Depending on your state’s system of property division, keeping your property can come with a cost. Most states use an “equitable” system, where the court attempts to give property to the most deserving spouse. Under this system, it’s easier to simply keep what’s yours without further obligations.
Far fewer states use the “community property” system. California is one of these states. Under this system, courts attempt to give each spouse 50% of the overall marital assets. This means that keeping property can leave you with unresolved obligations to your spouse.
Here are some factors that will determine whether keeping property will cost you later.
The Property May Not Be Yours
The community property system designates certain property as either “marital” or “separate.” Separate property originates from outside the marriage. For instance, property you inherit is meant for you alone, so your spouse has no claim to it. The same is true for gifts from people outside the marriage or anything you owned before the marriage.
Anything you purchased during the marriage, however, is a different story. This is marital property. Technically, all the money you bring in or use while married goes toward the benefit of your family. This means that when you buy a magazine, your spouse is part owner of that magazine.
Ultimately, you may consider something “your” property, but fifty percent of it may belong to your spouse.
You Pay for What You Keep
Consider the fact that you and your spouse co-own 50% of the marital assets. Now imagine keeping one of those assets, like a sports car. You can’t simply walk away with the automobile. Your spouse is part owner, and you need to buy their portion of the car.
Therefore, in California, you owe your spouse 50% of the value of any marital asset you keep. If that car is valued at $150,000, you must give your spouse at least $75,000 for it. This means you (or the court) must get creative when dividing assets.
If you have the means, you can pay your spouse outright for any property you keep. The court may ask you to pay it all at once, or you may be able to make a deal for a payment schedule.
Your next option is trading physical assets. If you still owe your spouse $75,000 for the car, you can give them property that adds up to that value. This could mean letting them have the jewelry, expensive artwork, or anything else that levels out the trade.
Sometimes, neither of the above options works. You may not have enough property to trade or money to spend, and all of your property’s value is tied up in the property itself. That sports car, for instance, may be worth $150,000, but that doesn’t mean you have $150,000 on hand to spend. Unfortunately, in situations like these, you may have to sell valuable property and split the profits evenly with your spouse.
Getting Help from Legal Professional
With the help of a good attorney, you can better untangle these commingled assets. They can help you find fair solutions for dividing property while helping you keep what is rightfully yours. Your lawyer may even be able to negotiate for a more equitable, or fair, division of assets.
You can also consider avoiding court, thereby avoiding the need for a 50% split. Through mediation, you can negotiate directly with your spouse. This process allows you to make agreements together without the need to obey the decisions of a disinterested courtroom.
If you’re concerned about losing property in your divorce, contact our firm for a free consultation. We may have options that can help you. Our number is (916) 571-1550, and you can reach us online.