Property Issues in California Divorce
What is Community Property?
California is a community property state in which spouses are entitled, with some exceptions, to an equal division of community property and debts in a di 00004000 vorce (called dissolution in California).
Community property is all property, in or out of state, that either spouse acquired during the marriage through the efforts of either spouse or with community property funds. This means that, even if only one spouse worked during the marriage and the other stayed at home raising children, both spouses are entitled to one half of the community property. “During marriage” refers to the time period from the date of marriage to the date when the parties legally separate. The date of separation is often contested because it determines the extent of the community property estate. The courts have said that separation occurs where one spouse subjectively intends to end the marriage and does something to evidence that intent. It could be moving out of the family home, telling your spouse the marriage is over, arranging for a new place to live, etc.
What is Separate Property?
The parties are entitled to keep their separate property which is not divided in a dissolution. Separate property is any property that is acquired before the marriage, including any rents or profits received from those items; property received after the date of separation with separate earnings, inheritances that were received before or during marriage; and gifts solely to one spouse.
Do debts and credit cards also have to be divided?
Debts are also classified as either community or separate property debts. With few exceptions, debts incurred during the marriage are community property debts that will be divided equally in the dissolution. It does not matter whose name is on the debt.
For example, credit card debts incurred during the marriage are community property debts regardless which spouse’s name is on the credit card. Student loans are one of the main exceptions to this rule. In certain circumstances, the community may be entitled to a re-imbursement if the couple pays off one spouse’s student loans during the marriage. Debts that you incurred before marriage or after separation are separate property debts.
What happens to the Family Home?
The family home in California is often the marriage’s most valuable asset. The division of the family home can be complicated if there are minor children and one spouse wants to stay in the home. The community property interest in the home is further complicated where the property is in the name of one spouse and was acquired prior to the marriage but the mortgage payments have been paid from community earnings. Parties should also be aware that if one spouse remains in the property after separation they may be incurring indebtedness to the other party if the fair rental value of the property exceeds the mortgage, taxes and insurance payments on the home. These are called Watts claims. The reverse may also be true. If the spouse living in the house is paying the mortgage which exceeds the fair rental value, they may be entitled to what’s called Epstein credits.
Am I entitled to a share in my spouse’s pension?
Another valuable asset in a marriage is a pension or retiremement plan. The non-employee spouse is entitled to a portion of the plan that was earned during marriage. To ensure that any pension settlement is enforceable it is advisable that any settlements regarding pensions are contained in a “Qualified Domestic Relations Order” (QDRO) signed by the Court.
How do I figure out the extent of my husband or wife’s property?
Each party is required by California law to file a preliminary and final “declaration of disclosure” with the Court that they have served an Income and Expense Declaration and Schedule of Assets and Debts on their spouses. The final declaration can be waived by the written agreement of the parties. The disclosures will list each spouses community property assets and debts and separate property. Most disputes involve the extent and valuation of community property assets. If a spouse tries to hide assets, your attorney can employ various discovery tools forcing a spouse or a third party to turn over financial records. For example, they can subpoena the records of third parties such as banks and CPA’s. In complicated cases it may be necessary to employ the services of a forensic accountant. It is a good idea to minimize this risk by taking some simple steps as part of any pre-divorce planning. You should make copies of important financial documents such as tax returns, W2′s, bank and brokerage statements and keep them in a safe place.
The law requires the parties to make full disclosure of all their assets and liabilities and also any business investments and opportunities. The case of Marriage of Rossi, illustrates what can happen when one party tries to conceal assets. In 1996 Denise Rossi won .3 million in the California State Lottery. She chose to conceal the winnings from her husband and filed for a divorce 11 days after learning of her winnings. She had been married for 25 years. 2 years after the case was over and a Judgment had been entered, her ex-husband discovered that his ex-wife had won the lottery. He filed a Motion and the judge gave all of the .3 million dollar lottery winnings to the husband, since the wife had intentionally not disclosed her winnings in the divorce proceedings. News reports indicate that Denise ended up filing for bankruptcy.
Don’t forget some often overlooked assets!
Some assets that are easily overlooked but may turn out to be valuable include:
a Tax refunds
a Frequent flyer miles
a Season tickets
a Prepaid insurance
a Vacation pay
a Club memberships
Are their tax consequences of a property settlement?
It’s important that you consider the tax consequences of any property settlements during a dissolution. Generally, IRC section 1041 provides that transfers to a former spouse incident to a divorce are not taxable. However, if either spouse agrees to sell an asset as part of a settlement there may be a tax consequence. For example, if parties agree to sell the family home and divide the net proceeds they may have to pay capital gains tax on any gain. The Tax Reform Act 1997 gives each spouse a 0,000 exemption from gain realized on the sale or exchange of the principal residence. Similarly, the tax consequences of distributions from pension plans now or in the future should also be considered.
Frequently Asked Questions
How much does a divorce in California costs?
Husband and I are talking about the big D, and I was wondering if we can even afford one!! We’ve been married five years, and have a 3 and almost 2 year old together. How much would it cost to help finalize a divorce with custody agreement and everything?
How to finalize a contested divorce in California?
There are no attorneys involved. The Petition was filed in May. OSC re support has been heard and order made. There are no other issues to resolve. What papers need to be file to get the divorce final and all parties legally single? I hope someone can help. Thank you.
Call a lawyer and ask for a consultation with him. It won’t cost very much, if anything, and will answer all your questions.
how can I get a divorce without a lawyer in California?
I need to get a divorce in California without a lawyer. I heard I can file for it without a help from a lawyer. My X is not around, and we have nothing to do with each other. I have no idea where to go and apply for divorce. I do not know where to get the application. Does anyone know the procedure? Please Help…
I make the analogy to persons considering self-representation to that of a person who has a cracked tooth or a broken arm deciding to fix themselves without a dentist or doctor. Can they fix the problem? Certainly. Will they enjoy the long-term ramifications of the “do-it-yourself” fix? Almost certainly not.
In most states, litigants who choose to represent themselves pro se rather than through counsel are held to the same standards as if they were an attorney. This means that even if they don’t understand the legalese language or the potential ramifications of the legalese language being used in their divorce decree, the pro se litigant is generally going to be bound by what they produce.
I have seen horror story after horror story of persons who thought they knew what it was they were agreeing to in their divorce documents, only to find out later that they forgot to include provisions or they forgot to include hold harmless language, and when all the person wants is to move on with their life, they cannot get approved for new credit, or get sucked back in to legal woes with their former spouse who decides not to pay on joint obligations he or she agreed to in the decree.
Many times, the pitfalls associated with a poorly constructed settlement agreement can wind up requiring a party to press the “reset button” on their finances by filing a bankruptcy petition.
Problems can be amplified further in dissolution matters involving children. Litigants choosing to go it alone often are entering a courtroom for the first times in their lives, and have no training on the rules of evidence or have no idea what it is their family law judge will be looking for in making a divorce and child custody determination, or in reviewing their former spouse’s relocation or modification petition.
Family law attorneys, particularly those who limit their practice solely to domestic litigation, have spent years honing their skills not only in court, but also on a pre-trial basis in preparing the case for trial through discovery and deposition processes.
Someone commented looking for a paralegal, which I would like to respond to. While a paralegal can go over the documents to ensure that they are accurate, he/she cannot give you legal advice. You need to have an actual attorney review any and all documents before you sign them in the very least to ensure that your best interests are being looked after. As you can see from the above information, it is easy to overlook even the simplest change in legallese which can cause you issues further down the road.
How should i start my divorce in california please help me?
I BEEN MARRIED FOR THREE YEARS AND SIX YEARS TOGETHER I ALSO HAVE A DAUGHTER OF 2YRS. WE HAVE A HOME BUT HE WANTS TO STAY WITH EVERYTHING HE BEING A JERK. I CAN’T AFFORD A ATTORNEY WHAT SHOULD I DO!!!
Here’s the website that can help you:
(Ask the Law Librarian is still my favorite.)
There used to be someone available at the courthouse to help you with the paperwork. Contact the courthouse in your county to get more information.
California is a community property state. Whatever was purchased and earned during marriage will be divided between the two of you.
Since there is a child involved, work on a visitation schedule that’s in the best interest of your daughter.
How do I follow-up on my divorce in California?
Hello everybody, I was just wondering how do I follow up on my divorce, it was filed in the state of California, and I have the case number and everything, and if it helps, it was filed in Compton Court in LA, so I wanted to know if there was a way I can follow up on it…Thank you very much in advanced.
go on line. www.lasuperiorcourt.com this will tell you everything.
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