inherit to achieve a balanced division of property.

Seek Legal Guidance from an Experienced CA Property Division Attorney

Given the complexities of inheritances and community property rules in California, seeking guidance is advisable. Certified Family Law Specialist Judy L. Burger is experienced in handling complex divorce and property division cases. She can provide valuable insight into how to protect separate property, navigate the division of assets, and ensure that your rights are protected throughout the divorce process.

Understanding the treatment of inheritances and community property under California law is crucial for individuals going through a divorce. Get informed and seek legal counsel to protect your separate property. Contact The Law Offices of Judy L. Burger in California to get seasoned help navigating the complexities of divorce involving inheritances and community property.

 

Valuing Business Assets
California Divorce

Valuing Business Assets

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Dana and Michael owned a successful dentist practice with three locations. When their marriage foundered, the practice was in jeopardy. Dana was the dentist, with Michael serving as office administrator. Dana wanted the entire practice and, since that was her expertise, it made sense. Michael wanted other community property that equaled his half of the value of the practice. As is true with many divorces, valuing business assets became a contentious part of their divorce proceeding.

In any divorce, community assets are determined and then split. The divorcing couple may be able to iron out a divorce settlement that suits them both. However, when agreement cannot be reached, the courts decide who gets what. The final divorce settlement or judgment will take into account the value of the business.

What Courts Consider

The parties need to know what kind of information the court will be reviewing to come up with that final valuation:

  • The fixed assets of the business,
  • The accounts receivable and intangible assets,
  • Goodwill customers and vendors have toward the business, and
  • Debts and liabilities.

In most cases, courts may want answers to questions like:

  • What type of business is involved?
  • How did the business start?
  • What is the current financial condition of the business?
  • What is the book value of the business?
  • How much can the business expect to earn?
  • Does the business pay dividends or not?
  • How much is the company’s goodwill worth?
  • Have any other ownership interests been sold?
  • If the company is publicly traded, what is the stock worth?

So, it’s a given that if the business is community property, some type of value must be assigned. Otherwise, how will the court know how to divide the community property estate?

Methods of Valuation

The ways used in business valuation may depend on the type of business being valued. A real estate agency may be valued differently than a convenience store or car dealership.

For example, some types of business may best be valued by looking at comparables. Looking at comparable businesses may be useful when coming up with an average value of that type of business. For Dana and Michael, an appraiser may look at the value of dental practices of a similar size in the same area.

The liquidation value tells you how much the company is worth if it is sold. If Dana and Michael are unable to reach an agreement, they may consider selling the practice and splitting the proceeds.

Determining capitalized earnings is a common way of evaluating businesses in California divorces. This method uses the current cash flow, annual rate of return, and expected value of the business to come up with a final figure.

It’s Complicated

The attorneys at the Law Offices of Judy L. Burger are experienced at all phases of divorce proceedings, including business valuation. Call us at 415-293-8314 to schedule a private appointment or visit our website. We maintain offices in San Francisco, Marin County, Santa Barbara, Ventura/Oxnard, San Jose, Gold River (Sacramento), and surrounding communities. Our new Beverly Hills office will open soon.