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Your spouse's debt may be part of community property in divorce

Do you and your spouse often fight about money? Perhaps, you're one of many couples in California who have gone from merely arguing over finances to determining that you'd rather go your separate ways than stay in an unhappy relationship. Hundreds, if not thousands, of spouses file for divorce because of financial disagreements that they are unable to resolve.

As a resident of California, your divorce is subject to community property laws. Did you and your spouse sign a prenuptial agreement? If not, did you at least discuss what you both could expect to happen financially in case of divorce? If you know other people who have already finalized divorces in this state, you may be able to rely on them as part of your support network.

Community property includes debt

When you marry in a community property state, you and your spouse become a single, legal entity. This means that all assets you acquire during marriage equally belong to you both. The same goes for debt. Just because your spouse ran up an enormous credit card bill or took out a college loan during marriage, that doesn't mean you are not partially responsible for that debt if you divorce.

Property you owned before marriage

If you have earned income during marriage, perhaps on a rental property, you may be the sole owner of those assets provided you already owned the property before you got married. Likewise, if a loved one left you an inheritance, the court may recognize it as separately owned property in divorce. What if you came into an inheritance during marriage, however?

If there is evidence (as in a signed document) that the benefactor wished you to be the sole owner of the inheritance, it may not be subject to community property division.

Why your separation date is so important

If you legally separate before finalizing your divorce, the income you continue to earn during that time is yours and yours alone. This is why many spouses open new bank accounts during the separation period so that they can keep post-separation income apart from jointly owned assets.

Co-mingled assets

In certain circumstances, funds you contribute to a pension plan may be subject to community property division. This is typically the case if a spouse added to a pension plan before marrying but continued to build up funds in the plan during marriage.

Such topics can be quite complex. It's critical that you understand California divorce laws before heading to court to avoid confusion or negative surprises during proceedings.

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Law Office of Edward S. Matisoff
3625 E. Thousand Oaks Boulevard
Suite 113
Westlake Village, CA 91362

Phone: 805-666-0980
Fax: 805-379-6722
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