Property Division & Characterization of Assets and/or Debts
California is a community property State. This means that anything acquired during the course of a marriage is presumed to be community property. Anything from wages earned to real property (family home or family vacation home) is community property if it has been acquired during marriage. The same rules apply to debt. Sometimes the property and debt division can be simple; most of the times, however, it is a complicated process which requires the help of an experienced attorney.
Most often parties run into a problem of disagreeing of how a particular property is characterized, vaulted, and how it should be disposed or divided. Both spouses must work together to work out the property division and debt division, it is faster, wiser and cheaper.
All property should be divided equally, so that each spouse receives roughly the same value of the property. Spouses are not required to sell everything and divide the funds, though if parties cannot reach a decision the Court may order it to be done. Making compromises is critical. If one spouse wishes to keep more liquid funds (checking accounts, stock accounts, etc.) that can outbalanced with assigning community debt to that spouse as well. Remember, both spouses must be looking to come up with equal “net” share, or the value of the assigned property after subtracting out the assigned.
Another important factor to keep in mind is that once the property is divided and the debt is assigned to one spouse of the other, you must make the marital settlement agreement a part of the Court’s judgment. That was it can be enforced just like any other money judgment.
Contact our attorneys and we will take the time to properly evaluate you individual situation any design a necessary course of action to achieve your goals.
Property Division and Characterization of Property
Property division and how to characterize your assets and debts can be one of the most important and complicated parts of your divorce or legal separation.
What is Separate versus Community Property?
In California, separate property is defined as property acquired by way of gifts, inheritances and/or property acquired before date of marriage and/or after date of separation. Community property is defined as that property with is not separate and was acquired between the date of marriage and the date of separation.
What is Mixed Property?
There is also a third category known as mixed property, i.e. property wherein it has both components of separate and community property. This may be a car that one spouse bought prior to marriage but then made car payments on it with earnings during the marriage. To unwind mixed property, at times it can be easy and things appropriately apportioned out and at other times it can be complex and require something known as tracing. Tracing usually occurs when there has been commingling of assets.
What is Commingled Assets?
A commingled asset is one in which a spouse’s separate property was either mixed with the other spouse’s separate property and/or mixed with community property. One example of where this can happen is if one spouse received an inheritance, which is presumptively separate property, however, subsequently, that spouse put their inheritance monies into a joint checking account during marriage. If this occurs, then it becomes commingled.
Characterization of Property
How property gets characterized is important in California since California is a community property state wherein all assets and/or debts, unless otherwise agreed, are equally split.
To ensure your separate property is not wrongly characterized and subject to equal division, to ensure you receive your one-half community equity in any community asset and/or to ensure you are not failing to apportion and/or trace property, you will need to consult with an experienced family law attorney. Our office is prepared to assist you with this.