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Can One Spouse Sell Community Property Before the Divorce is Final?

On Behalf of | Sep 26, 2019 | Divorce, Property Division

The division of property is one of the essential elements of the divorce process. The first step is classifying the property by type, which defines how it is handled during the division of property. Properties are typically considered either separate property or marital property. (In some cases, there may also be what is called divisible property which is a category used for income-producing properties or properties that change in value after the divorcing couple separates).

Separate Property

Separate property refers to property that is owned by one of the spouses before their marriage. This category can also include property that one spouse received as a gift or inheritance from a party outside the marriage. The spouse who owns separate property can generally manage it according to their wishes, including selling it or giving it away.

Marital Property

Property acquired during the marriage is marital property and is subject to equitable distribution by the court during the division of assets. Marital property can be divided in two ways: by agreement or by the court. If the court is handling the division of property in a California divorce, their goal is to split property fairly and equitably between the two divorcing parties. In some cases, this means a 50/50 split, but the court may decide some other form of property division is a better reflection of what is fair and equitable in a particular case.

Can My Spouse Sell an Asset to Keep it Out of the Division of Property?

Parties involved in a divorce cannot decide to sell an asset (designated as marital property) to avoid an equitable division during their divorce. If one spouse does sell a marital asset before the division of property, the proceeds of the sale would then become marital property. History has also shown that the court does not look favorably on attempts to avoid their responsibility to distribute assets equitably. Spouses must always be cautious when considering transferring property during a separation period. Some adjustments are necessary when preparing for a divorce. For instance, updating beneficiary designations or selling jointly owned assets that both parties agree are not necessary. Just remember that marital property is under the court’s jurisdiction.

If you are selling, transferring, or making significant changes to assets considered marital property, make sure you are not infringing on your spouse’s rights. Before you make any significant changes to your finances or your marital property, get in touch with an experienced divorce attorney at Maggio Law today. We can answer your questions and offer you guidance as you seek the best outcome in your California divorce.