Characterization of Marital Assets in Divorce

If you or your spouse have filed for divorce, or if you are planning to file for divorce, you may be wondering how the California family court will decide who gets what in terms of assets, property, and other valuables you and your spouse share in marriage. It is important to have an overall general understanding of the legal process for marital property division in California before you get to court, especially if you have inherited property either before or during your marriage.

Division of Property in California Divorce

First, anyone facing divorce should know it’s not a formulaic legal proceeding that splits everything down the middle, including the kids. It can get complicated, and it is always advisable to consult with a California family law attorney regarding divorce overall, but specifically if your marriage has particularly unique circumstances regarding marital property, such as a high asset divorce or real estate located outside of California or the US.

Furthermore, if you believe your spouse may be hiding assets, you should, more importantly, seek legal advice from an experienced high-asset divorce attorney like the lawyers at Bickford Blado & Botros. Don’t hesitate to enlist the help of an attorney. It’s always a smart move to speak to a family law attorney to shine light on your case.

Community Property

California is commonly referred to as a community property state because state law defines marital property as community property, which is the assets and debts a married couple acquires during the length of their marriage. In divorce cases, the community property a married couple shares must be equitably distributed between the two spouses in accordance with the family court judge presiding over the case.

In uncontested divorces, the spouses can decide how they will divide their property in their petition for divorce, and if approved by the judge, the divorce decree granted to dissolve the marriage will include the property division and distribution limits. This is a court order and is intended to be carried out in congruence with the end of the marriage.

Contested divorces, on the other hand, are subject to a judge’s decision regarding how a couple’s community property will be divided if the divorcing couple disagrees on the terms. This is often where divorce proceedings get complicated and emotions get heated. For this reason, many individuals turn to a California divorce attorney to help them identify and inventory assets, determine which ones are community assets and debts, and assign value to their assets and debts within the marriage.

Separate Property

If community property is property that is acquired during the marriage, separate property is property the individuals had going into the marriage that was acquired outside of the marriage. These assets stay separate and are returned to the original owner in divorce, in most cases.

Sometimes, there is a question as to what assets are separate property and what assets are community property. While a judge will have the final say, a family law attorney can assist in determining if the property is to be considered separate or community. There are a few different conditions that dictate which type of property a particular asset will fall under. Factors applied to marital property categories are below.

• When the property was acquired (before the date of marriage or after)
• How it was acquired (gifts and inheritances are not included in community property, even if they were acquired after the date of marriage)
• Whether or not marital funds went towards paying for the asset (even if it was acquired before the date of marriage)
• Intentions of the spouses and terms both spouses have agreed to (as in the uncontested divorce described above)

Keeping Separate Property Separate

If you inherit property while married, initially, that property is considered separate. Keeping it separate, though, takes planning and conscious effort. Below are some tips for avoiding dividing your inheritance with your spouse in a divorce.

• Keep income generated from your inheritance property separate; do not commingle that income with community property or community income.
• Do not add your spouse to the title of your inherited property.
• Do not borrow against that property via loans in both your and your spouse’s names.
• Place your inherited property in a separate property trust.
• Keep detailed records of all inherited assets to be readily available amid divorce proceedings should your spouse challenge the categorization of the property.

FAQs

Q: Is Income Generated from Separate Property Considered Community Property?

A: No. If you inherit a business and claim it as separate property, any income that the business generates is also deemed separate property in the event of a divorce and is not subject to division in your property division agreement. It can be, though, after some time, depending on the way the property is handled. Speaking with an attorney can clear up confusion regarding inherited property and CA divorce law.

Q: How Can I Protect My Separate Property from Being Divided in Divorce?

A: Considering how to keep separate property separate in a divorce is something that can’t be an afterthought, and many people who inherit property don’t anticipate getting divorced. However, if separate property and income generated from separate property are not commingled with other community assets from the time they are inherited, they can be kept as separate property in the event of a divorce.

Q: How Can I Find Out if My Spouse Is Hiding Assets?

A: If assets are missing from community property records or you suspect your spouse has assets you don’t know about, there are professional financial investigators who can help you uncover any potential hidden assets your spouse may be hiding. It is advised that you contact a qualified divorce attorney who will know exactly who to refer you to in order to uncover assets concealed by your spouse.

Q: How Are Debts Divided in Divorce in California?

A: California family court divides community debts just like they do community property–equally. However, it is not uncommon for a divorce agreement to use debts and assets to balance each other out. For instance, one spouse may be ordered to take responsibility for an outstanding marital debt, while at the same time, they receive more asset value in property division as a trade-off.

If you need legal assistance with your California divorce and/or division of marital property, contact an attorney at Bickford Blado & Botros to discuss how we can be of service to your family law case.

 

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