Many people contemplating divorce find the idea of community property division intimidating. They worry that they may have to split everything they own in half with their spouses and may experience significant financial setbacks because of that requirement.
Spouses can potentially negotiate settlements with one another as they prepare for divorce. Other times, they rely on a judge to apply the community property statute to their marital estate. Some property is not part of the marital estate and therefore is not at risk during divorce proceedings.
People often need to identify their separate property early in the divorce process to ensure they can protect it. What resources typically remain the separate property of either spouse after a divorce?
1. Assets addressed in prenuptial agreements
Some people enter into marriage with a pre-existing contract in place. Prenuptial agreements can discuss what happens with various resources during a divorce.
They can also clarify what property may remain the separate property of either spouse. So long as the spouses acknowledge the validity of the prenuptial agreement, anything designated as separate in the contract has protection from division when the spouses divorce.
2. Assets owned before marriage
People May have already owned a variety of assets before getting married. They may also continue accumulating property after legally separating but before they finalize the divorce. Spouses can use financial records to establish that certain assets are not subject to division due to the timing of when they acquired the property.
3. Assets received as gifts or inheritance
Friends and family members of either spouse may make generous gifts to them. People may also include a spouse in estate planning documents. An inheritance or gift usually remains the separate property of the spouse named as a beneficiary.
Occasionally, co-mingling can endanger separate property. Giving a spouse control over separate property or adding their name to ownership documents can potentially complicate the property division process.
Those who identify their separate property to protect those assets as they move forward with divorce may have an easier time planning their finances based on their separate resources. Learning more about the rules that govern community property division proceedings can help those preparing for an upcoming divorce.
