Category Archives: assets


Property Division In a California Divorce

According to the State of California, a couple seeking a divorce is allowed to lay down their own agreements and divide their property. As long as the agreement is reasonable and fair enough, courts generally accept it without questions. But if they are unable to do so, a court of law may decide for them through a judge or an arbitrator.


There are a few important notes you have to keep in mind while dealing with property in the case of a divorce in California. If you are aware of these points and processes, it will definitely help you in splitting property fairly and equally.


Community Property Or Separate Property?

Community property is any property that the couple accumulates in a joint form from the date of their marriage to the day their marriage is cut off. Unless both parties signed a written agreement saying a property is a separate property, the court presumes that it is community property. This also includes all earnings during the marriage and any property purchased using those earnings.


Separate property is any property that a spouse has owned before the marriage, or any gift or inheritance given specifically to one party during a marriage. It can also include any item that is bought with or exchanged for a separate property, as long as there is written proof.


Any property that is acquired before a divorce, but after separation is also considered a separate property. It is also possible for a couple to change a separate property into community, and vice versa. But make sure that there are written documents which clearly state the reasons and intentions of doing so.


Determining & Agreeing On Property Value

If a couple cannot come to an agreement on a property, the court will distribute it equally to both parties. From the total current market value of the community property or asset, subtract joint obligations of both parties involved. This will give the net community estate, which must be split equally, each spouse receiving one half. This is the procedure unless there is a special agreement made.


Agreement On Division Of Property

Both parties can divide properties and assets by agreeing to assign involved items to each spouse. They can also buy out or purchase the other person’s share, or agree to sell their community property and divide the money between themselves. Although less common and few desire it, a community property can be shared between two parties even after a divorce. Most couples, especially those who prefer not keep in touch, opt out of this as it requires them to continue a common financial affiliation.

If there are children involved, sometimes the parent with primary custody is allowed to live in the family home and take care of the children. If this is the case, the one who lives here usually pays the taxes, mortgage and insurance. But if he/she does not afford it and the other spouse has a significantly higher income, then they may be required to make these payments. The house can later be sold when the children can take care of themselves, unless there is another agreement.


Retirement & Pension Accounts

If either of the spouses acquires monetary profit whether in retirement, pension profit sharing, or any other benefit plan during the time of their marriage, then that is considered as community property.


Retirement benefits can be divided into two categories – defined contribution plans and defined benefit plans. On the other hand, pension plans can be divided either by reservation of jurisdiction or through a cash-out.


Shulman Family Law Group

Maya Shulman, Esq.


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Types of Property As Recognized By California Courts and Their Division in a Divorce

Among the many aspects that require a lot of thought in a divorce, asset division is one of the most critical one. More so when the people involved are affluent and high net worth individuals.

In California, the laws pertaining to division of property are unique unlike in states where an equitable distribution based on many factors such as length of marriage or income are taken into consideration while dividing the assets.

Marital property is divided on a 50/50 basis based on the theory of “community property” in California.

Types of Property Recognized By California Courts

Courts in the Golden State recognize three different types of property that form the basis for division in a divorce:

  • Community property
  • Quasi-community property
  • Separate property

Community property:  Assets purchased or owned after marriage is termed community property. Such assets can include the house, vacation homes, jewellery, vehicles, yachts and pensions.

Quasi-community property: If either of the couples owned or purchased any asset in a different state before moving to California, it is considered quasi community property.

Separate property: This category includes assets that were purchased or owned before getting married. Gifts received during the marriage or bequest are also considered separate property. Any asset acquired after the separation of the couple is also deemed to be separate property.

Division of Different Types of Property in California:

As for community property, the law in California favors a 50/50 split. All assets acquired while the couple is married, is to be divided equally unless there is a written agreement that specifies otherwise.

The net community asset is derived by subtracting any joint obligations or debts from the total market value of assets and each spouse receives exactly half of this amount in the absence of any other contrary agreement.

When it comes to physical assets that cannot obviously be split into half (such as house or a valuable painting), the law provides for a fair division of the total net worth of all assets. What this means is that while one retains the residence, the vehicle and jewels, the other gets the real estate investments, family owned business that are of equal worth.

Any employee benefit or retirement contributions that were started after entering into the marriage is also treated as community property and is to be divided equally. If the contributions or investments in retirement plan were made before getting married, that particular amount will be deducted before arriving at the amount to be distributed equally.

Pensions are divided in two ways. One way is by dividing the number of years the couple spent in marriage while contributing to the pension plan by the total years of contribution by the eligible employee. Termed “reservation of jurisdiction” this is the most common way of dividing pensions. The other method involves an assessment of the total market worth of the pensions that is translated into actual cash settlement for the spouse who has contributed to the pensions, while the other gets to retain any property that is worth the amount.

Quasi community property that is acquired after marriage is treated as community property under California law and is divided in the same way. If the property was acquired in another state before getting married, it is considered separate property.

Separate property is the wealth or assets that were possessed or acquired prior to getting married. Gifts or inheritances received during marriage by one person and any property or asset bought with a cash gift received is also considered separate property.  Such property remains with the individual owner.

All debts that are incurred during the time that the couple is married are also to be distributed equally among the partners as per California law.

Many times property division after divorce is not straightforward, and can be confusing especially when extensive assets are involved. Consult a legal professional specializing in such matters for better clarity.

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