Dividing your assets and finances is only one of the challenges of divorce, but it is a major factor and one that many spouses struggle with. The stakes are high when money conflicts arise. California laws surrounding the division of property can be difficult to understand if you don’t have legal knowledge or experience. Sarieh Law Offices is a valuable resource when you have more questions than answers. A free case evaluation serves two important purposes – it clarifies what your current situation looks like and helps you make an informed decision about what to do next.

Dividing Money in a California Divorce

Chances are that not all of your finances will be treated the same in your divorce. That’s because California divorce courts will first determine what property is community property and what is separate property, which is an important distinction because separate property is not subject to division in a divorce.

Community Property

Property that is eligible for distribution in a divorce is known as community property. This is most often property that was acquired during the marriage. Examples include the marital home, joint bank accounts, and retirement accounts.

Separate Property

Separate property will not be divided between spouses in a divorce. If an asset or debt was acquired before or outside of the marriage, it is separate. In most cases, gifts and inheritances are also considered separate property, even if they were received during the marriage.

Equal Division of Property

Community property is divided evenly between spouses since California is a community property state. This is true for most divorce cases, although there are always exceptions. You and your spouse will likely receive a 50/50 split of the community property.

Protecting Your Assets in Divorce

If you are looking for information about the divorce process, you are likely already married. However, a prenuptial agreement is a good option prior to marriage and allows both parties to outline how their property will be handled in the event of a divorce. A postnuptial agreement is the equivalent of a prenup for married couples. It serves the same purpose – to protect both spouses’ assets.

You and your divorce attorney may be able to prove that an asset is separate property, which would exempt it from distribution. If you have questions about a specific asset or debt and what may happen to it during divorce, contact Sarieh Law Offices. Our attorneys provide free case evaluations and are happy to answer your questions about property division in California.

Important Factors When Dividing Property

Qualifying property as community or separate may seem straightforward, but it often becomes complex, especially when the spouses don’t agree on the classification. Community property is acquired during the marriage, but some exceptions to this rule are:

  • Gifts

  • Inheritances

  • Property acquired prior to marriage that was gifted or transferred to the other spouse

  • Property acquired during separation

Separate property is not subject to division and includes property acquired before marriage or after separation. There are exceptions to this, including:

  • Property acquired during the marriage with separate funds

  • Gifts or inheritances acquired during the marriage

In addition to determining if the property was acquired before or during the marriage, a court will also factor a number of other details into their decision. The date of marriage and date of separation are important when dividing finances in a divorce because the value of an account or other piece of property must be known to distribute it correctly. These dates are then compared to the date the asset or debt was acquired. Many spouses disagree on the valuation of assets and about whether certain valuable property should be divided.

How Will Your Finances Be Divided in a Divorce?

An equitable division is the primary focus of California divorce courts. The judge may use various methods to decide how to split finances and other property, but the result is intended to be equal between the spouses. Every divorce case is unique because there are so many variables, so predicting how your finances will be split cannot be done with certainty. Speaking with a divorce attorney is the best way to get a clear idea of likely outcomes and possible alternatives.

Tangible and real property like furniture, vehicles, jewelry, land, and houses are often easier to divide than financial accounts because of the frequent changes in value due to deposits, withdrawals, and interest accrual. Some of the financial accounts that may be subject to division in a California divorce are:

  • Checking and savings accounts

  • Money market accounts

  • 401(k)s

  • Pension plans

  • Cryptocurrency wallets

  • IRAs

  • Investment accounts

Some financial accounts require a qualified domestic relations order (QDRO) to be entered before spouses can divide the funds. QDROs are needed for defined benefit plans, defined contribution plans, and a few other types of retirement plans. Examples include 403(b) plans, simplified employee pensions, 457 plans, and 401(k)s.

Assets you receive in a divorce, including some financial accounts, may have tax consequences to be aware of. In California, most of the property you receive as part of your divorce is not taxed. There can, however, be other tax implications when you receive capital gains, for example. Your divorce attorney can help you connect with a tax professional who will be aware of how the division of assets will affect you from a tax perspective.

Contact a Divorce Lawyer in Santa Ana, CA

Still looking for answers about your property and divorce? Contact Sarieh Law Offices for a free case evaluation. Our Santa Ana divorce attorneys will help you make an informed decision about choosing the next steps.