What Is Property Division?

Divorce is more than just ending your marriage. It is a formal legal process that involves several components depending on the unique aspects of the divorce. For example, one of the most challenging aspects of any divorce is property division, the process by which divorcing spouses establish separate ownership over their marital assets and property.

If you are preparing for divorce in California, it is essential to understand the property division process, what it entails, and how to prepare for it. Your property division determination can potentially impact your life in several ways for many years to come, so it’s vital to approach the situation with as much information as possible.

California Property Division Law

California upholds a community property law, meaning all property gained by married spouses during their marriage qualifies as community property. When the couple divorces, all community property must be divided equally, regardless of the reason for the divorce. California does not require a married person filing for divorce to list a specific reason or fault for the divorce; “irreconcilable differences” is a suitable generic reason listed for most divorce petitions in California. Fault would only come into play when a married couple has a prenuptial contract with specific terms and conditions regarding divorce with cause.

The community property law of California requires divorcing spouses to provide complete and accurate financial disclosure statements for their divorce. This means both spouses must compile and submit financial records of all their property and assets. While some of these records may overlap, each spouse is also responsible for providing proof of ownership over any separate property they intend to claim in the divorce. “Separate property” refers to anything that is not subject to division under California’s community property statutes. This typically includes property a spouse owned before marriage, inheritance from their other family members, and gifts, including those received from their spouse.

Financial Disclosure in Divorce

It is imperative to be honest and accurate in your financial disclosure statement. Any omissions or errors can significantly delay the property division process and even cause you to lose standing in the eyes of the court. Intentional obfuscation of facts or attempting to hide assets in property division proceedings will incur various legal penalties. It’s possible for a divorcing spouse to face contempt of court, or they may even face criminal prosecution for fraud or perjury, depending on the scope of their behavior.

If you suspect your spouse has hidden assets in your divorce proceedings, you must notify your attorney as soon as possible. An experienced attorney can consult a financial expert like a forensic accountant who can help you uncover hidden assets. Once you prove that your spouse has hidden assets in property division proceedings, your attorney can ensure they are held accountable and that all financial records are considered in your divorce proceedings.

What Will Be Split in Property Division?

California state law requires divorcing spouses to equally divide all marital assets and property gained during their marriage. This typically includes:

• Real estate purchased together, such as the couple’s marital home.
• Income earned by both spouses during their marriage.
• Investment accounts formed during the marriage.
• Business interests acquired during the marriage.
• High-value items such as vehicles, artwork, and luxury goods purchased with communal funds.

It’s important to note that sometimes separate property is also subject to division in divorce proceedings under the legal concept of “transmutation.” Separate property “transmutes” to community property if one spouse contributes to increasing the property’s value. For example, if one spouse owned a home before getting married but the other spouse paid for major renovations that significantly boosted the home’s property value, the family court will likely consider the home community property due to the other spouse’s contributions increasing its value.

Property Division With a Prenuptial Agreement

Many couples marrying in California draft prenuptial contracts for many reasons. In some cases, prenuptial contracts serve as blueprints for future divorce proceedings. In other cases, prenuptial contracts can firmly establish each spouse’s financial rights and responsibilities or even effectively shield one another from each other’s debts. A properly configured prenuptial agreement could potentially help you and your spouse circumvent most of the property division process in divorce, as the contract can include terms and provisions that the two of you have already agreed upon.

If you plan to marry in the near future and own considerable assets, you must think about the value a prenuptial contract could provide to you and your spouse. This contract will allow you to have difficult conversations about financial issues early in your marriage and make your expectations clear to one another. The contract could also make property division much easier if you decide to end your marriage in the future.

Making Property Division Easier

Property division is just one aspect of the divorce process, and it is often one of the most contentious. However, it is possible to make the property division easier and retain more control over the outcome of your property division determination by taking advantage of alternative dispute resolution. For example, divorce mediation allows a divorcing couple to privately negotiate the terms of their divorce under the guidance of a neutral mediator.

When you litigate property division in a divorce case, the judge may compel you to liquidate certain assets and divide the proceeds. However, suppose you and your spouse choose to mediate your divorce instead. In that case, it’s possible for the two of you to effectively “trade” assets and property until you reach a mutually agreeable property division settlement. This generally offers much more agreeable results than you could expect from a family court judge.

Ultimately, property division is a problematic aspect of any divorce, and it is best to go into this process with legal representation you can trust. If you have concerns about property division in your upcoming divorce, or you need to consult an experienced family law attorney about property division, contact Paula D. Kleinman today and schedule a consultation with our team.