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Law Offices of Hannah E. Sims, LL.M.
Oakland Certified Family Law Specialist

Keeping assets separate in case of divorce

California couples who are getting married might not want to think about the possibility of divorce. However, taking steps for financial self-protection in case of divorce is really no different from any other safety precaution. Couples who are not yet married can specify in a prenuptial agreement what property and debts they want to keep separate if they divorce.

Before the wedding, couples might want to consider getting appraisals for assets such as businesses that can be difficult to valuate. If a couple is already married, they could create a postnuptial agreement that serves much the same purpose as a prenup.

Couples may also want to open individual accounts even if they generally use a joint account. Any property they want to keep separate can be maintained from this individual account. Mingling an inheritance or other individual property with marital finances can result in that property being considered marital property. If a person has inherited a house, shared funds should not be used for its upkeep, renovation or other expenses unless the person wants it to be considered marital property. People should also keep records of all accounts and of any wills and trusts related to inheritances.

In a high-asset divorce, this process of property division can be particularly complicated. Since California is a community property state, all assets that the couple acquires after the marriage are considered marital property unless there is an agreement in place that states otherwise. This may also apply to the appreciation value of assets a person brought into the marriage. If the income of one spouse was significantly higher than the other, that person might be required to pay spousal support to the other. Even if that person earned most or all of the income in the marriage, the other spouse may be entitled to an equal share.

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