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Divorce - Division of Assets

Division of Assets and Debts

All “assets”, in other words, property, purchased during the marriage are presumptively community property, and will be divided equally, unless the spouse not wanting equal division proves that it is his/her separate property. If an asset which was acquired during the marriage was acquired by gift or inheritance, it is the separate property of the spouse who received the gift or inheritance. Spouses are also entitled to offset their separate property portion of an otherwise community asset. For instance, if the spouses purchased a piece of real estate during the marriage with a current market value (the court looks at the market value as close to time of trial as possible) of $225,000, and a debt of $150,000, the property’s “net” value, or the “equity” in the property, is $75,000 which, in most circumstances, must be divided equally between the parties. If one spouse wishes to continue to reside on the property, and can afford to pay the mortgage, s/he will usually refinance the property and take out the other spouse’s portion ($37,500) to pay the other spouse off that way. If neither party can afford the mortgage payments, they usually decide to sell the property and must divide the proceeds equally.

                If, however, one spouse used $20,000 of their separate property to make the down-payment on the property at time of purchase, s/he is entitled to that $20,000 back (provided s/he has submitted enough "tracking" evidence, that is, a paper-trail leading from the separate property source to the down-payment of the house), plus his/her one-half share in the equity. If the house is sold, the $20,000 comes off the top of the proceeds, before the remainder of the equity is divided so, if the house sells for $200,000 (below the estimated fair market value), let’s say there is about $55,000 left after payment of the balance of the mortgage debt, real estate agent commissions and other closing costs. The separate property contributor receives $20,000 off the top, leaving a balance of $35,000 to divide equally between the spouses.
                Vehicles are valued at Blue Book. Any debt on a vehicle will be subtracted from its Blue Book value. Household items and appliances are valued at fair market value or, garage sale value. Unless the parties can afford a professional appraiser, each spouse is allowed to provide his/her best guess as to the value of the items, and the court will decide what is reasonable. Pictures of the items showing its condition, receipts showing date of purchase, and other evidence are useful to the court. Many couples are able to agree on how to divide household items and appliances, and the courts encourage the parties to do so. Courts are very reluctant to spend valuable time, and the parties’ money on attorneys, going item by item to arrive at a fair valuation or division. It should be kept in mind that if one spouse is found to have received more value in the property than the other spouse, the spouse who earned less value in the division can request an “equalization payment;” that is, cash compensation in order to equalize the division.
                During the marriage, each spouse’s income is also community property; this includes deferred income, which is usually placed into retirement accounts such as Calpers, 401k’s, IRA’s and so forth. Each spouse is entitled to one-half the income earned in the others’ retirement account(s) from date of marriage to date of separation.
                All debts incurred during the marriage are community debts. There are some exceptions.
              Please keep in mind that the parties are free to agree to some, or any, other division of assets and debts, as long as the agreement is done after "full disclosure" (that is, each party has filed and served a PDD- please see above section on Divorce/Overview), and the agreement is voluntary and not coerced.

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Mary Rafani-Steele
Attorney at Law

204 N. Floral St.
Suite C
Visalia, CA 93291

Phone: 559-636-1445

In Business Since 1994

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Business Associations

California BAR Association