Divorce comes with many tricky waters to navigate. In some cases it feels like a settlement negotiation, but with complicated emotions involved. During the divorce process, one of the topics that both parties need to discuss with their San Jose divorce lawyers is how to appropriately divide shared assets. How do two opposing individuals decide who gets to keep what?
What Is Community Property?
Community property includes all assets shared between both parties. In California, community property includes all assets obtained during the marriage. This means that even if an individual purchased an item without their spouse, it is still community property. For example, if a spouse buys a car on their own, and they were married during the time of the purchase, California counts the car as shared property. This applies to call credit, loans, properties, and income that either spouse accrued while under their marriage contract.
One extenuating detail that impacts community property is the date of separation. In the state of California, the date of separation does not have to correlate with one spouse moving out of a shared property or filing divorce papers. The date of separation indicates the date the spouses felt as if their marriage ended. If the parties cannot agree on a date, the court decides this based on evidence. After the date of separation, the items that either spouse buys are no longer community property.
What Is Separate Property?
Separate property includes items that either spouse owned before the marriage and continued to keep separate during the marriage. This includes property like inheritances and student loans. Separate property also applies to property gained after the date of separation.
It is possible for a couple to possess partial properties. That is, some items count as both community and personal property. One party typically acquires this type of property before the marriage, shared it during the marriage, and then reinstated its “separate” designation after the divorce. For example, a retirement account can be partial property if a spouse contributed to it before the marriage, during the marriage, and after the separation.
What Is Transmuted Property?
Transmuted property pertains to any assets that changed ownership during the course of a marriage. In the state of California, it is possible to turn community property into separate property and vice versa. It is also possible to exchange ownership of separate properties. In this case, at no point was the asset in question community property. Instead, it belonged solely to one spouse, who transferred it completely to the other spouse.
In any scenario, both parties must have created a written agreement to officiate such changes. If no such written agreement exists, it is possible to prove that certain assets are transmuted property through the tracing principle. If a paper trail can clearly show ownership change, it is honored in place of a written agreement.
How Is Property Divided?
When filling out the divorce petition, the petitioner must fill out a form detailing a schedule of assets and debts. This form allows the petitioner to communicate what properties exist between both parties, which are community property, and which are to be determined. This form serves as a reference when determining who will get what assets and also helps to determine total property value.
The first method of dividing property falls into the hands of both parties. If they can agree on how to split their assets, they can create a written agreement that details what each person will walk away with. This option does not request court aid and keeps the settlement between both parties.
The second method of dividing property involves financial mediation. Mediation involves a professional who helps both parties divide their property. This method is effective for individuals who cannot come to an agreement on their own, but it does cost between $50 and $250 an hour.
Dividing assets during a divorce can be stressful because California doesn’t require an equal 50/50 split. This puts the responsibility of determining who receives what in the hands of both divorced parties.