When it comes to how marital assets are split up, it’s important to know that California is a community property state. This means that anything that a couple acquires during a marriage is subject to being split 50-50 between the two if they divorce.
One of the only ways to ensure that this doesn’t happen in a community property state is to include it in a prenup. If you didn’t draft one when you married, then there are some considerations you’ll want to make before you agree to divide up property among yourselves.
The marital home
Oftentimes, a couple will agree to a mortgage that they can afford as a unit, but not separately. They may wish to stay in the home for the kids’ benefit, but ultimately have to sell because they didn’t need as large of a property or as costly of one.
One of the decisions a couple has to make as they prepare to divorce is what to do about the marital home, such as whether to remain in it or sell it. If they’re going to sell it, then they have to decide how to split profits.
If one of you has a retirement or investment account, then it’s likely that only one of your salaries has gone to funding it. The problem, though, is that under community property laws, you’d be expected to give away half of it to your ex during a divorce.
You may be able to avoid having to do this if you can only dig up all the statements that you’ve been sent for it. If you accumulated any funds before getting married, then you may be able to keep those for yourself.
Taking an early payout from a retirement account or selling a home can result in a spouse having certain tax obligations. Under the new Tax Cuts and Jobs Act, which goes into effect on Jan. 1, 2019, spouses who pay alimony will no longer be able to take tax deductions for it nor will recipients have to report it as income.
While many divorcing couples concern themselves with what’s going to happen with big-ticket items, many don’t think about splitting up their debts. This is when having a San Jose attorney with skill and experience in representing your interests can be helpful.