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What is Equitable Distribution in a Divorce?

concept of lawyer dividing equitable property during a divorce case

What is Equitable Distribution in a Divorce?

Equitable distribution is the legal term used to describe the division of assets and liabilities acquired during the marriage between spouses. Assets are things of value such as a house or money in a retirement account. Liabilities are debts such as credit card debt or loans. It is important to understand how equitable distribution works in California to ensure a fair and just settlement. In this article, we will discuss what equitable distribution means, how it works in California, and what factors are considered when dividing property during a divorce.

What is Equitable Distribution?

Equitable distribution aims to divide the marital property and marital debt as fairly as possible between the divorcing spouses. Equitable is not the same as equal. Equitable means fair and impartial and when couples divorce, the courts try to achieve a fair allocation of property based on a list of factors or guidelines set forth by state law. Married couples typically acquire property and assets while also accumulating some debt, and equitable distribution decides how to divide these assets and liabilities.

Marital property includes anything that was acquired during the marriage, while separate property refers to property that was brought into the marriage by one spouse or acquired through inheritance or gift. Assets have to be designated as marital or separate property before deciding how to divide.

Divorce courts will divide marital property, which may include marital homes, vehicles, retirement accounts, and more, based on what is deemed equitable or fair to both parties. This division of assets and debts is often based on a series of factors, such as the length of the marriage, the income and earning capacity of each spouse, the age and health of each spouse, and more. Marital debts are also divided equally, including credit card debt, loans, mortgages, and other liabilities.

What is Community Property?

Community property refers to the assets and debts that are jointly owned by a married couple. In California, anything acquired during the marriage is subject to division between both spouses. This means that anything purchased or earned by one spouse during the marriage is considered community property and belongs to both spouses.

However, any property acquired before the marriage or by gift or inheritance during the marriage is considered separate property and is not subject to division in the event of a divorce. This includes retirement accounts opened before the marriage or any inheritance received by one spouse during the marriage. Any debt incurred by one spouse before the marriage or after separation may be considered separate property, and the other spouse is not responsible for it.

How Does Equitable Distribution Work?

The process of equitable distribution starts by determining what is included in the marital property and what is separate property. After that, shared assets, such as bank accounts, real estate properties, and retirement accounts, are evaluated and divided equally between the two parties.

Debt is also considered when dividing property. Any loans, credit card debts, or other financial obligations are assigned to one spouse or shared between both parties, following the equitable distribution system. Debt division can be tricky because different debts may have different interest rates, payment schedules, or terms. In some cases, one individual may be given responsibility for more debt than the other to offset some other form of unequal property division.

Equitable Distribution of a Marital Home

The marital home is among the most important marital asset, as well as the most valuable one too. During the equitable distribution process, the court will aim to divide all the marital assets as fairly as possible between the spouses, including any equity in the marital home. If the marital home is jointly owned, the court may order it to be sold, with the proceeds divided between the spouses, or it may award the home to one of the spouses, with the other being compensated through other marital assets or alimony.

If the spouses have a mortgage on the home, the court will have to determine how to divide the mortgage payments or which spouse will assume the mortgage debts. The equitable distribution of a marital home can be a complicated process. However, by working with a qualified family law attorney, spouses can protect their interests while navigating through the process as smoothly as possible.

Schedule a Consultation With a San Mateo Divorce Lawyer

In California, dividing assets can be a complex process, requiring the careful review of all financial records, appraisals of property, and the guidance of a qualified divorce attorney. Contact the Law Offices of Bradley Bayan at (650) 364-3600 to schedule a free consultation. With our help, it is often possible to reach a fair and equitable distribution of property that protects both spouses’ interests and ensures a smooth transition into the next chapter of their lives.

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