Property and debt division in a Calif. divorce

by | Aug 20, 2014 | Firm News, High-Asset Divorce |

Ensuring that a fair division of assets occurs in a California divorce court requires an accurate determination of community property owned versus total debts held. Once a net value is finalized from their difference, a couple must then decide how much interest each person will claim in individual community property and debts in order to achieve as close to a half-and-half division as possible.

The Schedule of Assets and Debts should provide an honest starting point for such calculations. On this form, each spouse must itemize the couple’s total possessions individually, legally requiring full disclosure of community property, separate property and debts to each other. If information in the schedules conflicts, legal action to resolve a dispute may be necessary; however, a private mediator might help resolve a situation more amicably.

Debt can greatly complicate property division. For instance, an ex-spouse could retain a high-value home in a divorce and balance that value by assuming debt for a jointly held credit card onto which the other party initially signed. Failure to meet that payment could saddle the other party with unexpected pressure from a creditor. The ex-spouse assuming responsibility could avert this problem by establishing a new individual credit card account and making a balance transfer onto the joint account.

A high-asset divorce can present unique challenges. As an example, one spouse might attempt to hide part of the wealth at stake in an undisclosed bank account. In order to ensure a fair division of possessions under California law, the other spouse could seek an attorney experienced in using formal discovery methods. Once necessary documents are obtained through a subpoena or demand for production, a forensic accountant working with the attorney may seek out discrepancies pointing to the undisclosed account.

Source: California Courts, “Dividing Property and Debts in a Divorce“, August 15, 2014

Source: California Courts, “Dividing Property and Debts in a Divorce“, August 15, 2014