Divorce is often complicated. You’ll have to consider splitting up property and marital assets. The law varies depending on where you live. In some states, there are specific laws regarding how property gets divided. For example, in California, the property is usually split 50/50. However, if one person earns substantially more money than the other, they could be awarded more than half of the property. In addition to a property, marital assets include everything else that belongs to both spouses. These items might include vehicles, bank accounts, retirement plans, real estate, and clothing. Some states require that each party receive equal value in the division of marital assets. Other states allow judges to award whatever amount they deem appropriate. Divorce Attorney in Upland CA
If you are deciding whether to file for divorce, it’s best to get legal advice from a divorce attorney at the Law Office of Stephen Gassner. We will protect your interests and guide you through the legal process.
How Assets Get Divided in a Divorce
Divorce is a stressful process, especially when there are children involved. When couples separate, one spouse often feels like they deserve more than the other. This leads to arguments over how much each party should receive. Let us take a look at how assets get divided in a divorce. Divorce Attorney
Marital property includes things such as bank accounts, vehicles, retirement plans, retirement accounts, pension plans, and real estate. Such property acquired during the marriage is also called a marital estate.
The length of the marriage, the presence of children, and whether one spouse had a job outside the home are some factors the court considers when deciding how to divide the marital assets. Some courts even consider the income earned during the marriage. For example, if a husband earns $100,000 per year while his wife stays home, the judge might decide that she needs to contribute to the household expenses. This is the principle of equitable distribution. Marital debts are also included in equitable distribution. Divorce Attorney
Laws regarding marital property, which is also known as community property, apply in the state of California. This means that both spouses are generally assumed to own equal ownership of any property obtained during the marriage by either spouse. In addition, the Family Code Section 2550 requires the common estate to be divided equally when it comes time to divide all of the property at the time of separation. This means that the court must ensure that the split of common assets and debts is exactly 50/50, absent a contrary agreement between the two parties.
Community property does not include gifts or inheritances that one of you got while you were still married or other non-earned property. Student debt, which refers to loans taken out to pay for one spouse’s education or training, is typically regarded as that spouse’s separate property. That spouse will be accountable for paying off their student loans after your divorce.
Separate PropertySeparate property includes personal property acquired during the marriage, including jewelry, furniture, clothing, and household goods. Separate property is often excluded from the property division in a California divorce. Depending on how it was initially acquired, an asset may or may not be a married person’s separate property.
Separate Property Vs. Community Property
In summary, any asset only owned by one spouse is considered separate property. Conversely, any property both spouses possess equally is considered community property (typically acquired during the marriage).
Complications will likely arise. For instance, if you have a mortgage on a separate property and pay the mortgage with community property during the marriage, if you and your spouse make improvements to the property while you are married, or if you combine separate property and community property (for instance, in a bank account or stock portfolio).
List of Divorce Assets
To fully comprehend this list of assets that the divorce settlement could impact, consider the following important considerations. Even if you or your spouse own something on the list, you must first determine if it is marital property, separate property, or a combination of both before discussing how you will divide it. How your marital assets are shared in a divorce or legal separation will be significantly influenced by the type of divorce you choose.
A marital home is the most typical asset in a divorce. However, there are a lot of other things that must be decided upon and shared during a divorce. Each case has its own complexity. Consider a vacation home as an example. Vacation houses can be a source of wealth, income, or both. The same applies to assets that provide revenue, including farms, rental homes, and commercial real estate. What if a family member, such as your father, resides in a rental property you own? The house appears to be an asset on paper, but if you pay all the expenses, it can actually be a debt.
Remember other unrelated assets from the divorce, like timeshares, undeveloped land, and deeded parking spaces. These aren’t “real estate” in the conventional sense, but despite the difficulty in estimating their value, they may nevertheless be valuable.
You have at least one checking account and, conceivably, a savings account. These are known as liquid divorce assets. Bank accounts, unlike real estate, are typically simple to liquidate. But depending on when you get paid and when your payments are due, they can be challenging to evaluate and divide. For instance, these accounts’ balances can be high the day you begin the mediation process but seem different the day your divorce is finalized. Other accounts, such as credit unions or money market accounts, might need the account holder to be an employee of the business, practice a particular profession, or have a brokerage account.
At least one of these marital assets is likely owned by you or your spouse, but determining the value of a car can be challenging due to various criteria, including mileage, vehicle type, condition, utility, location, and operability.
For instance, the value of automobiles and trucks may be much lower than you believe because the resale market is relatively small, and the financial commitment is rather significant. However, some assets, such as motorcycles, boats, RVs, campers, and even airplanes, may be “by default” given to one spouse, leading to an unfair distribution of property.Lastly, some vehicles, such as luxury bikes, jet skis, or snowmobiles, can only be utilized in particular situations.
Traditional Non-Retirement InvestmentsMore people than ever own non-retirement investments thanks to the broad appeal of brokerage websites. However, tucked away beneath those user-friendly apps, websites, financial records, and vibrant quarterly reports are some difficulties, including cost-basis, capital gains, tax losses, and volatility that, if you’re not careful, can make separating these divorce assets arduous (and expensive). Moreover, even if their values appear to be the same on paper, not all investments are equal. Therefore, what would appear to be a fair division at the time of your divorce might be anything but.
Non-Retirement Investments Paid by the EmployerOwning restricted stock units (RSUs) can be lucrative, but discussing and dividing them is more complex. Even if the shares or options haven’t vested, value, transfer, and taxation issues must be settled at your divorce. Additionally, you must determine (and agree) whether the RSUs are a perk for sticking with the company or a reward for a job well done.
Alternative Investments Not Linked to Retirement
Although each of these investment strategies is distinct in its own right, they are all unsuitable for beginners. Some are influenced by factors that are out of your control, such as political unrest, monetary policy, or severe weather. Others may be a mystery since they aren’t traded openly or demand significant investment. If you have most of your assets in one or more of these financial entities, your divorce may become complicated.
Term Life InsuranceBecause it has no value unless the policyholder dies, term life insurance is not regarded as a divorce asset. However, whole life insurance may have a “monetary value” that the policyholder may withdraw. But doing so may not be optimal since liquidating whole life insurance can result in surrender fines and force you to cancel the policy if you dip into it.
Other People’s InvestmentsThe majority of the assets in a divorce belong to the people involved. However, occasionally an asset may belong to someone else. Such is the situation with UTMA/UGMA accounts or 529 plans that benefit your kids. But now that they can’t be sold for your benefit, you might argue that they aren’t even marital assets.
Personal Entertainment – Related Digital AssetsMany consumers still possess digital assets like sizable mp3 music collections or movie downloads despite the development of streaming services. These digital data may be worth a lot because it may be expensive to replace them if just one spouse in the marriage keeps the original.
Digital Assets Related to Travel and Leisure
If you or your spouse travel a lot or eat out frequently, there’s a good chance you’ve accumulated many loyalty and reward points during your marriage. There are several factors to consider regarding divorce and digital assets for travel and recreation. Divorce Attorney
Web-Based Digital Assets
Determine whether these should be regarded as divorce assets if you or your spouse used marital finances to start a website, blog, or Instagram account, register a domain name, or gather subscribers or followers that may be converted into a passive income stream.
Digital Assets with Intellectual Property
The intellectual property of creators and inventors can generate large profits. Additionally, suppose you have a patent that can be turned into money in the future or are presently receiving royalties from something you invented and licensed. In that case, these could be regarded as assets, income streams, or both in a divorce.
Digital Assets for Artwork
It’s customary to think about assets that are either physical, like a car or house, or, at the very least, have monetary worth, like a stock or bond. Digital photos may not fit into one of these categories, but that doesn’t imply they are worthless as marital property.
NFTs, on the other hand, are digital works of art that may be purchased or sold using a cryptocurrency. It could be challenging to evaluate and exchange them during a divorce because the market is young, and ownership is restricted to a single, particular person. But if either spouse has one, it must be taken into account when calculating divorce assets.
Qualified Defined Contribution Plans: Retirement Investments as Divorce Assets
Other than marital property, retirement accounts may be the most significant divorce asset. However, unless you want to take an early withdrawal and pay penalties and taxes, this type of account won’t be liquid when you divorce.
Treating a qualified defined contribution plan as a marital asset requires careful handling and execution because it is titled to one person, its value changes frequently, and special paperwork must be created and approved by a judge to divide one.
Plans with Qualified Defined Benefits:
Since a pension promises to provide retirement benefits in the future, how do you value and split one if you’re getting divorced right now?
Furthermore, how can non-pensioners ensure their portion will be available when they retire? A pension is one of the most complicated divorce assets because corporate, government, and military pensions are all regulated differently, some require mandated contributions, and additional paperwork is necessary to secure their availability and split.<
Person-to-Person Retirement Account:
Although IRAs and 401(k)s are tax-deferred retirement accounts, IRAs have different documentation requirements to be divided in a divorce. As a result, they may have a further tax treatment than a 401(k). Additionally, because IRAs can contain non-traditional investments, their risk profile may be significantly higher.
Investments for Retirement Based on Insurance:
A lump sum can be invested in an annuity today in exchange for a lifetime stream of payments. However, an annuity’s value as an asset in a divorce is exceedingly challenging because payments may have yet to start, and you are unsure how long they will last.
Personal Property List of Assets in a Divorce
Household ObjectsWhen determining the value of household items as divorce assets, it’s more important to consider what it would cost to replace them. Don’t forget about the cutlery, linens, towels, and other “things” you’ll need to start separate residences, even though many divorcing couples only consider expensive items.
Jewelry and ClothesIf an item was received as a gift, clothing and jewelry are typically not regarded as divorce assets. However, you and your spouse may opt to sell it and split the money if you no longer want anything, such as your wedding rings or a fashionable handbag one of you gave the other. However, it occasionally occurs, which is why it was included in the list.
CollectionsEven a little collection of guitars or a few bottles of excellent wine might be valuable, even if you don’t consider yourself a collector. Additionally, if it is a legitimate collection, you should get it professionally appraised because collections can be extremely valuable.
Personal AmusementPersonal entertainment products like LPs, CDs, and DVDs might be valuable as divorce assets because you avoid a replacement expense, much like digital versions.
Divorce and business ownership bring a new set of challenges regarding property splits. Whether you or your spouse is a business owner or has shares in another company, the challenges surrounding the list of business assets in divorce that need to be reviewed and resolved are significant.
Everything Else That Might Qualify as a Marital Asset
As the name suggests, anything that we have come across in our years of practice and needed help to fit into one of our other categories is covered in this area.
Frequently Asked Questions
Can You Get Divorced Without Splitting Your Assets?Yes, you might be able to get a “status-only” divorce, in which case the judge will issue a divorce decree that formally dissolves your marriage but doesn’t make any decisions regarding the division of your marital assets or debts. When one spouse asks for it, a court in California may conduct a separate hearing (sometimes known as a “bifurcated trial”) solely for the purpose of approving a status-only dissolution of the marriage.
Why You Shouldn’t Leave the House in a Divorce?Leaving the house might significantly impact your divorce in terms of child custody. This is because you spend less time with your children when you move out. This could undermine not only your relationship but also your parental custody case.
Who Takes the House in a Divorce?Your assets should be split equally between you and your spouse. This also applies to the marital house, even if only one person was involved in its acquisition. The distribution of assets typically considers each person’s individual financial needs.
California Divorce Law Firm that Will Represent You
If you think you need a divorce attorney, please give us a call, and we’ll walk you through the procedure. If you have any concerns at all regarding how to begin a divorce, the advantages of settling before filing a complaint, or any other aspect of the procedure as applied in California, then get in touch with our skilled divorce attorney at the Law Office of Stephen Gassner immediately for a consultation of our divorce attorney and case evaluation.
Looking for a Family Law Attorney in California, USA? Look no further the Law Office of Stephen Gassner can help you with different family law issues, including divorce, property division, paternity, child custody and support, spousal support, visitation rights, and property division including the complex division of business property. We serve in the following areas of California, USA.
324 N Mountain Ave, Upland, CA 91786, United States