Division of Property
Dividing Community Property – What You Need to Know
- Date of Marriage: What is your date of marriage?
- Community Property: In general, all income and all property either you, or your spouse, or both of you, acquired, after you were married, belongs equally to both of you. If your spouse already had a 401k when they married you, and continued to make payments to their 401k after marriage, then, some part of that 401k belongs to you as well.
- Dividing Community Property: There are a lot of ways to divide your community property. You can divide each asset up equally. Or, you can trade off assets against one another. This allows people to only keep assets they really want.
- Complications and Complexities: Though the rules to divide community property may appear simple, in fact, it can become quite complicated.
- Example – Commingling: This is when money or property existing before you were married, is then used to buy a marital property. Or, is mixed with marital money in accounts.
- Example – Family Homes: This is when non-marital money is used to purchase a marital home. The result may be that a reimbursement will be required, before any sharing of equity. Or, when a home owned by one person continues to be used by the spouses after marriage. Even though the home is owned by one spouse, the marriage may own some of the accumulated equity.
- Example – Closely Held Businesses: This is when a business owned/operated by a spouse, existing at the date of marriage, continues on during the marriage. Even though the business may belong to the spouse, the marriage may develop interests in the business. This raises issues of valuation and apportionment, so that the marriage is in some way receives compensation based on certain legal principles.
- Example – Accountings: Many spouses keep bank and financial accounts in their own name after marriage. Funds in those accounts are likely marital property, and an accounting may need to be done to show how money has been used. We have traced millions of dollars in assets for reimbursement.
- Example – Businesses Started During Marriage: A business started during marriage usually belongs to the marriage. This asset will need to be valued. Once valued, the spouse who will not be operating the business will likely be compensated their share of value.
- Example – What is Not Marital Property: A person’s graduate degree is not community property. A person’s talents are not community property. Inheritances are not community property. Assets or income received from a family trust are not community property.
Division of Property – The Next Steps
- Financial Information: Locate the last 1-2 years of your tax returns, including business returns. Look for any recent paystubs. Print out the last month of bank and financial account statements.
- Talk to a Family Attorney: A meeting with an attorney is strictly confidential, even if you do not hire that attorney. That includes an initial consultation. Since you may end up hiring them, you should not have to pay to consult with an attorney.
- What Kind of Attorney: The more conflict you expect to have in your divorce, the more experience you need in your attorney. The less you know about the finances in your marriage, the more experience you need in your attorney. The more financially complex your estate is, the more you need an attorney who knows their way around taxes and financial records. The best settlements and judicial decisions come from attorneys who excel in court and at the conference table – who know the rules of law and how to argue a balance sheet.