Upon filing for a divorce, spouses may seek full or partial representation, or they may choose to represent themselves. Couples that have many assets and debts to divide may want to choose attorney representation and a legal proceeding to assist in the division. Normally, couples can reach a fair agreement themselves beforehand, but until a judge signs the agreement and issues the order, it is not considered binding.
When dividing property and assets, spouses should take into account their debts as well. For example, if one spouse receives an asset with a high value, they may balance the value out by also taking on debt. The more property, assets, and debts that the couple own, the more complicated the processes become. Couples with retirement plans face additional complications and special forms, and they should seek an attorney for help.
How to Divide Property
A good start to dividing property is to make a list of all jointly and separately owned items. Community property is any assets, property, or debt acquired during the marriage, and separate property is anything acquired before the marriage. Make the list in several columns, clearly delineating property that is community or separately owned.
Be open and honest with each other; anything that is not disclosed will usually come to light later during divorce proceedings. Once you create the list, divide everything equally so you and your spouse end up with roughly equal shares. Any disagreements, such as the specific value of property or whether it is community or separately owned, will need to be determined in court.
Dividing Retirement Accounts
In California, community property is divided at an even 50/50 share under the Family Code of California. For a contribution plan like an IRA or 401(k), the value is determined by looking at the current statement. Benefits are divided within the time frame of the marriage. For example, if one spouse contributed to the IRA for 16 months before the marriage, that value is subtracted, and the remaining balance will be split evenly.
Pension plans can be more valuable than all other combined assets, including a house. If one or both spouses have a pension plan, it is highly recommended to seek a lawyer. The division of pension plans follows separate rules that do not apply to any other assets, and they can be difficult to navigate.
For some benefits, like a pension plan or corporate plan, determining value may require hiring a specialist, known as an actuary. This specialist may be hired for each spouse, and they may not agree on the value of the plan. In this case, each actuary must appear in court during divorce proceedings. The judge will make the final decision of value and division.
The order to determine value and division of a pension plan is called the Qualified Domestic Relations Order (QDRO). The QDRO must be agreed upon by both the provider of the plan and the judge. Without the help of an attorney, QDROs are complicated, and mistakes often result in expensive consequences.
Couples seeking divorce are strongly encouraged to seek legal representation if they have a variety of assets, property, and debt. An attorney can help with the fair division while maintaining civility between the couple and mitigating issues that may arise.
Though the initial procedure for dividing property and debt may not be difficult, complicated benefits and additional assets can become overwhelming. To make sure you don’t make any costly mistakes, seek the experienced counsel at Boyd Law Firm. We are a full-service law firm serving Orange County and Greater Los Angeles. Our Los Angeles family law attorneys are especially experienced in family law, divorce, business law, and bankruptcy.