What is Property Division?
Couples going through a divorce must decide how to divide their assets and debts. Assets may include real property such as a home, cars, bank accounts, jewelry, art, household furniture, stocks, retirement accounts and pensions. Debts may include tax debt, student loans, credit card debt, and loans. The three major steps to resolving property issues are characterization, valuation, and division.
Community Property and Separate Property
California is a community property state. This means that any property acquired during the marriage is usually characterized as community property and will normally be divided equally between the parties unless the parties agree to an unequal division. Generally speaking, property acquired prior to marriage, after separation, or obtained by gift or inheritance is separate property and will be awarded to the party acquiring the property. However, there are many factors and circumstances which can change the characterization of a particular piece of property. A couple can agree either before or during marriage to change an asset that was originally separate property into community property but such agreements must be in writing and must clearly state the intentions of the parties. Sometimes a spouse changes a separate asset into a community asset without meaning to by combining or “commingling” separate property with marital property. Many types of assets can be partially community and partially separate, including retirement accounts one spouse contributed to both before and during the marriage.
How is Property Divided?
First, the spouses assign a monetary value to each item of property. If the spouses cannot agree on the value of an asset the judge will make that determination. There are several options for dividing the marital property. Spouses can divide the assets by assigning certain items to each spouse, by allowing one spouse to “buy out” the other’s share of an asset, or by selling assets and dividing the proceeds. They can also agree to hold property together even after the divorce. All debts accrued during the marriage must also be assigned to one of the spouses. Some couples are able to agree on how to divide all their assets and debts. If an agreement cannot be reached then the judge will make the decisions about division of the marital assets and debts.
Here’s more information on Property Division in California.