When a California couple decides to end their marriage, they must face the question of how to divide their property. Most states use the "equitable division" method in which the property is divided in a way that is fair to both parties. California recognizes two kinds of marital property: community property and non-marital property. Community property must be divided equally between the spouses, whereas non-marital property is awarded to the spouse who owns it. The rule is simple enough, but its application can be complex.
One of the most difficult questions to answer in any California divorce is the treatment of accumulated benefits in retirement plans belonging to one spouse or the other. If the benefits are fully vested, that is, the spouse who earned the benefits owns 100% of all benefits to which he or she may be entitled, the couple can include the fully-vested amount in their calculations of the property division. But what happens to benefits that are not fully vested?
In most Sacramento divorces, the largest or second largest asset is the retirement plan of one or both spouses, and dividing the assets in a plan can become complicated. All income earned by a retirement plan after the marriage took place is deemed community property, and state law requires that it be split equally between the divorcing spouses. Many retirement plans are governed by the Employee Retirement Income Security Act ("ERISA"), and distributions may trigger harmful tax consequences for the person that is the beneficiary. The most effective method of dividing pension benefits is the use of a Qualified Domestic Relations Order ("QDRO").
Most residents of Sacramento who are considering ending their marriages are aware that California is a "community property state," but they may not know exactly what the title means. Familiarity with the state's community property laws may assist in resolving disputes about dividing a couple's assets and in planning for the economic consequences of a divorce.
California courts usually expect divorcing couples to prepare a mutually agreeable plan for splitting their assets and debts. However, some couples cannot reach such an agreement, and the court is required to step in. Couples also misunderstand the effect of the state's community property laws. The following guidelines may help solve deadlocks about property division.
Michael Avenatti is a Los Angeles attorney who has garnered an outsize share of media coverage in the last several months by representing adult film actress Stormy Daniels in her dispute with President Donald Trump about an affair she allegedly had with him several years ago. He is now getting media coverage because of his pending divorce and the property settlement with his estranged wife. Avenatti's divorce does not provide a paragon for ending a marriage, but he and his wife have apparently reached an agreement about dividing assets that may provide a template for other high-asset couples.
When a divorce becomes nasty, one or both parties may use tactics that they would never use in their business or social lives. One of the most common tactics is to hide marital assets from the other spouse. This behavior is usually based on three incorrect assumptions: the other party has no means to search for or find the property; the property is hidden so that it will not be found; and if the property is found, the consequences will be light.
Most people in Sacramento County understand that a divorce involves the division of property owned by the couple. An understanding of the types of property that a couple may acquire during their marriage can help understand the process of dividing those assets.
Many couples in Sacramento who are going through a divorce attempt to divide their property without consulting a lawyer, an accountant or a financial planner. Such efforts can resolve a number of major issues in the divorce without the interference of the courts or opposing attorneys. The do-it-yourself property division process, however, has a number of pitfalls for the unwary.
Most people in Sacramento County have been told that California is a "community property state," but very few know exactly what the phrase means. The phrase refers to state laws that govern the division of property in a divorce or legal separation, but even understanding that part of the law does not adequately convey the effect of the law on divorcing couples.