When clients first come to our firm, they are often concerned about what
will happen to their assets when they get a
divorce. They’ll ask, “What’s going to happen to my investments?
My house? My nest egg?” Cash in bank accounts, 401k and IRAs, stocks
and bonds, real estate, land, inheritances, classic cars, entire businesses,
artwork and collectibles – divorce touches on all of these things,
but to what extent?
Often, clients have heard plenty of horror stories...they’ve had
friends who went bankrupt after a divorce. Friends or family who “lost
everything” in their divorce. They’ve heard about divorce
leading to absolute financial ruin, so naturally they’re concerned
about how their heard-earned assets will be affected by divorce. Since
California is a community property state, does that mean everything will
be split 50-50? Most importantly, what can you do to avoid financial devastation?
We have good news for you. When you hire a skilled divorce lawyer, there
is NO reason why your divorce should mean financial ruin. There’s
a lot that a
good attorney can do to protect the bulk of your assets, even if you’re a high-net
How courts in California divide marital assets are fairly black and white
– all marital property is owned equally by both spouses. However,
that doesn’t mean spouses can’t negotiate something other
than a 50-50 split. There’s a lot of room for
negotiation, especially when the settlement can be negotiated
outside of court.
Do You Have a Prenup or Postnup?
For high-net worth couples, it is very helpful to have a
prenuptial agreement in place or at least a
postnuptial agreement. With a prenuptial agreement for example, instead of wondering what will
happen to the marital residence, the vacation home in Aspen, or the fine
art collection, such issues are already sorted out in the prenup and there’s
no question about how these assets would be divided.
If you’re already nearing divorce and you never drafted such an agreement,
it may be too late to do it now. Here is the first thing you need to know
about property division in a California divorce: All marital property
is owned equally by both spouses regardless of who earned it or whose
name is on the title. Separate property however, is not subject to division
in a California divorce. So, what counts as separate property?
Separate property includes:
- Property owned by a spouse before the marriage
- Inheritances received by one spouse before or during the marriage
- Gifs received by one spouse before or during the marriage
Separate property is not divided in a California divorce, with limited
exceptions; for example, when a spouse financially contributed to the
“enhanced value” of separate property during the marriage.
In some instances, separate property can be classified as marital so it
all depends on whether it was co-mingled with a spouse’s money or
if a spouse’s sweat equity or financial contributions increased
the value of separate property.
Marital property on the other hand, is subject to division in a divorce. By law, each spouse
has a 50% share in marital property, which refers to all assets acquired
during the marriage. Marital property includes but is not limited to:
- Cash in bank accounts
- Real estate
- Fine art collections
- Retirement accounts
- Automobiles, motorcycles, boats and ATVs
- Stocks and bonds
California is one of a handful of community
property states. Under California law, if the spouses do not work out a property
division agreement on their own, a California judge will divide their
property for them and in this case, the judge will divide the couple’s
property according to California’s community property laws. Meaning,
the judge will first determine which property is marital and which property
is separate. From there, the couple’s marital property will be divided
equally between the spouses.
If you have substantial assets, you may not want to divide your marital
property in half. You may have other ideas. The only way to maintain the
best possible amount of control over the process is to negotiate a fair
settlement outside of court. Because once your case is forwarded to a
judge, you have no say in the matter. Not only do you lose control, but
you spend more money because divorce litigation is a lot costlier than
a collaborative divorce.
Divorce litigation sounds intimidating because it is. You’re leaving
your hard-earned assets in the hands of a judge who doesn’t know
you, who doesn’t know your spouse, or what led to the dissolution
of your marriage. In fact, the looming threat of divorce litigation is
one key reason why you need a good divorce lawyer who will be your advocate
and negotiate a fair settlement on your behalf.
When Does Court Become Necessary?
Ideally, you and your spouse will be able to negotiate a fair divorce settlement
that you can both live with. However, not all divorces can be negotiated
out of court and there are times when a client of ours has no other choice
but take their spouse to court.
If your spouse has been physically abusive, or if they refuse to cooperate
or negotiate, or if they are lying, hiding assets, attacking you personally,
insulting you, escalating demands, constantly delaying things, withholding
money, or denying you access to your children, chances are you have an
adversarial divorce and court may be your last resort.
When you’re left with no choice but to go to court, you need a skilled
divorce lawyer fighting in your corner, and our attorneys at Claery &
Hammond, LLP are highly skilled at both collaborative and adversarial
divorces. For expert advice,
contact our firm today.
Who Gets the House in a California Divorce?