At the termination of a marriage, the parties must divide property acquired during that marriage. Often this process is simple. On other occasions, however, this process is complex.
COMMUNITY PROPERTY LAWS IN CALIFORNIA
California is one of nine states which operate under community property laws in the event of a divorce. The remaining states operate under what is known as “equitable distribution” laws. Under equitable distribution laws, property acquired during the marriage belongs to the spouse who earned it—barring unusual circumstances—and during a divorce, the marital property is to be divided in an equitable manner, according to a variety of factors.
Community Property vs. Separate Property
Property obtained prior to marriage is considered separate property. This concept, while seemingly simple, can often be subject to interpretation and require an attorney who is familiar with the legal intricacies to ensure property is fairly divided.
Community property laws. Divides marital property right down the middle, regardless of mitigating circumstances. This means that even if only one spouse was employed for the duration of the marriage, husband and wife own all money earned equally.
There are many factors, even in a community property state, which can determine the eventual property award.
Our firm has years of experience handling divorce and property divisions. However, having a knowledgeable Los Angeles family law attorney by your side during the entire process could be the single most important thing you can do for your future.
The Community Property Presumption
California law presumes that all property acquired during the marriage by either spouse – while a resident of the state – is community property. This includes real estate and personal property, and, in some cases, trusts. Whether the real estate is located outside of California, or movable property is transported outside the state, has little relevance, as long as the spouses retain a domicile in the state.
The California community property presumption is important for several reasons: for instance, community property cannot be sold or given away without the knowledge or the blessing of the other partner. Once the divorce proceedings begin, restrictions are automatically imposed to severely limit any property transactions, such as sale, gift, or borrowing against marital property in general.
PROPERTY DIVISION, COMPLEX PROPERTY DIVISION, AND VALUATION OF PROPERTIES
Diving assets during a divorce can be complicated, especially when you consider property, 401k’s, and pensions. If you’re going through a divorce and need assistance, call Los Angeles property division attorney Hossein Berenji for a free consultation. We have over 20 years of combined experience, helping our clients obtain or retain their fair share of the marital assets during a divorce.
COMMUNITY PROPERTY LAWS IN CALIFORNIA
California is one of nine states which operate under community property laws in the event of a divorce. The other eight states are New Mexico, Arizona, Texas, Idaho, Nevada, Washington, Wisconsin, and Louisiana. The remaining states operate under what is known as “equitable distribution” laws. Under equitable distribution laws, property acquired during the marriage belongs to the spouse who earned it—barring unusual circumstances—and during a divorce, the marital property is to be divided in an equitable manner, according to a variety of factors.
Community property laws, on the other hand, divide marital property right down the middle, regardless of mitigating circumstances. This means that even if only one spouse was employed for the duration of the marriage, husband and wife own all money earned equally. Equal ownership extends to debts in community property states as well, making both spouses equally liable for debts—even when one spouse was unaware of those debts. Property Division—Often the Largest Source of Contention in a Divorce
Along with child custody, property division may well be the largest source of contention between couples during a divorce. Both parties are likely concerned about how the marital assets will be distributed and whether they will receive the level of assets they feel they are entitled to. This can be especially true if one spouse has vowed to leave the other in poverty, simply out of spite.
There are many factors, even in a community property state, which can determine the eventual property award; however, having a knowledgeable Los Angeles family law attorney by your side during the entire process could be the single most important thing you can do for your future. Particularly in cases where you feel your spouse has engaged in a dissipation of assets prior to the divorce, your attorney could bring in a forensic accountant to prove you are entitled to a larger share of the property distribution.
SEPARATE VS. MARITAL PROPERTY
The community property presumption is that all property acquired during the marriage by either spouse (while a resident of the state) is community property, including real estate and personal property. Where the real estate is located (outside the state) is not relevant so long as the spouses retain a home in the state of California. In some instances, settlements in a personal injury lawsuit may also be considered community property.
The exception to community property laws for property acquired jointly during the marriage is a pre or post-nuptial agreement which specifies the property is separate. Despite the presumptions associated with California community property laws, outlined in California Family Code §§ 760 – 761, it is still possible to make an attempt in court to refute a particular item as community property, however, the judge will require a preponderance of evidence to do so. Some additional facts about community property distribution in the state of California include:
- Neither partner can legally sell or give away community property without the knowledge and/or agreement of the other partner.
- Once a California divorce petition has been filed, restrictions are in place which limits property transactions, including borrowing against the marital property.
- Property allocation by a California judge can only be avoided if there is a valid written agreement in place (like a prenuptial agreement).
- While married persons are generally allowed to control their separate property independently of their spouse, once a divorce or legal separation is in the works, temporary restrictions will be in place even for the sale of separately owned real estate.
You may wonder what constitutes separate property. Under California law, the following qualify for separately owned-property (which would not be included in property division):
- Property owned by one spouse prior to the marriage;
- Profit from property owned by one spouse prior to the marriage (with certain exceptions);
- Property inherited by one spouse or received as a gift before or after marriage;
- Profit from property inherited or received as a gift before or after the marriage;
- Earnings or wealth acquired after a legal separation is in place, and
- Income earned while living apart and separately.
WHEN SEPARATE PROPERTY IS TURNED INTO COMMUNITY PROPERTY
With the consent of both spouses, separate property may be changed into community property—or vice-versa—through the recording of a title change (known as transmutation).
Another example of turning separate property into community property would be if a husband owned a Ferrari prior to the marriage, then added his wife’s name to the title during the marriage.
For a transmutation to be valid, it must be in writing. If such a transmutation affects a third party, such as a creditor, that creditor must be notified of the change in ownership. All assets and debts will be investigated and identified during a divorce, and characterized as community or separate property.
COMPLEX PROPERTY DIVISION
Although some property division cases are relatively simple, others may be much more involved. This generally occurs when there are stocks, retirement accounts, pensions, 401(k)s, bonds and large amounts of real estate. It is often necessary to collaborate with experts such as investigators, business valuators and forensic accountants during a complex property division case. Divorces which have complex property divisions must be handled especially carefully, with assets and property being thoroughly evaluated.
A married person can generally control their separate property independently of their spouse. There are exceptions: for instance, if one spouse files for an annulment, divorce, or legal separation, temporary restrictions are placed on the sale of any separately owned real estate.
Separate property includes:
- All property the person owned before marriage, including any profit from such property;
- Any property the individual inherited or received as a gift after getting married – again, this encompasses any revenue from such property;
- Any earnings and wealth acquired after the legal separation of the spouses (or domestic partners);
- Income earned while living apart and separately. This could include an income of minor children who live with the spouse.
We pride ourselves in providing complete and detailed information on topics that matter to you. If you need further assistance, please call us or schedule a free consultation. Call us: (562) 439-9001 for a free 30-minute initial consultation.