When you’re getting divorced, nothing is easy. Every step of the way brings new complications and challenges. One of the biggest struggles in any divorce, besides custody and visitation rights concerning your children, is how to divide your assets. There are a lot of misconceptions about how to properly divide assets in a divorce, and often times, laws vary from state to state.
In this article, I’ll share some things I’ve learned about dividing assets in a divorce in California. Since laws vary between states, you’ll want to double-check these in your own state.
- You don’t always need a lawyer. However, you might find having a 3rd party mediator may make your conversations more productive. It’s always a good idea to have a lawyer if you have significant assets or you’re having a hard time agreeing on how to split things up. But if your situation is pretty straightforward and you don’t have any disagreements, handling the asset separation yourself is fine.
- Community property remains community property until a judge awards it to one party. Even though you can agree on how to divide your assets without getting a lawyer involved, nothing is final until the divorce is settled and the judge makes the final ruling.
- Property is considered community property if community money was used to purchase it, without regard to how the property is titled. This usually comes into play when the couple has purchased a home or cars during their marriage. If the wife has a $30,000 car and the husband has a $20,000 car, both of which were purchased with money earned during the marriage, each spouse is entitled to 50% of the value of each car, or $25,000. In this case, the wife would owe the husband $5,000 since she has the more expensive car.
- Assets are considered separate assets if they were purchased with separate money such as an inheritance, even if it occurred during the marriage. In California, separate property includes anything you owned before marriage, inheritance and gifts to one spouse, and money you earn from separate property. Separate and community property and debt can get very confusing, so it’s important to document all of your assets and figure out exactly which column each asset falls under.
- Funds in retirement accounts that accumulated during a marriage are considered community property. When one or both spouses have a significant balance in their retirement accounts, it’s incredibly important to employ a lawyer to help determine how to properly split the assets.