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Asset & Debt Division in a Divorce

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California is a community property state, which means that property, assets, and debts acquired during marriage are considered the joint assets and responsibility of both parties. What this means is that unless there was a prenuptial agreement signed, both parties can generally expect to split the accumulated assets and debts during a divorce.

Requirements of Financial Disclosures

Before assets and debts can be divided, both parties have a duty to disclose their assets and debts by penalty of perjury. This enables both parties to have an accurate understanding of what assets, debts, and other instruments comprise the marital estate. There are severe penalties for attempting to hide an asset, such as fines and even possibly the surrender of 100 percent of the non-disclosed asset.

Characterization of Property

Once an asset is disclosed in a dissolution, the next step is to characterize the property as separate property or community property. This is not always straightforward as there are assets that are acquired prior to marriage that are considered separate property but during the marriage, the community pays down the mortgage or adds to the value of the asset. Therefore at this juncture, experienced counsel can ascertain whether there are reimbursements that need to be accounted for and in complex cases, a forensic accountant can be utilized.

Dividing a Business

As stated above, generally speaking, assets acquired during a marriage will be split evenly upon dissolution. This is relatively easy when it comes to cash holdings, but what about a business? How do you arrive at a value for a business and then figure out how to divide it? This is one of the more complicated scenarios that arise in a divorce but it is also a common scenario because Americans are known to embrace the entrepreneurial spirit and therefore small business owners are a-plenty as there should be.

When it comes to complicated asset divisions, our divorce lawyers in Pasadena will consult with a financial expert who can arrive at a valuation for the business and then we can present the divorcing parties with options. One party can offer to buy out the other person’s interest in the business and this is generally the most common option. However, arriving at a valuation for the business is an art and a science and the right experts must be consulted and designated.

Dividing Retirement Accounts & Pensions

Similarly, with retirement accounts and pensions, Lee, Green, Stewart & Paul Attorneys at Law will often advise clients to obtain a Qualified Domestic Relations Order (QDRO) to divide any pensions or retirement accounts.

Thinking Outside the Box

Every divorce is different and our divorce lawyers in Pasadena will discuss various strategies with you to divide assets and debts, always coming up with creative solutions and thinking outside of the box.

To schedule a consultation with our divorce lawyers in Pasadena about how to protect your assets, please either call us today at (626) 325-0770 or contact us online.

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