Property in a Divorce means assets and debts. Deciding who gets what. In California determining Property Division, is a four step process. Step One is listing every asset and debt the parties have. This is a tedious and frustrating job, particularly if they’ve been married a long time. Happily enough there’s a mandatory preprinted form, called the Schedule of Assets and Debts, which is quite helpful. Assets are listed first, by category, starting with real estate. Debts are listed second, starting with student loans. Most of the categories have italicized instructions. For bank accounts, insurance polices, and credit cards, for example, you must attach your most recent statements, and for real property copies of deeds as well. The Schedule is like a balance sheet with backup materials. We will help you (and often push you) to get this done.
There are columns on the right hand side of each page of the form. If you believe that a particular asset or debt is separate property, “P” for Petitioner or an “R” for Respondent goes in the first column on the same line as the asset or debt. The second column in the asset section and the third column in the debt section are for the date of acquisition or the date incurred, the basic tests of whether assets and debts are separate or community property. Two more columns in the asset section are for fair market value and the amount owed on the asset. The debt section has only one more column for the amount owed.
Step Two is deciding whether an asset or debt is indeed community or separate property, as the client believes it to be. Community property is all property acquired during marriage by either spouse or both of them. Separate property is property owned by a spouse before marriage, or acquired by a spouse during marriage by gift or inheritance.
Frequently one spouse has a right of reimbursement for separate property contributions to community property for its acquisition or improvement, or a portion of separate property has become community property because of community property contributions to separate property. We can help you resolve separate property issues which is frequently an extremely difficult and a time consuming process requiring our diligent investigation and all of our experience, as well as our detailed knowledge of the law.
To determin accurate property division in a divorce, each party must prepare a Schedule of Assets and Debts and serve it on the other party as part of a Declaration of Disclosure. This is supposed to happen twice, once at the beginning of the case and once just before resolution. Ideally the information on the first (or “Preliminary”) Schedule is a ‘snapshot’ as of the date of separation. That makes possible the equal division of liquid community assets when the case is resolved, as well as debts. If the parties had $10,000 in a savings account on their date of separation, each should get $5,000.
The second (or “Final”) Schedule is a snapshot taken when the case is close to a settlement conference or trial, and used to finally the case. It makes possible the calculation of reimbursements from one party to the other depending on what has happened to the liquid assets and the debts, since the date of separation. For example, one party may have withdrawn $4,000 from the savings account, leaving $6,000. At the time the case is resolved by settlement or trial, each party will receive $3,000 from the account, while the party who withdrew $4,000 in the interim must reimburse the other $2,000, so they come out even at $5,000 each.
Step Three in accurate property division is determining the value of tangible assets like real estate, and intangible assets that do not have a readily ascertainable market value. These are divided at their value when the case is resolved, not their value on the date of separation. If the parties cannot agree on their value, these assets must be appraised. A third variety of reimbursement may be required when one spouse continues to reside in the family home after separation, say for10 months while paying the mortgage. The home could have been rented for $400 per month more than the mortgage payment, so the parties have lost $4,000. The spouse in the house must reimburse the other spouse $2,000 to be even.
In practice most Preliminary Schedules of Assets and Debts are incomplete and show amounts not on the date of separation, but months later: and when cases settle, Final Schedules are usually waived. This means a tremendous amount of time and effort on our part obtaining copies of account statements from the date of separation forward, calculating reimbursements from one spouse to the other and vice versa, and so forth. After we’ve done all that, we finally arrive at the fourth step.
San Diego Divorce Attorney Stanley D. Prowse is a California Certified Family Law Specialist. We welcome your legal inquiries.