As a community property state, California law states that all property accrued in the duration of a marriage must be divided as close to evenly as possible during a divorce. Anything a spouse brought to the marriage, received as a gift, or got after the parties separated is considered separate property. In the case of no legal written agreement being made between the couple about a division of the property, the law says that community property is split 50/50.
Unless another agreement was made, each spouse will earn an equal share of the net community estate. A net community estate is defined as the market value of the community estate after debts are subtracted.
In the California Family Code, sections 760 and 771 lay out the laws dealing with community property and what happens with it in the divorce. A judge takes into account the possession of property, along with each individual’s wages and the duration of their marriage when dividing the community property. An agreement made prior to marriage, called a prenuptial agreement, can be used to decide who gets what property in the case of a divorce. Without such an agreement, California community property laws go into effect to decide the division of the property.
All accumulations of pension, retirement, profit sharing, and other benefits made during the marriage are considered community property. These assets accrued are then part of the equal division. Benefits obtained prior to the marriage are considered separate property and do not get divided. Should they decide they want to, the beneficiary of the retirement plan can try to purchase the amount of the community interest of the plan from their spouse. If this is not a possibility, the court can decide how each spouse will get the proper amount of the benefits when they are paid.
The business or practice is considered community property. This aspect of the settlement is possibly one of the greatest burdens for the couple involved. The difficulty in determining a business’s worth is primarily due to an evaluation of “goodwill.” This intangible value is a complex figure since it is attempting to predict the future growth and expectations for the business. Whether a business can be sold on the open market or not, it still has a goodwill value.
This can be a confusing concept for many business owners. Many people do not understand that a business has a goodwill value, even if the business is not currently running.
California law determines a business’s goodwill value by saying that it is a going concern. The law assumes businesses will continue to run and they will not lose customers that would have been lost had the business been sold. Public accountants and appraisers are hired during this period to come up with a value of the business or practice.
If children are a part of the divorce, the parent with primary custodial rights is typically awarded the home along with the children. This lasts for a period of time after the divorce, and during that time the spouse with the home will generally have to pay for things such as the mortgage, property tax, and insurance on the home.
Unless the couple has children, a property settlement agreement can sometimes be the only negotiation required for a divorce. This settlement states what happens with the couple’s house, their retirement assets, property, and their debts.
Some people elect to write their own property settlement agreement. This can work in some cases, but it is not the wisest approach. An attorney can ensure that everything is properly worded and each side gets their fair share. If you write your own, there is a greater potential of miswording something and causing problems in the future. Mistakes in the property settlement agreement may lead to one party making claims against the other’s property.
Many couples stumble upon unresolved problems when they attempt to write their own settlement agreement. The slightest dispute can cause a court to nullify your agreement.
This fact is vital: both parties must agree with every aspect of the agreement for it to be legally legitimate.
It is wise to seek professional legal help to ensure you are receiving everything you deserve. We’re just one phone call away. Get in touch at (951) 749-5863 today.