Next to the emotional trauma of going through a divorce litigation, the court fights over marital property rights can be the most tantalizing experience for divorcing parties. Before dividing the parties’ properties, the courts must go through careful analysis and apply, albeit with varying levels of discretion, certain criteria defined by statute and case law.
Simple property questions often have complicated legal answers and interpretations in court, leaving parties with disappointment, anger, remorse, and most importantly irreparable emotional and financial harm. The analysis starts with determination and characterization of the type of property at issue. According to California Family Code, all property acquired during marriage by a married person domiciled in California, is “Community” property unless it qualifies as “Separate” property. Separate property is usually referred to as what is owned before marriage, through gift or inheritance during marriage, or after the date of separation.
Complications can arise when parties, upon divorce, realize that they have intentionally or unintentionally commingled, transmuted, or in some other ways changed the character of the property from separate to community or vice versa. Matters can be even more complicated if parties disagree on date or manner of acquisition of a property, or when a property is acquired outside California, or during a period of separation. Special rules apply to characterization of certain types of property such as employment related benefits, life insurance policies or injury/disability related recoveries. The next step in the process is valuation of marital property, often necessitating use of experts such as realtors, forensic accountants and business valuation professionals as the case may be. Finally, the general rule that marital assets and debts be divided equally is subject to many exceptions, and the court’s calculation of offsets and credits for separate and community property contributions may be different than the parties’ expectations. All of this can tie up a property fight in court for months if not years, often depleting the very assets over which the parties were fighting! So be wise, be smart, and explore all your options before resorting to protracted court litigation.