There are four basic tasks when working out what to do with the assets and debts in a divorce: listing, characterizing (as separate or community), valuing and dividing. In a California Judges Benchguide, a checklist gives recommended steps for a judge to follow when characterizing, valuing and dividing property. You don’t have to follow these steps when dividing up assets and debts on your own. But it can be helpful to know how a judge would likely go about it. Here are the main checklist steps:
Characterizing, Valuing and Dividing Property – Steps
- What are the community assets and community debts to be divided?
- Is there any property that is requested to be confirmed to either spouse as separate property?
- Have the spouses agreed to a division of the property?
- If not, are any exceptions to the equal division requirement for community property applicable?
- What time of valuation is to be used? (Normally this is the date of trial so that valuations are as current as possible.)
- Are there any valuation issues that should be bifurcated, i.e. split off and tried before other issues? (Sometimes valuation of a complex asset such as a business could merit a “trial” all by itself.)
- What is the value of each asset to be divided?
- What is the value of each liability (debt) to be divided?
- Were there separate contributions to community property that must be reimbursed to the spouse who made the contribution?
- Was separate property used for community expenses after separation that must be reimbursed to the spouse who made the contribution?
- Was community property used to pay separate property obligations that must be reimbursed to the marital community?
- Will the parties agree to some non-judicial method of dividing any of the community property? (Mediation, for example – since trials to divide property require a lot of the court’s time and resources)?
- What is the total value of the community estate (assets minus liabilities)?
- Award one-half of the total value to each spouse by whatever means is necessary or appropriate, including ordering a sale (say of the house) and division of the proceeds.
- Confirm any debts incurred before marriage and after separation to the spouse who incurred them.
In the unfortunate situation where the net value of the community estate is negative (debts exceed assets), the court is not required to do a 50/50 division. The court can consider other factors, including the ability of each spouse to pay off the debts.
Characterizing, valuing and dividing property can be simple or complex, depending on your situation. The more complex it is or the higher the value of your property, the more likely professional help is worth considering. The professional help would most likely come from a divorce mediator, Certified Divorce Financial Analyst (CDFA), other financial professional or a family law attorney.
Related Posts and Pages:
Division of Assets and Debts – Basics
Listing and Characterizing Property
Community and Separate Property