When divorce is on the horizon, and proceedings begin, clients tend to ask, “What assets cannot be touched in divorce?” Understanding those assets is vital to ensuring you’re financially protected during the divorce process.
In the 2022-2023 fiscal year, 111,894 marital cases were filed in California. With around 7-10% of Santa Barbara being divorced, you aren’t alone, and it’s important for you to be able to protect your financial future and personal assets. In California, which is a community property state, any assets acquired during your marriage are usually equally divided between the spouses during divorce. That being said, not all assets are up for grabs.
Having an experienced Santa Barbara divorce attorney is vital. At Drury Pullen Law, we are dedicated to helping clients protect their personal property during divorce.
What Is Considered Separate Property in California
The division of assets in a divorce in California focuses on the difference between separate property and marital (community) property. Separate property may continue to be protected under certain conditions. Section 770 of the California Family Code states that separate property includes:
- Anything owned before getting married, such as property bought
- Anything inherited or a gift. Even if both spouses receive it, the property is considered separate if kept distinct
- Any rental income from a property you owned before marriage, or interest earned on a separate savings account
However, depending on various factors, separate property may be reclassified as community property. Any assets must be properly recorded and kept separate to protect them during a divorce.
Property at Risk in Divorce
Regardless of whose name is on the title, any assets gained during your marriage are usually considered community property. This includes:
- Property purchased during the marriage
- Joint bank accounts
- Vehicles purchased jointly
- Earnings made by either spouse during the marriage
Real Estate and Property Division
Dividing real estate in a divorce can be tricky, especially in cases where one spouse owned the property prior to marriage. However, if joint funds were used to pay off the property, the non-owner spouse may be entitled to receive a share of the property’s value.
In these situations, the Moore/Marsden rule is applicable. When a couple divorces, they claim assets as either separate or community property, and the Moore/Marsden calculation helps fairly divide property. In cases where the amount the estate is worth isn’t agreed upon, a professional appraisal may be necessary to determine the property’s fair market value.
What Is Commingling?
Commingling is when your separate property mixes with community property during your marriage, making it more difficult to prove which portions of the asset can be considered separate.
Typical situations of commingling include:
- Paying for shared costs (like home repairs) with inheritance money.
- Transferring money from a premarital inheritance to a joint bank account.
- Taking money out of a separate bank account to pay for joint expenses, like family vacations.
When combined, separate assets may no longer be protected, making it important to track your combined and separate assets properly.
How to Protect Assets Through a Prenuptial Agreement
Often called a “prenup,” a prenuptial agreement is a contract signed before marriage that outlines how assets will be divided if a divorce occurs. Prenups are an excellent way to easily protect your separate property and are enforceable in divorce if both parties sign voluntarily and fully disclose their personal finances and the agreement is reasonable.
With a prenup, California’s community property laws come into effect, and your property will usually be divided equally between spouses. Here at Drury Pullen Law, we can assist you in creating your prenuptial agreement to clearly outline your financial priorities.
Divorce can be a lengthy process, with a divorce in California taking at least six months but potentially taking even longer if the marriage has high assets. Having a prenup can significantly shorten the divorce process and give you peace of mind.
FAQs
Q: What Money Can’t Be Touched in a Divorce?
A: Money that was inherited, monetary gifts, or anything earned before marriage is considered separate property, and generally can’t be touched in a divorce. To make sure this money remains protected, you must keep clear documentation of all your finances during the marriage, such as any letters, records, or bank statements that show the origin and distinct separation of these funds. Without proper documentation, your assets could become categorized as community property.
Q: What Assets Are Untouchable in a Divorce?
A: Assets considered untouchable in a divorce include inheritances, personal gifts, and property owned before marriage. However, if these assets are commingled with marital property or used for marital purposes, they can lose their separate property status. In such cases, they may be subject to division during the divorce. Proper documentation and careful management of separate assets are crucial to maintaining their protected status and preventing them from being considered community property in a divorce settlement.
Q: What Is the Biggest Mistake During a Divorce?
A: Besides failing to maintain proper records and mixing separate properties with marital assets, a big mistake during divorce is not having a full understanding of your finances. A lot of people make mistakes when estimating the worth of their income and assets, which can lead to unequal property division. Without a professional, it can be easy to forget important information regarding your finances. Protecting your future after a divorce requires that all financial matters be carefully examined and understood.
Q: Is My Wife Entitled to Half My 401(k) in a Divorce?
A: It depends. Retirement accounts like pensions, IRAs, and 401(k)s often include both separate and community property, making division during a divorce complex. Contributions made before marriage are separate property, while those made during marriage are community property.
To divide these assets correctly, a Qualified Domestic Relations Order (QDRO) is required. A QDRO transfers retirement funds directly to the non-employee spouse’s account, ensuring a legal and simple process. Without a QDRO, dividing funds incorrectly can lead to fines.
Speak With a Qualified Attorney Today
The attorneys at Drury Pullen Law are ready to assist you if you are going through a divorce. Our attorneys offer custom, strategic advice to make sure your assets are appropriately valued and protected throughout the divorce proceedings. Avoid losing the property you are entitled to keep by getting in touch with Drury Pullen Law to arrange a consultation.