Homes, QDROs, stocks, cars, businesses, debt… There can be a lot to divvy up in a divorce as you go your separate ways. Freedom Law 805 will fight for what is yours and guide you through this complex process. We partner with industry experts in QDROs, real estate, and investments to ensure you get the best outcome possible when dividing your assets in a divorce case.
The Big PiCture
All California family law property division issues boil down to one question: is this community property or separate property? Answering this question can become extremely complex, however. Below are some definitions and examples to help you understand what belongs only to you and what is shared.
Community Property
In a nutshell, everything you earn or buy with money you earned during marriage is community property. This means all income from your job, all contributions to your retirement plans, all property such as homes and cars you purchased with income earned during marriage, and all payments you made toward these assets with income earned during marriage. The same goes for your former spouse’s earnings. Even if you never had a job during the marriage, half of the money your spouse earned during marriage belongs to you. Similarly, all debt acquired by either of you during marriage is community debt. It makes no difference whether you and your spouse held joint or separate bank accounts during marriage.
SEPARATE PROPERTY
Everything you earned before your wedding day and after the day you and your spouse separated (not the day your divorce became final) is your separate property. Separate property also includes gifts or inheritances you received during marriage, as well as income your separate property generates during marriage. For example, if you own a rental property when you get married, the rent you earn from that property during marriage is also your separate property. The same goes for other investments you own during marriage: if they increase in value during your marriage, that income is yours. Your spouse has no claim to your separate property.
The date of separation can become a point of contention in divorces. It can sometimes change whether an asset is community or separate property. The Family Code defines date of separation as the date that one spouse expressed an intent to end the marriage, and his or her conduct was consistent with this. To illustrate, one spouse may say she moved out with plans to reunite with her spouse after he addressed his issues, but she filed for divorce six months later. The husband may argue her move-out day was the date of separation if his employer stock options vested shortly after she moved out. The wife may show her attempts to salvage the marriage during this period to fix the date of separation as the day she filed for divorce, which affects her community property interest in the stocks.
Mixed property
Few couples plan to get divorced at the time they get married. So, they share things. Spouses use their separate savings from before marriage to buy a home together. They continue contributing during marriage to 401k’s they had before marriage. They pay off student loans with income earned during marriage. They pay off mortgages during marriage on rental properties they inherited. This makes things complicated when the couple decides to divorce.
A reputable family attorney will partner with a CPA trained in the process of “tracing” separate and community funds in commingled accounts. The CPA will provide you with a clear calculation of what funds are separate versus community property. Sometimes couples each hire their own expert to convince the judge what funds are community versus separate property.
Exceptions to the Rules
Prenuptial Agreements
Some spouses hope for the best but plan for the worst when before they get married.
Claims of Waste
When one spouse has recklessly used community funds during the marriage, the other spouse may have a wasteful dissipation of assets claim. This allows the claiming spouse to essentially get a refund for the other spouse’s wasteful expenditures.
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