After several years of marriage, you and your spouse may have accumulated substantial assets together. Typically, that begins with setting up a joint bank account and buying your first car or marital home. But it does not end there. Suppose you come from a dual-income household where both spouses are doing well in their careers. In that case, you might have multiple real properties, vehicles, bank accounts, stocks, individual retirement accounts (IRAs), 401(k)s and even pension accounts.
Owning significant valuable assets can complicate property division, especially in a community property state like California, where a court will divide your assets equally when you divorce. Everything you earn, acquire and owe during the marriage is subject to division, so you must take steps to protect your assets.
Gather, identify and classify
One of the most critical steps you can take is to gather the titles, bank statements and financial records of all your assets. Identify when you acquired the asset and how. If you owned or purchased property before your marriage, you might get to keep it unless your spouse contributed to the increase in value of the property. Furthermore, anything you inherited or received as a gift during the marriage is separate property. Your separate property is yours regardless of a marriage or divorce, provided you did not commingle it with marital assets.
Learn the true value of your assets
Some assets, such as artwork, land and jewelry, can increase in value over time, while others can depreciate. Similarly, business assets and real estate have the potential to generate income. The purchase price might not be a fair appraisal. Determining the fair market value of your assets can ensure a more reasonable split. In some cases, it might be better to sell the asset and split the earnings. You should also assess if maintaining ownership or selling certain assets has tax consequences.
Knowing what your assets are and how much they are worth can help you ensure a fair division during a divorce. You can protect the assets that should belong to you and safeguard your share of the community property.