Division of Assets

One of the most important decisions that will need to be worked out in a divorce settlement (after the welfare of any children involved) is how the assets and property will be divided among the parties. Division of property and assets is a serious legal matter that can be tremendously complicated, especially if one party forces the other to divide the assets in an inequitable piecemeal fashion.

At King Law Firm Attorneys at Law, Inc., we understand that each spouse or partner makes a significant contribution to marriage, and we work hard to make sure our clients are receiving their fair share of assets. We take great care to guarantee that the best interests of our clients are being met and that both parties are receiving the assets, property and debt that is deserved and warranted, in a concise, understandable and stress-free manner.

Property Division Law

In California, all material property and debts are divided equally among the spouses or domestic partners who are separating through divorce. The only way equal division does not happen is if one of the spouses or partners agrees to an unequal share (which isn’t a wise thing to do) or if there is a set pre- or post-nuptial agreement or an intact marital agreement.

Many couples will work out the division of assets through mediation, but even if you have already decided how to equitably split your property, a judge must sign off on the agreement and issue a final order before community property becomes separate. Should the matter of asset division go to court, the judge in the case will decide the division for you and may not physically divide everything in half equally. Instead the judge will decide upon a roughly equal net share of the property, including debt, which can balance out someone receiving more property or intrinsic value.

One requirement for divorces and legal separations is filling out a Schedule of Assets and Debts form (Form FL-142), which the spouses will exchange with one another to disclose all assets to one another. This is how each partner will figure out what type of property it is, as well as the fair market value of each item. You must be honest and truthful when filling out the form, as hiding anything will usually come out sooner or later and the cost of having lied about it can result in very serious penalties. It also helps to find out if the case can be settled (because everyone agrees on the majority, if not all, of the property values, debts and distribution) so that the matter doesn’t have to go to trial.

One word of caution: Be careful when dividing debts, as if something like a credit card is in your name and your spouse or partner defaults on the agreement to pay that debt as part of the settlement, the creditors can still come after you, the signatory.

Types of Property

Property is defined as anything that can be bought or sold, or has intrinsic value, including: houses, cars, furniture, clothing, bank accounts, cash, pension plans, 401(k) plans, stocks, businesses and patents.

There are several types of property you need to be aware of:

Community Property

In California, each spouse or partner owns half of all community property, which is property that was acquired through labor or skill during the course of the marriage that is not a direct, sole gift or inheritance. This includes salaries (and any items bought with that salary), pensions, profit-sharing benefits, stock options, retirement benefits, and businesses owned by one or both spouses or partners. It doesn’t matter if the spouse or partner worked outside of the home, or the property is in only one person’s name, it is still considered community property if it was collected during the marriage with money made from salaries or other means that are also considered community property. This also consists of debt collected during the marriage, including credit cards that are only in one person’s name. There are exceptions, but they are few and far between.

Quasi Community Property

This is property that was acquired by one or both spouses or partners while living outside of California, when, if it had been bought in California, it would have been considered community property. All of this type of property will still be considered community property so long as the divorce occurs under California law.

Separate Property

Anything you have or owned prior to getting married or registering for domestic partnership is known as separate property. Inheritance and gifts given to your spouse or partner during the marriage are also considered separate. This includes money earned or property bought from or with separate property. Property and earnings acquired after the official date of separation are also considered separate, even if you are still technically married under the law.

Commingling

When property is considered both separate and community, the property has become mixed property.

When figuring out if property acquired during marriage or domestic partnership is community or separate, always look at the source of the money, and where the money to purchase the property came from.

Pension Plans

Special rules apply to the division of pensions, which are very technical and do not apply to any other type of asset, as pensions can sometimes be worth more than all of the couple’s other assets combined. If a pension is part of your assets during a divorce, you must attach a Pensions Benefits — Attachment to Judgment form (Form FL-348). In some cases, the pension plan must be “joined” as a party of your divorce. A qualified domestic relations order (or QDRO) is the court order that details how the pension will be divided. It is an extremely complicated form, and if filled out incorrectly, can become extremely costly. It is best to consult a lawyer when dealing with pensions in a divorce.

If you are getting divorced and need any type of help in preparing your documents for the division of assets, especially if the community property includes a pension, please contact King Law Firm Attorneys at Law, Inc. to set up a consultation. We can help you receive not only your fair share of your property, but make sure all of the forms are filled out properly so that it doesn’t cost you financially and emotionally down the road.

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