While families are designed to stick together in good and bad times, problems do arise, and sometimes these problems may lead to divorce, legal separation, annulment, child custody battles, and visitation issues among a wide array of family law-related matters. No one wants to be in any of the situations mentioned above, but when it happens, ensure you have the help of a well skilled and experienced San Diego Family Law Attorney. An attorney who understands the ins and outs of California State laws and regulations that pertain to marital property will take you through the entire process of determining marital property.
Marital Property Laws in California
Getting divorced in California is easy but complex, as neither spouse needs to prove the reason for divorce in a court of law. Still, there are many different aspects that can be involved when going through a divorce such as child custody, alimony, community property that need to be divided. In order to a get a divorce the only requirement is that one of the petitioners have to be a resident of California for six months, the court can always grant the divorce even on the grounds of irreconcilable differences.
One of the things that comes up during the divorce proceedings is property division, and this involves marital/community property and personal property. Marital property is the property that was attained after marriage, and so, it should be shared when the two parties separate. The personal property, on the other hand, is not always subject to sharing.
When compared to other states’ laws, property laws in California are unique mainly because all family properties in California are usually supposed to be divided equally between the two partners.
What is Considered as Community Property in California?
In California, community property is any income or asset that was earned by married persons while they were living with their spouses. Other than community property, there is separate property, which is defined as everything that was attained by a person before they got married, a gift to a spouse during the marriage (or inheritance), and anything that was obtained after the couple separated. The law has jurisdiction only over community property, and in this State, this property must be divided correspondingly in the event of separation.
What this means is that the total cost of the marital assets will be established, then the financial responsibilities of the two parties subtracted to get the net cost of the community estate. If there are no written agreements on its division, each spouse will be entitled to 50% of the net worth of that community estate.
However, if there is a written agreement on the said property, the law will follow the particular request in the division of the property.
Note that the law does not physically divide each part of the marital property equally; the net worth of all the assets has to be determined first. This means that one spouse might end up with the family business while the other one ends up with the family home. What matters is that each spouse will get assets of the same value as the other spouse.
It is not challenging to establish whether a specific property is a separate or a community asset. However, certain assets might pose distinctive problems of this kind. If, for instance, there was a business that was owned by one spouse before the union and both the parties worked hard to develop it, it might be hard to tell whether such a company will be shared equally or it will belong solely to its original owner.
Community property laws in the State cover a broad range of assets including:
- All the incomes that were received by either partner in the time of their marriage. This includes salaries, stock dividends, interest income, capital gains, and retirement accounts, among others,
- All properties that were acquired in the time of the union using income that was made during the marriage. This may include real estate properties and personal properties, and
- All debts that were incurred during the period of the union.
Note that, it doesn't matter which partner brought the most returns or acquired more property during the marriage; everything will be subject to the same division. Couples can, however, agree on another sharing plan, a different one, if the divorce is uncontested.
Division of Employment/Pension Benefits
Everything that a married person accumulated, including proceeds from a pension scheme, profit sharing, retirement, and other employee benefits are all considered as part of the family property and so, are subject to an equal division after the disbandment of a marriage. Whatever the spouse contributed before the marriage and after separation will however be exempted from the equal division. To make things easier, the attorney may suggest to the partner, who is the owner of the pension scheme, to compensate the other spouse with some non-owner spouse’s part of the interest accumulated (community interest). The court may also reserve the authority to have both the parties receive an equal part of the benefits once they are compensated.
Division of Pension Plans
As implied above, retirement plans are divided into one of these two ways:
- Cash-out
- Reservation of authority/jurisdiction by the court
The most popular approach in which retirement plans are managed during the divorce is by the reservation of authority/jurisdiction. In this case, the court places an order requiring the other spouse to receive a certain percentage of every pension paycheck once the employed partner stops working. The court has first to determine the portion of the pension check that the other spouse will receive. This is determined by allotting the number of years the employed partner has been contributing to the pension scheme, which is also used to calculate the percentage of the family property in that pension plan.
Example:
If a wife contributed into a retirement plan for 20 years, ten of which she contributed while married, the community share of that pension plan would be 50%. The husband will, therefore, be eligible to receive 25% of the wife's pension checks, which translates to half of the marital property share.
If it is the court that is deciding on the matter, the other spouse may choose to receive his/her part of the working spouse’s benefits earlier before the working spouse retires. In this case, if the spouse that is employed fails to retire on the set time, the other spouse will still be able to receive his/her stake of the marital property on the set time. When this happens, the other spouse will not be eligible to a part of the wealth earned after that.
The Qualified Domestic Relations Order, created by the Federal Retirement Equity act of 1984, requires employers to meet the terms stipulated by the order made by courts regarding a party’s retirement plan. Even though this order, popularly known as Q.D.R.O, is expensive, time-consuming, and a little complicated, it is slowly becoming a necessity in the divorce process. Many companies have been created just for the single purpose of formulating these orders and not just preparing them; they, at a considerable fee, forward them to commissioners in charge of pension plans.
The Cash-Out Option
This is another way to deal with pension, and it involves finding out the actual valuation of the marital property in a pension plan. This is done by an actuary, an expert in financial evaluation and statistics about insurance policies, pensions, and annuities. The actuary’s work will be to review the description of the plan and establish the worth of the assets that the working spouse has accumulated in his/her account to determine the current value of the marital share of a pension plan.
Under this plan, the employed partner will be the one to receive the entire amount of the pension scheme after retirement, and then the other partner will be entitled to other assets under the family property but of the same value.
Division of Professional Practice or Business
In California, professional practice and businesses are part of the family property. This means that they too must be included in the estimation and splitting up of marital property. If the business or the professional training has been advanced during the union, there are some aspects of community property in it, and so, it must be included in the division of property during divorce.
Determination of the actual value of community property in professional practice or business is not always easy, mainly because there has to be an assessment of goodwill, which is basically the tangible value in any business. The goodwill is grounded on the expected success of the business in future pertaining to its name and reputation. Even for a business that is owned and run by one spouse, its goodwill value must be determined since it cannot be sold during divorce.
In this division of professional practice or business, the law works in the assumption that the business will continue to operate or the professional spouse will continue working and improving his/her professional status.
A fully certified business appraiser or public accountant will be appointed to define the significance of the professional practice or business. The work of these professionals is to review the records and books of the practice or business and prepare a report that will be used in the divorce process.
Division of the Family Home
The court will allow the spouse with the primary custody of children to keep the family home for the period before the divorce is settled. This is the same spouse that is required to continue making payments for property tax, mortgage, as well as property holder insurance whenever they are due, within that period. If the primary custodial parent is not financially able to make those payments, the other spouse will be required by law to make them even though he or she will not be living in the family home.
The court may decide to sell the house if there are no children in the marriage, the youngest of the children has already attained the majority age, or the couple has agreed to it.
Deciding on who keeps the family house or whether or not it should be put on sale to a third party is among the most challenging decisions a court has to make during the divorce proceedings. This is because in most families, the house is the most valuable property and sometimes both parties have a great emotive attachment to it. When children are involved, it becomes even more difficult because there are other important considerations to make.
There are many considerations that the presiding judge has to make to determine the spouse who will keep the family house.
Among these considerations is Whose house is it in the first place? This could be a simple thing to think about, but the reality of the matter is not always easy to determine as it seems. If the couple bought the house together, or the house was bought after the marriage, this will automatically become marital property, and so, both parties have a right to it. This could still pose problems if, for instance, the house acquired during the union is under the title of one partner. This goes to show that the property is a separate asset and may belong to just one spouse. The other spouse may be required to produce an agreement or any form of understanding to show that both of them owned the property.
If, on the other hand, the property was acquired before marriage, the actual owner of the house will be the one to get it after divorce. If, however, the other spouse proves that he/she had contributed to the payment of the mortgage or home improvement costs during the union, the division of the property may ensue.
If the house is marital property, there is more than one way through which it can be shared:
- Selling and dividing profits: If the two parties agree, the home could be sold, and the profits split up. This works best if there are no children involved and that none of the spouses is financially able to take full ownership of the home alone;
- One spouse can buy the other out: One spouse may decide to keep the resident and compensate the other one his/her part of the property. In this case, the home may be refinanced so as to remove the other spouse from the mortgage agreement. The spouse who is buying the house must prove that he/she can afford to assume the full possession of the property so as to meet all its costs including insurance, mortgage payments, repairs, maintenance, utilities, as well as property taxes.
Division of Education Certificates and Practice Licenses
A college degree earned during the marriage and a professional license acquired during the same period are both considered as marital property. The costs used in determining the worth of these include the tuition fees, books and other fees paid in the acquisition of certificates and licenses. California law, however, does not give the other spouse a right to a certain percentage of the improved earning ability of the spouse who has acquired the license or degree certification.
What is the Role of a Family Law Attorney in All This?
Any matter relating to family law may be challenging, and since no one wants to imagine getting involved in such issues, a lot of people are usually lost on what to do when the time for marital property division comes. A skilled and experienced family law attorney is always the best solution, as he or she can guide you through the entire process from the beginning to the end.
The attorney will basically take you through three main steps to ensure that your rights are respected and that the entire process is not as stressful as it can get:
- Listing down all the properties owned by the couple and categorizing them as the community or separate properties,
- Evaluating the marital property for an equal division, and
- Seeing to it that you get all that you deserve by the end of the divorce process.
The attorney will first advise you on any litigious and non-litigious matter concerning marital property determination that may affect the entire process. He/she will also file legal documents and take part in any mediation sessions on your behalf. They will also represent you in the court of law during the entire divorce process and ensure that all your needs are met. Thus, you should seek out immediate legal assistance from a family law attorney to help you in the determination of marital property.
Find Family Law Attorney Near Me
Divorce may be inevitable, even for a marriage that started at a high note. Some of these legal issues arise when one least expects, but it helps to know that you can always find legal representation to ensure that your divorce proceeds well, with minimal problems and in the least time possible. San Diego Family Law Attorney is an experienced law firm concerning family matters and understands the complexities of California family laws and regulations better to represent you in the marital property division. Call our San Diego Family Law Attorney today at 619-610-7425 and let us make the process easier.
