There are many financial issues to consider in a divorce case. One of the most significant issues is the division of property. “Property” includes both physical assets, such as a home, vehicles, bank accounts, etc., as well as deferred compensation, such as pension plans, 401ks, and stock plans. “Property” also includes debts. In a Santa Clara County divorce case, and in California at large, community property laws govern the division of all property. In general, in California, all property acquired during marriage is “community” in nature and must be divided equally upon divorce. All property acquired prior to marriage, or after separation is the acquiring party’s “separate” property. Additionally, any property acquired during marriage by gift, bequest, inheritance or the like, is “separate” property, as well. The characterization of an item of property as “community” or “separate” will determine how the item is divided in a divorce.
At a basic level, “community” property must be divided equally, while “separate” property is confirmed to the party who acquired it. In reality, the division of property is not quite so simple. Often times during marriage, “community” and “separate” property become mixed, or “commingled.” In that case, it needs to be determined whether it is possible to “trace” the separate property so that it can be returned to the separate property owner. Additionally, issues can arise when property is purchased during marriage, but only put in one spouse’s name. The value of assets can also be an issue.
Other financial issues to be considered include how funds are spent after parties separate. There are specific automatic orders that go into place once a party is served with divorce paperwork, preventing both parties from transferring/moving funds and/or making large purchases without the agreement of the other spouse or a court order. Additionally, each party’s income and expenses should be taken into account, to determine whether spousal and/or child support are appropriate. When setting support, it is important to know what constitutes “income” for purposes of determining support. Income is not necessarily limited to funds earned from employment, but can include commissions, bonuses, rental income, stock proceeds, interest, unemployment and disability benefits, and the like. Another consideration when setting support is whether both parties are working. If not, the court can order one or both parties to seek work so that he/she is able to contribute to the support of the minor children and/or so that he/she can become self supporting, for purposes of spousal support.