In the absence of a prenup, California community property law provides that all community property (any property acquired during the marriage that is not a gift or an inheritance) is divided equally upon divorce. It usually doesn’t matter if the property is in one party’s name – if it is acquired during marriage, with some exceptions, it is community property.
Property owned before marriage (or acquired by gift or inheritance) is considered “separate property” – which means it belongs exclusively to the spouse that acquired it and doesn’t fall under the 50/50 community property rule. However, efforts to improve, enhance, or contribute to separate property can create a community property interest in that separate property. This is where a prenup can come into play. A prenup can provide that your spouse never acquires a community interest in your separate property.
If you don’t have a prenup, the determination of what is separate and what is community property often requires the use of forensic accountants that can trace dates of purchase, purchase prices, contributions, and increases or decreases in value over time. In high-asset cases, the accounting and legal fees over these matters can run into the hundreds of thousands, or even millions, of dollars.
Furthermore, earnings are community property. If you married without a prenup and earned $50,000,000 during your marriage, that entire sum would be community property. That means your spouse would own one-half of that property and anything purchased with that property.
A prenup can regulate all aspects of how separate and community property assets and liabilities are treated. In the case of a financially independent couple with their own resources, a prenup can provide that all income, assets and debts acquired or incurred remain separate property. On the other hand, a couple might agree that all property accumulated during the marriage remain community property but that certain property brought into the marriage, such as family businesses or funds, always remains separate. Since each situation is different, a prenup should be carefully tailored to meet the circumstances of each couple.
If you have a question regarding Family Law in California please contact us at (818) 926-4420 or visit the Family Law section on our website at Law Offices of Anat Resnik. Call today and we will connect you with Anat Resnik, an experienced, aggressive, affordable Divorce and Family Law Attorney in California. After you have spoken with our California Family Law attorney, we can schedule you a free face to face appointment to discuss your circumstances. If you have questions or are considering any aspect of filing for Divorce, a Paternity issues, Child Custody and Visitation, Spousal Support & Alimony, etc. we can help! Call us now at(818) 926-4420. We look forward to hearing from you and assisting you with any and all family law needs.