Divorce isn’t just a choice of the heart; it’s a tough financial decision that can impact your credit and finances for years. Thus, it’s important to weigh your options before agreeing to a divorce property settlement. Many times, emotional aspects of divorce can be overwhelming and lead to a hasty agreement. This often results in an uneven division of property and assets, and it can leave one spouse without proper finances or assets. Unfortunately, these types of errors can be tricky to reconcile.
How’s Property Divided?
The first thing most divorcing couples do is figure out a way to divide their assets fairly and come up with a asset protection strategy. This is a crucial part of the divorce process that requires a good understanding of your assets. They’ll be identified as either marital or separate property. Separate property is anything acquired before the marriage, while marital property is anything acquired during the marriage. Separate property is not generally subject to division—what was yours remains yours to keep. Marital property, however, will be divided.
The key is to divide property equally. This can be done in a number of ways. If you each have separate bank accounts and one of them has more money in it, you may want to give additional property instead of money to make it “even.” Keep in mind, you don’t only divide your assets; you divide your debts. This can also be used to offset property division. Maybe one partner gets the bank account with more money but he or she also takes over the car loan.
Are There Special Considerations in California?
There are nine states in the U.S. that recognize community property as a form of co-ownership. California is one of them. In general, community property is virtually the same thing as marital property: it was acquired after the marriage and is therefore owned jointly. However, there are some cases where California may treat separate property as community property. The state also considers all total earnings between both spouses’ community property subject to division.
How’s Divided Property Taxed? What About Debts?
Before deciding on property and asset division, it’s crucial to understand relevant tax implications. If property is transferred as part of the divorce decree, it shouldn’t be subject to gift tax. If, however, property is transferred one year or more after the proceedings, you may end up having to pay tax on it! That’s why it’s important to get it right the first time.
You’ll also need to determine who will claim any children on tax filings. Claiming a dependent child has significant tax benefits, so it’s important to figure this out early. If you both claim your children, you could be subject to a tax audit. You should also take into consideration any debts the two of you have together. It’s possible to establish terms of repayment within the divorce decree. For example, your spouse may agree to assume control of a specific credit card and its payments. It’s important to remember that credit card companies can still come after you if the former partner is late on a payment. This is one of the reasons why working with a San Diego divorce attorney is so important.
Experienced Divorce Attorneys in San Diego, CA
Dividing property and assets can be an extremely complicated process. It’s best to work with an experienced mediator or attorney who will help identify the asset values and debts and divide them accordingly. Boyd Law works with clients in San Diego, California, and the surrounding areas. Our San Diego family lawyers are exceptionally experienced in complex division of property and asset cases and can help you identify how to fairly divide your property. Contact us today for help with your case.