Getting a divorce is a tiring and frustrating process for many. Not to mention, most disagreements during the process happen the most while dividing up assets and debt. So how does one navigate this? The first step is to understand what exactly can and cannot be divided. In this month’s blog, we discuss the differences between community property and separate property and how this affects the split in assets.
Community Property vs. Separate Property
Depending on the state, there may be different property division laws when it comes to divorce. Here in California, the community property standard is used to determine what assets are divided between spouses. These are generally things that domestic partners own together and have purchased during the course of their marriage as well as any earnings and debt. However, this does not include any gifts or inheritances.
For example, you may be wondering who gets the car. If the car was purchased using money earned during your marriage, then it belongs to both you and your spouse even if you solely paid for it. This is because the savings you used to purchase the vehicle was earned while you were married and is now considered community property. This also applies to any accumulated debt or financial obligations even if it was incurred by one person only.
Basically, community property and community debt are divided evenly between partners. However, this does not necessarily mean that it’s always divided 50/50. Certain situations can bypass this ruling such as a prenuptial or postnuptial agreement that explicitly states certain assets or property remain separate in the event of a divorce. Spouses can also agree on different plans for splitting and alimony.
On the other hand, separate property is anything an individual owned before they were married. This includes inheritances, gifts, rents, profits, and any income they earned before joining in matrimony.
For example, if you had instead purchased a car using money you inherited from a relative, then that car belongs to you even if it was purchased during your marriage. This is because you were using money that is considered separate property.
In addition, separate property is also anything you acquire or earn after getting divorced. The date of separation is important because it can determine the difference between community property and separate property.
Agreeing on What to Divide
Trying to divide up the property between you and your spouse can get very tricky. There will most likely be some disagreements, especially if it’s a contested divorce. In this case, hiring a lawyer is your best option for a mediation. However, if you both decide to divide it up yourselves, here are some steps to take:
- Make a list of everything valuable.
- Determine which items or belongings are community property or separate property.
- Agree on the fair market value of each property.
- Get the judge’s approval.
Overall, it’s still best to go over your community property with a lawyer in order to keep things organized and fair. In this stage, being transparent and honest is extremely important and you should not try to keep anything hidden. Otherwise it will lead to even more conflict down the road and you may even face penalties.
Get Legal Support
It usually gets very confusing trying to determine what belongs to who, especially if you’re uncertain about the source of money. That’s why you should put your trust in Family Law Richard E. Young & Associates. With decades of experience, we will provide the necessary guidance and support to make your divorce hassle free. We will work hard to get the best possible results. Visit our website to learn more and schedule an expert consultation to address any questions or concerns.