What Happens to Property After Divorce?
PROPERTY AFTER DIVORCE
You and your partner have finally settled on a divorce. The papers are filed, and the calm seems to be on the horizon. Dividing your property appropriately is one of the next steps you need to address in this process of separation. The courts play an active role in the division of your property, and there are many elements factored into doing so appropriately. Here’s what you need to know about what happens to your property after a divorce.
TYPES OF PROPERTY
A divorce separates more than just people. It also means splitting up the property of the now divorced couple. However, there are different types of property that are a part of a marriage. Not all of this property is subject to division in the case of divorce, and being able to differentiate the different types of property is important.
There are two types of property that are distinguished in the case of a California divorce: “separate property” and “community property”. Separate property is property that belonged to one spouse before the marriage, was gifted to only one spouse during the marriage, or may have been inherited by one spouse during the marriage. This type of property cannot be divided in the case of divorce, except in special circumstances. Usually, separate property remains under the ownership of the original individual spouse. Community property, however, is subject to division between the two spouses in a divorce. Community property presumptively includes all property either spouse acquired during the marriage with their efforts, labor or marital earnings, no matter whose name the actual purchase is under.
Though these two types of property are clearly differentiated, they can become difficult to distinguish when trying to divide them between the two spouses. Such difficulties exist in situations where sometimes separate property has become marital property (This is more technically referred to as a “transmutation”). Scenarios like this often occur during a marriage. A simple way to understand this is in the framework of money. Money that was considered to be separate property initially may be pooled or commingled with other community money to purchase or invest in something together, such as a house. That separate property money may now be difficult to trace (i.e. identify) many years down the road. Recordkeeping by the spouse who used his or her separate property to help by the house is crucial. Failing to do so could easily “transmute” the once separate property to community property.
As always, each case is unique and individual. Absent an agreement between spouses upon divorce, courts have the final say. California specific laws about the sharing of separate and marital property are often complex and knowing what evidence to present is often the key to presenting your property claims. It is important to familiarize yourself with this process.
WHAT IS CONSIDERED COMMUNITY PROPERTY
California divorces are subject to community property laws. This essentially means that all assets acquired during the marriage by one or both spouses is considered community, or equally shared marital property. This includes both earnings and debts accrued by one or both spouses. Of course, there are always exceptions to every rule, and this is where you need proper legal advice.
All property, including pension plans, IRAs, 401ks, and other retirement plans acquired during your marriage (absent having a properly formed Premarital Agreement) are considered marital/community property as well. The community portion of the retirement benefits will be divided among you and your spouse.
What comes next
If you are going through a divorce and need help understanding the process of the division of your assets, contact us for help with next steps or representation. We understand the emotionally difficult process this can be and want to support you in the ways we can.