During a marriage, a couple can amass a significant amount of assets and liabilities. Dividing marital property during divorce can be quite tricky. The division of property is particularly tricky when there are substantial assets involved, like: a family home, rental properties, vacation properties, retirement accounts, pension plans, stock options, restricted stock, brokerage accounts, businesses, professional licenses and practices, deferred compensation, etc. Deciding who gets what can be a challenge even when couples can avoid falling into the trap of contentious litigation. When the situation does escalate to a high conflict divorce case, the division of property can become even more complicated.
Some assume assets are divided based on their current dollar value, but during the division of assets, the short and long-term financial benefit of the assets needs to be considered. Understanding the benefits requires a thorough understanding of each of the marital assets (the liquidity, cost basis, tax implications associated with the sale of the asset, etc.)
One area that is rife with misunderstanding is defining property as either Marital Property or Separate Property.
Separate Property generally includes any inheritance received by one spouse (either before the marriage or after the marriage), a gift received by one spouse from a third party, property owned by one spouse before the marriage, settlements received through a personal injury judgment, etc. Separate property can lose its status as “separate property” if it is comingled with marital property.
Marital Property is all other property acquired during the marriage that does not count as separate property. It does not necessarily change the status as “marital” property if one spouse owns the property. It does not matter how property is titled. All property acquired during a marriage is typically considered marital property, no matter which spouse is listed as the owner or whose name is on the title. Marital Property generally includes any income and assets acquired by either spouse during the marriage in either spouse’s name including: pension plans, retirement accounts, 401ks, IRAs, deferred compensation, stock options, restricted stocks, bonuses, commissions, country club memberships, annuities, life insurance, brokerage accounts, bank accounts, businesses, real estate, tax refunds, limited partnerships, professional practices and licenses, etc.
California is a Community Property State or an Equitable Distribution State. Community Property states consider both parties in marriage as equal owners of all marital assets.
If you need help filing for an Orange County, California divorce, or if you need to discuss how to negotiate the division of property, please get in touch with one of the experienced family law attorneys at The Maggio Law Firm today.