We are often asked “does the process of a divorce treat assets and debt equally? Will our property and debts be divided 50/50?
Virtually every divorce in San Diego involves the distribution of assets and debts. Assets will include everything from the family home to personal property, a business or professional practice, retirement accounts or pensions, investments, real property and even collections of value.
Debts include any obligation incurred by either party from the date of the marriage to the date of separation, regardless of who’s name is on the account or obligation, with few exceptions.
The question of will the process of a divorce treat assets and debt equally is not a straight forward legal or financial issue. The issue is the nature of each asset or debt itself. Is the asset or debt community property or the “separate” property of one of the spouses?
Student loans are a common example. Generally speaking, if student loans were incurred by either spouse prior to the marriage they will remain the separate obligation of that spouse after the divorce. Spouses owe each other a “fiduciary duty” to act in each other’s best interests until final orders are issued in a divorce. If one of the spouses goes on a shopping spree or runs up credit cards before or during the divorce the Judge may believe it is more equitable to assign that debt to the spouse who acted in a rash or unreasonable manner.
If either spouse attempts to hide money or assets, or substantially undervalue anything reported on their financial disclosures the Court has the authority and power to sanction (financially penalize) the responsible party.
Does the process of a divorce treat assets and debt equally? If an asset or debt is genuinely community property the Court may still decide it is more “equitable” or fair to distribute property or debt in what appears to be an unequal order based upon the nature of the property or debt itself and the actions of the parties before and during the divorce.
If the parties reach any reasonable agreement through negotiations or mediation the Court will usually approve it. However, California Family Law does not specifically specify a 50/50 division of every debt or asset. Each case is unique.