California is a community property state, which means that property, assets and debts acquired during marriage are considered the joint assets and responsibility of both parties. What this means is that unless there was a prenuptial agreement signed, both parties can generally expect to split the assets and debts during a divorce.
Before assets and debts can be divided, both parties have a duty to disclose their assets and debts by penalty of perjury. This enables both parties to have an accurate understanding of what assets, debts and other instruments comprise the marital estate. There are severe penalties for attempting to hide and asset, such as fines and even possibly the surrender of 100% of the non-disclosed asset.
Once an asset is disclosed in a dissolution, the next step is to characterize the property as separate property or community property. This is not always straightforward as there are assets that are acquired prior to marriage that are considered separate property, but during the marriage the community pays down the mortgage or adds to the value of the asset. Therefore at this juncture, experienced counsel can ascertain whether there are reimbursements that need to be accounted for and in complex cases, a forensic accountant can be utilized.
As stated above, generally speaking assets acquired during a marriage will be split evenly upon dissolution. This is relatively easy when it comes to cash holdings, but what about a business? How do you arrive at a value for a business and then figure out how to divide it? This is one of the more complicated scenarios that arise in a divorce, but it is also a common scenario because Americans are known to embrace the entrepreneurial spirit and therefore small business owners are a plenty as there should be.
When it comes to complicated asset divisions, Dream Law Attorney Sanjay Paul will consult with an expert who can arrive at a valuation for the business and then we can present the parties to a divorce with options. One party can offer to buy out the other person’s interest in the business and this is generally the most common option. However, arriving at a valuation for the business is an art and the right experts must be consulted and designated.
Similarly, with retirement accounts and pensions, Dream Law attorney Sanjay Paul will often advise clients to obtain a Qualified Domestic Relations Order (QDRO) to divide any pensions or retirement accounts.
Every divorce is different and Dream Law attorney Sanjay Paul will discuss various strategies with you to divide assets and debts, including thinking outside of the box.
The aforementioned is not intended to be legal advice. Contact Dream Law attorney Sanjay A. Paul, Esq. for a consultation on the facts of your case.