california divorce laws

How’s Your Property Divided During a Divorce? California Divorce Laws Explained

In the United States, about 42-45% of first-time marriages end in divorce, and about 60% of second-time marriages end in divorce.

A healthy marriage is good for physical and mental health. That being said, an unhealthy marriage may harm those things. Life happens, and many times, a divorce is necessary.

But when it comes to dividing up assets, things can get complicated, which is why states each have their explicit laws as to how things get broken up.

As it pertains to California divorce laws, California is 1 of 9 states that enforce community property, the idea that all property acquired in the marriage gets a 50-50 split. But of course, it’s not that simple.

There are many factors and rules that go into determining how things will be divided up. But what are they?

Keep reading for an in-depth look at California divorce laws so that you can better understand how your property will be affected.

What Is Community Property in California?

One of the divorce rules in California, which will affect the way your assets are divided, is called “community property.” The community is you and your spouse. In California, all property or debts that are acquired by either or both parties during a marriage belongs to both parties EQUALLY.

Cars, boats, accumulated income, savings, 401k’s, stocks, bonds, and any other property acquired during the marriage (or domestic partnership) belongs to BOTH parties.

On the other end, all credit cards, mortgages, car loans, and any other debts accumulated during the domestic partnership (or marriage) belong to the community. It doesn’t matter which domestic partner or spouse acquired the income or incurred the debt. It is all equally shared by the two people involved in the relationship.

What Is Separate Property?

The separate property applies to any debt or asset that a spouse or partner can PROVE they acquired BEFORE the marriage. They also may have to prove that they kept it separate throughout the marriage.

Some examples of separate property are as follows:

  • Student loans
  • Inheritances or gifts
  • Property acquired while spouses were living apart
  • Any property using separate funds
  • Any property acquired after a separation

While these are only a few of the many examples of separate property, they are some of the most common.

What Is Transmuted Property?

Transmuted property (or transmutation) happens when the state of property changes during a marriage.

For example, spouses may decide to make community property separate or vice versa. It has to be done using a written agreement, and both parties must agree.

If you don’t have a written agreement, you must be able to use the “tracing principal” to prove how one property went from being a community to separate property, or the other way around. Without this proof or a written agreement, the property will take on its original form.

Without this proof or a written agreement, the property will take on its original form.

Spouses May Agree Not to Have Community Property

Community property happens by default. If there is a prenuptial or postnuptial agreement, spouses can agree not to have community property. They may also agree that only some property is community property.

Either way, all of these transmutations have to be in writing, or else the intentions of both parties are not deemed as being clear.

When it comes to selling a house during a divorce, there is a process that will determine how things are done.

How Are Assets Divided Through Community Property Law?

If you’re going through a divorce settlement in California, and you don’t have any written agreements, your properties and assets will be divided according to the community property law.

Not everything is split down the middle. Any piece of property that is separate, or any debt acquired BEFORE a marriage, will stay with the spouse who acquired them. It will not be subject to division.

Everything that was acquired during the marriage will be split down the middle. So if a married couple can’t agree on who will keep their home, the home will be sold, and profits split down the middle.

There are many challenges every couple will face while going through a divorce and trying to divide up their assets. Not every split will be deemed as fair by each couple, but the only way to make it as fair as possible is to go with the 50/50 split.

How Is Property Value Determined?

How the value of your property is valued, greatly depends on your relationship with your partner or spouse.

If you can agree enough to do so, you and your spouse will put a monetary value on all things shared. From there, you’ll be able to divide everything up in a fair manner.

For many couples, this isn’t possible because each person’s definition of fair is different. The higher earner might think they deserve a bigger cut. One spouse may think it unfair to share credit card debt racked up by the other.

An appraiser helps in these situations because they can factually determine the value of everything – from a house to a painting.

When it comes to retirement assets, a CPA often steps in as things tend to get complicated.

How Is The Property Divided Up?

Spouses may assign certain items to each other. They can allow one spouse to “buy out” their assets or their share of an asset. Or they may decide to sell all their assets and divide all the proceeds.

Some couples decide to share property even after a divorce. For example, a well-to-do husband may agree to let his spouse and kids continue to live in the house, with an agreement that once it’s sold, assets will be divided.

Some keep investment properties with the hopes that the value will increase and an agreement that they’ll sell when it does.

All debts assigned during a marriage must be assigned as well. If the split is amicable, the couple may be able to do so on their own, with the help of lawyers. One spouse may take all the credit card debt while the other agrees to handle the remainder of student loan debt.

It’s important to remember that regardless of what you sign, the credit card companies and other debt holders are not required to be a part of the agreement. So even though your spouse may agree to pay half the credit card debt, if they don’t, the credit companies will still go after you, the other spouse.

Lawyers may solidify an agreement by asking the court to put a lien on one spouse’s separate property as a security measure to ensure repayment of the debt. It’s best to settle everything during the event of a divorce. Leaving assets and properties to sell for later requires divorced couples to remain in financial agreements and a relationship.

If one spouse wants to keep the house, but the other doesn’t have the money to buy them out, they could always ask for a refinancing of the house loan for an opportunity to do just that.

The Courts Will Make It More Complicated

No matter what two parties in a community try to agree on, it’s rare that they both feel as though things are divided fairly.

The best way to settle things is amicably and with the understanding that both parties will take a hit in one way or another.

While the 50/50 law implies that things are split fairly, this is never the case. It isn’t always just about money. One spouse may value their home significantly more than a car. One spouse might value their paintings much more than any furniture.

That’s why it’s best to settle things together so that both parties end up with as much of what they want as possible.

If lawyers can’t get two people to settle and agree on dividing up their properties and assets, then it’ll be left up to a judge to decide.

A judge won’t care which party racked up the debt, or which party wants to keep the boat. A judge will do their absolute best to follow the 50/50 rule.

Even if you think your best option is to battle it out in court, it’s not. A family law judge may leave you with things that neither spouse thinks is fair. While it may be a perfect split, it’s possible that both parties will leave feeling as though things didn’t turn out at all the way they wanted.

The best advice is to settle it with your lawyers so that it doesn’t come to that.

Equitable Mediation Is Your Best Bet

Work with lawyers that have your best interest at heart. Make it clear that you both want to leave with things as fair as possible but that you are both willing to bend a little on things that are more important to the opposing partner.

Despite how much turmoil there may be in a marriage, you’d be surprised at how amicably you can end and divide things if you’re both willing to work with each other and your lawyers.

Only about 5% of divorces go to trial, and that’s because it’s hardly ever the best option.

What If You Don’t Want To Wait for Your House to Sell?

Maybe you’ve decided to sell your house and split the profit, but your divorce will be finalized in just a few weeks. Why wait for months for your house to sit on the market and then even longer to wait for a sale to go through? If you do this, you’ll still be financially involved with your spouse and have to sign documents together, communicate with an agent together, and make decisions together.

If you want to sell your house and split the profits, it’s in your best interest to find someone you trust who buys houses for cash in all 50 states.

How Does It Work to Sell Your Home for Cash?

If you want to sell your house FAST and divide the profits, you can do it in 5 simple steps. First, you’ll go through a quick assessment with the potential buyer. They’ll ask about your situation and explain the process.

Then, an analysis of your house will be done. Potential buyers will take a look at your house, the property, and any history or additional information that may affect its value.

From there, you’ll receive a cash offer at no charge and you can either accept it or deny it. You’ll have time to run it by your lawyer, or anyone else, and whether or not you say yes is up to you and your spouse.

Once you decide to accept an offer, all you have to do is sign the necessary paperwork, and then you’ll receive your cash! It’s that simple and it does grant many couples going through a divorce the peace of mind they were looking for.

California Divorce Laws Don’t Have to Determine Everything for You

California divorce laws are there to protect both parties in a community. When two people can’t, on their own or with the help of lawyers, agree on how to divide up their properties, the court has to get involved.

A family law judge will base all their determinations on the 50/50 law, so you and your spouse may both end up feeling like you got the short end of the stick.

During a divorce, there are so many things going on, and it can be overwhelming. If you’ve agreed to sell your home, don’t add putting it on the market to your long list of to-dos. 

Are you unsure of whether or not selling your house for cash is the best route to take? Take a look at our testimonials and see how others feel. And feel free to contact us with any questions you may have!

 

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