Depending on the state you live in, there are generally two basic methods of dividing assets in a divorce: equitable distribution and community property. California is a community property state, which means the court will divide the couple’s community assets equally. Any asset obtained or income earned during the course of the marriage is considered community property unless other agreements have been made, such as a prenuptial agreement, or some particular exception to that characterization exists in the law.
However, certain assets, called separate assets, that are obtained during the marriage will typically not be included in the community property estate. Two common examples of separate assets acquired during the marriage that are generally not considered part of the community estate include gifts and inheritances. In addition to gifts and inheritances, anything acquired or owned before the marriage and anything acquired after the parties separate are also separate from the community estate.
When assets are divided and distributed in a divorce, they are not al divided “in kind.” Instead of physically sawing your favorite armchair in half, the court will consider the fair market value of the assets, which are of course included in the calculation of the community estate. Thus, assuming that both of two assets are of equal value, one spouse may receive one of them (for example the family home), while the other may receive the other (in this example the family business); the actual asset doesn’t need to be divided equally, only the cash value of the assets. Even so, it can be difficult to divide assets to which both parties may have an emotional connection, and the division of these contested assets is often a source of conflict during a divorce. Don’t be surprised if your spouse suddenly takes an interest in your prized collection of figurines, not because he or she wants them; rather, to use as leverage to get something they want.
While the division of community property itself is a relatively straightforward calculation, some assets can be difficult to value. For example, a family business that was owned by one spouse before the marriage, but that grew during the marriage can pose unique problems. In these cases, it may be necessary to hire an independent appraiser to come up with an accurate valuation.
Calculating and dividing the community estate can be a complicated and time-consuming process, especially in high net worth marriages and those with business interests. If you have specific questions about the division of assets or are wondering what you might be entitled to in a divorce, contact an experienced divorce attorney to assist you through this process.