When you divorce, you’re required to submit paperwork detailing the type, value and nature of your personal property. Determining whether an asset is separate or community property is the key to deciding who gets it, or if it needs to be divided between the two parties. In short, community property is acquired during the marriage (or commingled during the marriage) and separate property is assets acquired before and after the marriage. Since there may be exceptions that apply, it’s best to work with an attorney and forensic accountant for your community property evaluation in San Francisco, CA.
What is community property?
Community property is the presumption that anything acquired during the marriage belongs equally to both spouses. This includes assets like homes, vehicles, personal property and investments, but it also applies to debt.
Sometimes, when couples divorce, things can get heated. Occasionally one spouse might try to hide assets or argue that they’re not community property. They might do this because they’re afraid they’ll have to give up a particular asset, or they might do it to be spiteful. Either way, there are often exceptions that allow spouses to get an equitable division of their marital property. For example, if one spouse wants to keep the house, they can sell other separate assets or give up something else equal in value.
Keep in mind that just because you acquired something separately doesn’t mean it isn’t community property. Your attorney can help you determine the asset classification based on California case law. For example, if you used marital funds to make a few last payments on a separate asset, your spouse may have a claim to some equity there.
What is separate property?
Separate property is generally anything acquired before and after a marriage. This sounds simple, but it can be incredibly complex. For example, what happens if a person owns a business before marriage, but their spouse supported the business and invested some of their own assets? How is the business’s value appreciation during the marriage calculated? These questions are why having a forensic accountant is so helpful.
Why does it matter?
If you have an amicable divorce, you might wonder why any of these property classifications matter. After all, even if a marriage doesn’t work out, it would be ideal to separate the property without argument. In many cases, spouses can do this, especially if everyone is in agreement.
Unfortunately, divorces tend to be emotionally fraught, especially when the couple has been together for decades. If you’re the spouse who put their own blood, sweat and tears into your ex’s separate asset—be it business, home or otherwise—you’ll probably want some compensation for your work and contributions. It’s entirely possible to determine how much you’re owed through law and forensic accounting.
If you’re going through a divorce and having trouble determining what is separate property versus community property in San Francisco, CA, a forensic accountant can help. Reach out to Medina & Company Consulting, Inc. today to arrange a consultation to discuss your case.