California state guidelines divide assets and debts equally. When the parties to a divorce want to keep their break up out of the courtroom and come to an agreement, they can handle the issues the way they want to. People are able to do this if they both understand their rights, disclose information completely, cooperate with each other, and are able to remain reasonably calm.
Real estate and retirement accounts are usually the most valuable assets acquired during a marriage. People in agreement, usually find that dividing the retirement plan is easy after deciding on the amount and having it divided with a Qualified Domestic Relations Order. Dividing real estate can be trickier. There are different factors that might need to be considered. Does one party want to keep the home? Can they afford to keep it? Is the property the family home where the minor children are bring raised? Is the property an investment property? What are the tax implications, if any?
Usually we see the parties opting to sell their property right away and dividing the proceeds so they can have the cash. This is easiest to figure out when it goes up for sale and sells right away. If the sale actually finalizes after the divorce, consideration must be made for who will be maintaining the property and paying any costs. If one party will remain in the home until the sale, there may be other considerations.
Sometimes the parties decide not to sell the property right away, allowing one person to live in the property until an agreed upon time to sell. The terms of who will be paying the mortgage, taxes, insurance and other costs will need to be agreed upon. For different reasons, the parties might agree to split the proceeds unequally.
Other times, one of the parties pays the other party and keeps the property. If the person can afford it, they will refinance the mortgage to pay the other person and have their ownership removed from the title. This seems to be the best way to remove any liability. If the other party doesn’t remove themselves from title, many problems could arise. It’s best to get legal advice before doing anything that could create future obstacles in your finances. Sometimes they equalize the transaction by giving up other property, like a portion of other person’s retirement account.
If any of the property is investment property, there are more things to consider. The tax rules are very different from the sale of residential property. People would be foolish to make a move without first consulting a tax professional to understand any consequences from the sale of investment property. Even if one party makes the investment property their residence, there are rules that need to be followed.
To sum it all up, people who want to do things fairly and are able to do their due diligence have options on how to handle the division of their assets in a divorce.
This article is not intended to be legal advice. Any legal questions need to be answered by a licensed attorney. Tax matters should be answered by a CPA or other tax professional.
