COMMUNITY PROPERTY
In the midst of a divorce, property division often causes the most tension and disputes aside from child custody disputes. At the Law Offices of Linda S. Gross, we understand the animosity that can arise when determining how to divide your hard earned property. We are knowledgeable about California's community property laws and can explain how these laws will impact your property division.
DETERMINING COMMUNITY PROPERTY
Unless there is a valid prenuptial agreement, California laws dictate how to divide assets and debts upon a dissolution of marriage, separation, dissolution of a domestic partnership, or divorce. Generally, all debts incurred during marriage and unpaid on the date of separation are subtracted from the community assets to create the amount of the net estate. Each party in a divorce is then entitled to fifty percent of the net estate.
Questions arise as to what constitutes the community property of the parties, what the values of those assets are, and how to divide the assets and debts. California law provides that all property and assets acquired during marriage are presumed to be community property, except:
Gifts to one spouse
Inheritance to one spouse
Assets accumulated prior to the marriage and kept separate
Any pension, earnings, or assets acquired after the date of legal separation
Any earnings, accumulations, appreciation, or profits arising from a separate asset
Generally, community property includes earnings during marriage from work andefforts, and property acquired with those funds. Many couples in a dissolution have a home, cars, bank accounts, and perhaps some retirement benefits which were acquired during marriage. These assets must be valued upon dissolution.
Sometimes there is a "mixed asset," that is, one which was owned by a spouse before marriage such as a residence or business, but during marriage the spouse continued to operate the business or used earnings after marriage to invest in the asset such as paying down the mortgage on the residence. Anytime a spouse invests community funds (those earned during marriage) into a separately owned asset, commingling can occur. In a dissolution, it may be necessary to figure out how much of the value of the asset is separate property and how much is community.
Often when spouses purchase a family residence, one of the spouses has savings or inherited funds which they use for the down payment. Under California law, the residence acquired during marriage is community property but the spouse who contributed his or her separate property is entitled to reimbursement for the separate funds they invested in the home.
If a spouse claims funds or an asset belonged to him or her before marriage or was acquired with separate funds, the spouse must "trace" the funds back to the separate property source to show that the funds were, in fact, separate. Linda is skilled in tracing asset trails to prove an asset was in fact kept separate or commingled. Usually a forensic accountant has to be hired by the spouse who is trying to show that he or she has separate funds which can be traced back.