Divorce can be a challenging and emotionally draining process, made even more complicated when dividing assets between spouses. In California, the state follows community property laws, which means that all assets and property acquired during the marriage are considered community property and must be split equally between both spouses during divorce cases.
Separate property, acquired before/after the marriage or obtained through gifts or inheritances, remains the sole property of the spouse who received it. Therefore, it is prudent to maintain records of all property and gifts received and keep inherited assets separate from community property. There is also Quasi Community Property, this is property/assets that might have a separate property interest and a community property component. The key here is to maintain clear and concise financial records and be aware of what you and your spouse have in terms of cash on hand, property, investments, retirement etc.
Why a Proactive Approach is Better
One proactive approach is to enforce the terms of a prenuptial agreement if one was created before marriage. It outlines the ownership of property in the event of a divorce and can help protect assets that either spouse brings into the marriage, if done properly. While it may not be the most romantic subject to discuss before marriage, it can prevent disputes and ensure a smoother separation process if a divorce occurs.
Do You Need a Forensic Accountant
In cases where the value of assets is significant, divorce valuation is recommended. Hiring a forensic accountant or an experienced appraiser can help ensure that all assets are accurately valued and divided appropriately. A forensic accountant can investigate any potential financial misconduct, business finance issues such as hidden accounts or assets, or undervalued property or real estate, that could impact the division of assets.
In high-asset divorces, an experienced attorney in asset protection can navigate the complexities of California’s community property laws and ensure assets that should be protected are, in addition to looking at what is a fair division during the divorce process. An attorney that specializes in high asset or complex divorce can provide strategic legal advice and help negotiate a settlement that protects some assets and limits exposure to risks.
It is important to Know Your Rights
It is important to note that filing for divorce first in California typically does not provide an advantage to either party. Other than if the case were to go to trial the Petitioning party would present their case first, possibly being advantageous. However, the majority of cases will settle outside of trial. Regardless of who files first for divorce both parties have equal rights to conduct discovery, get court involvement on case matters or negotiate a settlement.
The bottom line is that the more complex a divorce, the more need there is for an experienced attorney to assist you with strategies that can safeguard your financial future before, during, and after a divorce. The best strategy if asset protection is a concern is to have a prenuptial agreement to lay out everything fairly prior to emotions running high due to divorce. However, if you are amid a divorce or facing a pending divorce then enlisting the services of a Certified Family Law Specialist, C.F.L.S., that understands complex financial situations is key. A good C.F.L.S, can assist you with putting together the appropriate team of professionals such as forensic accountants, appraisers etc. to take proactive steps to ensure a smoother process and a more secure financial future.