How to Pay Less in a California Divorce
If you earned more than your spouse during your marriage, you may be faced with serious financial obligations as you approach divorce. This can be a daunting prospect, especially since California law requires spouses to divide all assets acquired during the marriage equally. Parting with about 50% of your hard-earned assets can be shocking, and you may be searching for potential strategies to lower this burden. Fortunately, you can work with qualified divorce attorneys in the Inland Empire to approach this situation with confidence.
Milligan, Beswick, Levine & Knox, LLP can assist you as you strive for the best possible results in your California divorce. We have guided numerous divorcing spouses toward positive outcomes in the past, and we can do the same for you. While searching for effective strategies on the internet may serve as a positive first step, a consultation can provide you with more targeted advice and guidance. Book your consultation today to learn more.
Understanding Separate vs. Community Property
The first step to protecting your wealth as you approach a California divorce is simple: Understand the differences between community and separate property:
- Separate Property: Separate property includes all of the assets you acquired before the marriage or after the date of separation. It also includes inheritance and gifts, regardless of when these assets were acquired. The most important thing to remember about separate property is that it is not eligible for division between spouses during divorce. It remains the sole property of the spouse who acquired it.
- Community Property: In contrast, community property is always divided equally among spouses. This property includes everything spouses acquired during the marriage. This might include real estate, retirement assets, cars, pets, stocks, t-bills, and much more. Under California law, this property is always divided in a 50/50 manner with no other factors considered.
Why is it important to understand the difference between separate and community property if you are trying to limit financial burdens as you approach divorce? If separate property only applies to assets acquired outside of marriage, then doesn’t this mean you have no control over this distinction if you are already married?
Yes and no. While you might not be able to change the assets that you already acquired during or before the marriage, you can control the assets you acquire after the marriage. This is when the date of separation becomes very important. In California, the date of separation is usually the date on which spouses stop cohabiting. Although they might still be technically married until the official date of divorce, the date of separation highlights the point at which spouses are no longer financially codependent.
For example, you might be set to receive pre-IPO stocks at your company. If you can delay this award of stocks until after your date of separation, you might enjoy a considerable advantage as you approach divorce. You might also benefit more if you receive bonuses, pay increases, and other work benefits after the date of separation instead of before.
The same logic applies to any important transactions that you might be planning to make. Have you identified an investment that you think will be lucrative in the future? You may want to wait until after the date of separation before you make that investment.
Negotiate a Better Deal for Property Division
Another obvious tactic to limit financial burdens is to negotiate with your spouse outside of court. While they may be set on receiving 50% of the community property (as they are entitled to), you might be able to negotiate a deal that is more favorable to you. For example, you might know that certain assets are less valuable than others, despite them having equal prices on paper. You might be aware that the housing market is about to crash, for example. If this is the case, you could agree to give your spouse 100% of the family home while keeping assets that you think will be more valuable in the near future.
The last thing you want is for a judge to force your hand, potentially forcing you to liquidate assets that would be more valuable if held long-term. Negotiations allow you to exert more control, while spouses must place their trust in judges if they pursue litigation.
Highlight Your Ex’s Remarriage or Cohabitation
You might want to keep a close eye on your spouse as you approach divorce. If they begin cohabiting, this may free you from your alimony obligations. After all, alimony is intended to provide financial support for spouses who suddenly find themselves alone. If they immediately begin cohabiting with someone new, there is no longer any real justification for alimony. Highlight this fact, and you could free yourself from alimony altogether.
Consider Modifications in the Near Future
Remember, you can modify your alimony and child support agreements in the near future if need be. For example, you might be planning to retire very soon. Under California, spouses can avoid paying continued obligations if they retire. In some professions, it is acceptable to retire quite early. In most professions, however, 65 is the normal retirement age. Modification may also occur for other reasons, such as the sudden, unexpected loss of income. Whatever the case may be, speak with your divorce attorney if you believe you are entitled to modify your agreements and pay less.
Get in Touch With a California Family Law Attorney in California
If you need to explore strategies for reducing financial burdens, do not hesitate to book a consultation with the family law lawyers at Milligan, Beswick, Levine & Knox, LLP today. Over the years, we have served many divorcing spouses in the Inland Empire, including those with complex assets, high net worths, and high incomes. We understand the importance of protecting your wealth as you head into divorce, and we can help you explore a range of potential options for reducing the financial burden ahead. Book your consultation today to get started with an effective action plan.
Stephen Levine, is a Board Certified Specialist in Criminal Defense — an honor achieved by only the top criminal law attorneys in California. Mr. Levine has over 40 years of experience in criminal defense and family law serving Southern California, and is a highly regarded Super Lawyer as well as AV Rated attorney.