If you are considering a divorce or are in the process of going through a divorce you may feel overwhelmed with the tasks that need to be completed.
Don’t worry, we can help you with these tasks.
This means completing all necessary forms that will summarize your assets, debts, and income. This can be daunting task, particularly if your ex handled the household finances and you are not communicating well or do not know where they are kept. Your inventory may involve a family owned business, a professional corporation, stocks and bonds, real estate, deferred compensation accounts, retirement accounts and/or pensions. These need to be included in the total financial picture.
We will discuss which marital assets you want to keep for yourself and which you might agree to give up or split. Which assets are marital assets or debts. We need to try our best to distinguish what is marital property, which you and your spouse acquired together, during the course of your marriage, and separate property. If you are claiming property is your separate property, be prepared to provide dates purchased or acquired.
Dissipation of Assets are marital assets, debts and/or income that may not have been used for marital reasons.
Look for Asset Transfers you don’t recognize or assets that have gone down in value. If you think your spouse has “dissipated” marital funds for non marital reasons, such as gambling, drugs, money spent on a girlfriend or boyfriend. These are handled differently. Even though these funds may be gone, they can usually be traced and accounted for in the final division of assets remaining.
Understand if your state is a community property (“CP”) state.
California is a CP state and, as such, requires that marital assets be divided on an equitable basis. This means that you need to justify an equitable settlement not necessarily equal. This could require some financial reporting and analysis to determine what is “equitable” now and in the long run. How your future looks under a certain settlement should be considered when evaluating what is “equitable” dependent on your circumstances, i.e., length of marriage, children, etc.
Do not transfer any property either shortly before you file for divorce or during the divorce proceedings, unless agreed upon. Do not even transfer your separate property. Such acts appear suspicious and, in the exercise of its equitable distribution authority, the court could penalize you for your actions.
Understand the effect of the “Date of Separation” vs. “The Date of Divorce”. In California, many assets are valued at the Date of Separation. Thus, you need to agree on the Date of Separation. Do not agree until you understand the financial ramifications of this date on your share of the assets and debts.
Consider the Tax Effect on Both Parties with the final settlement.
There may be tax advantages for both parties for finalizing the divorce in the current year or the following year. You can possibly trade off different assets rather than divide each asset/debt equally if valued correctly, in regards to, what is this asset worth on an after tax basis. This is extremely helpful if one party needs more current cash flow or in need of a down payment for a new home.