In the time since your marriage began you have no doubt accumulated a considerable number of new assets, like a new family home, vehicles or a business you’ve built together. Now, with your marriage coming to a close, how to settle your high asset divorce is as confusing as it is stressful. Everything you have accumulated while married will need to be sorted and divided evenly; this is the time to be thinking about protecting yourself and preparing for your best future.
Community property
In California, community property is any income or asset that was acquired during your marriage. By law, you and your spouse must divide all community property evenly between you, unless you have a prenuptial or other written agreement stating otherwise.
Your assets are divided by calculating their total market value, then splitting that amount between the two of you. This includes everything from homes and vehicles to pensions and businesses.
Like other assets, the value of pensions, businesses and property are evaluated by the amount they have increased in value since the marriage began. Therefore, a properly worth $250,000 when you were married that is now worth $400,000 represents $150,000 worth of assets to be divided.
The value of an asset, not the type of asset, is taken into account when dividing community property. It is not uncommon in these divisions for one person to be awarded a home and vehicle, while the other is awarded a business of equal value, for example.
Dividing your assets
There is an element of strategy in dividing assets. Knowing what to fight to keep and what to let go of doesn’t necessarily come down to a raw dollar value. You will want to consider what will help you in the short-term and what will give you long-term financial longevity.
You will also need to consider that debt is factored into community property. You or your spouse may opt to take on a large amount of the other person’s credit card debt, for example, but then also receive a piece of property to equalize the asset value.
California is one of only a few states in the US that recognizes community property. There are many benefits to this system, but understanding each of its facets and how to leverage them can be difficult. There are many instances where deciding the value of an asset or what is or isn’t separate property becomes murky. You can maximize your assets and start your new future right with help from a professional.