How Property Division Works During a Divorce
When a couple divorces, they must divide the marital property and debts. Property division in California is based on community property laws.
Even though spouses own an equal interest in marital property, it can be challenging to divide everything you own equally. In some situations, dividing an asset equally may not be possible. Therefore, issues may arise with property division that results in disputes.
Separate Property vs. Marital Property
The first issue that must be addressed in a property division case is identifying the property that should be included in the marital estate. Community property usually includes all assets and income acquired during the marriage. These assets are to be divided equally between the spouses during a divorce.
Community property can include, but is not limited to:
- Income
- Financial accounts
- Real estate
- Vehicles
- Personal property
- Retirement accounts
- Business interests
Separate property is not subject to division. These assets include property you owned before you were married, inheritances received during the marriage, and gifts received during the marriage. It also includes income and property acquired after you are formally separated.
Classifying property correctly is crucial during property division. This issue can be the source of disputes during a divorce as spouses allege property should be included or excluded from the marital estate.
Dividing Complex Assets and High-Value Property
Another problem that spouses often encounter during property division is dividing certain types of assets. Some assets are inherently more difficult to divide because of the nature of the asset.
For example, retirement accounts are often difficult to divide because they may include separate and community property. Any income in the retirement account before the marriage is separate property. However, contributions to the account and interest accrued during the marriage are community property.
Business interests, commercial property, gifts, and inheritances can be difficult to divide. Unless you are careful to keep inheritances and gifts separated during the marriage, they could become commingled with community property. If this happens, your spouse may claim an interest in these assets.
Dividing a partnership or business interest can also be complicated to divide. If you own an interest in a family business, your family members have a vested interest in protecting the business from your spouse.
High-value assets can also complicate property division. It may be necessary to hire third-party appraisers to provide unbiased property valuations. Correctly valuing assets is crucial to ensuring you receive a fair share of the marital estate.
Prenuptial and Postnuptial Agreements
You can avoid property division disputes during a divorce by entering a prenuptial or postnuptial agreement. These agreements identify community property and separate property. The agreement states how property will be divided during a divorce.
A pre or postnuptial agreement is a binding contract between the spouses. Provided that the agreement was drafted and executed correctly, the court should enforce the agreement even though a spouse may now feel differently about how they want to divide their assets.
Debts Are Subject to Community Property Laws
In addition to dividing your marital property, you also divide your debts during a divorce. Marital debts may include vehicle loans, credit card debt, business debt, mortgages, and personal loans.
Some debts are secured by property that is subject to property division. A spouse may agree to assume the debt if they want the asset. However, when dividing debts, you must consider other issues, such as child support and alimony. Therefore, it can become a complicated issue for some couples.
Transmutation and Property Division
California law specifically addresses the issues of transmutation and property division. Transmutation is the process of changing the classification of property from community property to separate property and vice versa.
If you agree to change the property classification after 1984, the law requires that the agreement be in writing. The agreements must be clear about the intent of the party to transfer their interest in an asset. The agreement is intended to protect a spouse’s right to community property. Transmutation is a complicated issue in property division cases that requires the assistance of an experienced property division lawyer.
Learn More About Property Division in California Divorces
Property division can be an issue that spouses fiercely dispute during a divorce. Call Berenji & Associates Divorce Lawyers to schedule a free consultation with our Los Angeles property division lawyers. We work with clients to negotiate fair property division settlements to protect their interests.
Contact a Los Angeles Property Division Lawyer Today
For more information, contact our experienced Los Angeles property division lawyers at Berenji & Associates Divorce Lawyers by calling (310) 271-6290 to schedule a consultation.
We serve all through Los Angeles, Beverly Hills, Los Angeles County, and its surrounding areas. Visit any of our offices at:
Berenji & Associates Divorce Lawyers Los Angeles Office
550 S. Hill Street STE 1467
Los Angeles, CA 90013
(213) 277-2586
Berenji & Associates Divorce Lawyers Beverly Hills Office
9465 Wilshire Blvd #333
Beverly Hills, CA 90212
(213) 277-2586