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Dividing property and debts in a California divorce

On Behalf of | Jan 25, 2018 | Firm News, Property Division

The California legislature presumably decided to make property acquired during a marriage community property to simplify divorces. This choice often has the intended outcome, but many divorcing couples still run into problems in negotiating property division issues.

Every divorcing couple in California must file Form FL-142, a complete list of the couple’s assets and debts. Completion of this form often helps a couple identify areas of disagreement about the value of their community assets, but it may not help the couple divide these assets equally. Even community assets must be given a value to ensure that they are divided equally.

A necessary first step in this process is reaching an agreement on the value of the couple’s assets. The value of some assets, stock and real estate, for example, may change over time, and the timing of a valuation may have a significant effect on the value attributed to some assets. The expert advice of an accountant or actuary may be necessary to properly assign a monetary value to one or more assets.

Even if a couple agrees on the value of their community property, division may require converting one or more assets to cash. Division of this type almost always requires that the asset be sold, and the timing and terms of a sale may have a significant impact on the value of the asset in the divorce. Again, expert advice may be necessary to ensure that the most value is received for the asset.

Dividing debts can be even more fraught with peril. Credit card debts owed to different card issuers can have very different terms for repayment. The terms of each card used by the couple should be thoroughly understood before the card balance is divided or assumed by one of the spouses. Cash obtained from the sale of assets can often be used to pay or reduce community debt.

Source: The Judicial Branch of California, “Dividing Property and Debts in a Divorce,” accessed on Jan. 22, 2018