Divorce in California - Who Gets the House?
The family home is not only the most valuable asset in most divorces, it’s also the most emotional, especially when there are young children. California law treats the marital home as either community property to be divided 50-50 or as the separate property of one spouse, but there are many factors to consider in making this determination. If keeping the house is important to you, consulting with an experienced, aggressive Marin County divorce attorney is a must.
Community Property or Separate Property?
California law presumes that any real estate acquired during the marriage is “community property” that is owned equally by both spouses. A major exception is when a house is given to one of the spouses as an inheritance or a gift, which would be presumed to be the property of that spouse. A more complicated situation arises when a home is owned by one spouse prior to the marriage. The spouse that is not on the title may be able to rebut the presumption of separate property by showing that mortgage payments and improvements were paid for with marital funds.
Options for the Family Home in a Marin County Divorce
If the home qualifies as separate property, the titled owner will simply get the house. There are several options when the house is community property. Most of the time, the house is sold and the profits are divided because neither spouse can afford to keep up the payments on the house on their own.
Another option is a “buy out,” with one spouse paying half the value of the house to the other, and becoming the sole owner. The buy-out is an attractive option, but it’s important to consult an experienced Marin County divorce attorney to determine whether you will be able to afford the entirety of the upkeep. Be sure to consider the tax implications and all of the expenses such as:
• Mortgage Payments
• Property Taxes
• Maintenance for specific items such as a pool or tennis court
Sometimes, when the spouses have young children, the child will issue a “deferred sale of home” order. This will require the spouse that is not living in the home to make payments towards the mortgage and upkeep for a limited amount of time, allowing the children to continue to live in the home.
Will I Need to Go Back to Work After My Divorce?
There was a time not too long ago when a parent that stayed home with children would routinely be awarded “alimony for life” if the couple divorced. The expectation was that this parent would continue to stay home and raise the children, and the parent that worked during the marriage would continue to support both the former spouse and children in the “lifestyle they were accustomed to.” This is no longer the case, so if you are a stay-at-home parent contemplating divorce, you should speak to an experienced and aggressive Marin County divorce attorney to find out if you will need to go back to work after your divorce.
How Alimony (Spousal Support) Amounts are Determined in California
New gender neutral laws award alimony based on many factors, including the maintenance of the “marital lifestyle.” An important factor is whether the spouse seeking support contributed to the sole or higher earning spouse’s career by taking care of the home and children while they advanced their career by acquiring education or promotions. The debts and assets received in the divorce settlement (or order) and any separate property owned are also considered. California does still consider the impact of working on a primary caregiver, giving stay-at-home parents a grace period, but “alimony for life” has become extremely rare. It is important to know that alimony cannot be determined in California until child support is resolved by an agreement or order.
How Long Can Alimony (Spousal Support) Be Collected in California?
Some states have passed laws that strictly limit the duration of spousal support, outlaw “lifetime alimony” or end payments when the payor retires. California spousal support has no such limits and is based on “general equitable principles and guidelines.” Generally, the court will only award up to half the length of a marriage of less than ten years, but will impose no limits on longer marriages. Spousal support may be ordered to allow a stay-at-home parent to continue in that role until the children are “school age,” but lifetime support is extremely rare.
Child Support Laws in California
Child support payments are ordered to ensure that both parents are contributing to the costs of raising a child. The payments are usually made by the parent that spends less time with the children, but can also be ordered when there is equal parenting time, but substantially unequal incomes. The goal is for the children’s lifestyles to be impacted as little as possible by the divorce. It’s important to hire an experienced and aggressive Marin County divorce attorney to protect your rights and the rights of your children.
How Long Does Child Support Last?
California requires parents to support their children until the age of 18. There are some exceptions, such as a child that is 19, but still in high school and living with a parent. Support could end if a child marries, registers a domestic partnership, becomes self-supporting or joins the military. A court could also order continued support for an adult child of the marriage with a serious disability that prevents them from becoming self-supporting.
How is Income for Child Support Determined in California?
Child Support is calculated based on both parents’ net income from all sources. First the gross income is calculated, including commissions, unemployment benefits, social security, lottery winnings, alimony (spousal support) from another marriage, and other types of income. Net income is the gross amount minus allowable deductions for federal, state and local taxes, union dues, health insurance, etc. Some parents will try to reduce or avoid paying child support by quitting their job, turning down overtime or switching to working “off the books.” These attempts will fail because the court will “impute” income to a parent based on their education, employment history and training.
How Is Child Support Calculated Once Income is Determined?
The following questions need to be answered to determine the correct amount of support:
• The parenting time arrangement
• The number of children eligible for support
• The tax liabilities of the parents
• Child support obligations for other children
• Health insurance expenses
• Parents’ job related expenses
• Costs for health care, day care and travel
The court may also order additional support for a child’s education, talents and special needs, or for travel expenses for visitation.
How is Property Divided in a California Divorce?
One of the most challenging issues facing a divorcing couple is how to divide the property of the marriage. Some couples can agree on how all the assets should be divided, and there is no law that prohibits them from making their own choice. It’s when couples can’t agree that laws will guide or order how the property of the marriage is distributed. In California, the division is based on “community property,” equally dividing marital property and leaving each spouse with their own separate property.
Is It Community Property or Separate Property?
The first step in the process is to determine whether an asset or debt is community property or separate property. California law presumes that anything acquired during the marriage is community property, but there are notable exceptions. For example, anything that is inherited or gifted during the marriage is separate property. It’s not always so simple because if the non-titled spouse works on the property to increase its value or marital funds are used for this purpose, it can be converted to community property. The date the couple separated can impact a determination of whether a specific asset or debt is community property or separate. Most courts will tend to consider the asset or debt community property if it’s a close call.
How Much Is the Property Worth?
When a couple doesn’t know or can’t agree on the value of an asset, the property must be appraised. If a spouse is contemplating a buyout of the marital home, the value of the home must be assessed by qualified real estate professionals based on similar homes in the area. Artwork, antiques and other tangible assets can be appraised by a professional. Some financial assets, such as a retirement plan, may require evaluation by an accountant.
Dividing a Family Business in a California Divorce
It’s a rare post-divorce couple that can continue to run a business together, causing divorcing couples with family businesses to be quite contentious. Family businesses are difficult to value and rarely have “market value” when sold to a third party. When a couple cannot decide how to divide a business, the courts will impose a decision. If you are a business owner seeking divorce, it’s important to consult with an experienced and aggressive Marin County divorce attorney to protect your business during the divorce.
Community Property and The Family Business
California is a “community property” state. This means that, in the absence of an agreement, the property and/or debts acquired during a California marriage are divided equally. In order to be exempt from distribution to the other spouse, the property must meet the criteria as “separate property,” which was either acquired before the marriage, during the marriage as a gift or inheritance or purchased exclusively with profits derived from separate property.
Family Businesses Are Difficult to Categorize
A common scenario is a business started by one spouse prior to the marriage. This scenario creates both community and separate property components. Control of the business would likely be awarded to the original owner spouse, but the other spouse may be entitled to a community property award for the appreciation of the business that occurred during the marriage.
How is Appreciation Determined?
Appreciation from the efforts and skill of a spouse during the marriage is community property that will be divided. For example, if you owned a business prior to the marriage, but your spouse worked as a designer that developed profitable products that caused the business to flourish, that appreciation would be community property. On the other hand, if the business appreciated purely due to “market forces” such as rental real estate in an improving neighborhood, that would remain separate property.
What is the Business Worth?
Family businesses are difficult to assess as much of the value is in the form of “good will” which is tied to the owners and operators of the business. For example, a pottery business would have little to no value without the artist that’s been making the pottery, but there may be a large inventory that has value. The court will usually order an independent business evaluator to determine the value of the business at the time of the marriage and at a later date - either at the commencement of the divorce proceeding, the separation of the couple or another relevant date.