Preparing for a divorce requires taking critical first steps to protect your financial future. You must identify all assets and debts. Specifically, you need to determine what is marital property and what is your separate property.
Starting this process early can help you avoid complications related to the division of assets and prevent later issues. Doing this work now enables you to secure your personal property. The first step is to inventory each property item and classify its type.
Identifying separate property
Some assets are easier to label as separate personal property. These assets may include gifts and inheritances, whether acquired before or during the marriage, as defined by California Family Code § 770.
Even when you know something is your property, you still must list it in the legal documents, which are part of the required preliminary financial disclosure. Given the risk of complications arising from failing to document and disclose these items correctly, it’s advisable to consult a skilled attorney before the next stage.
Mandatory financial disclosures
Once you identify and classify all marital and separate property, you must list everything on mandatory legal forms. You will need to review and accurately complete the following required divorce forms:
- Schedule of Assets and Debts (FL-142), or a detailed substitute like (FL-160) in some contexts
- Income and Expense Declaration (FL-150)
- Declaration Regarding Service of Declaration of Disclosure (FL-141)
You must ensure that these court documents reflect your property inventory. Your lawyer can help you complete all the paperwork accurately.
What if my property increased in value?
Some personal property appreciates during the course of a marriage. You must understand and identify whether this increase in value was passive or active:
- Passive appreciation occurs when neither spouse did anything to cause the increase in value, such as when the value of your home increases due to market forces.
- Active appreciation may be divided between you and your spouse if one of you put in effort that increased the value of your home, such as remodeling or adding on to it.
Active appreciation is typically subject to division as community property in a California divorce. Your lawyer can help ensure that the increase is valued accurately and divided appropriately during the divorce.
Also, you must understand that when a home is considered separate property belonging to one spouse, the community estate acquires an interest in the property if community funds (including both spouses’ earnings) are used to pay down the mortgage principal.
Build a foundation for your future
Inventorying your personal property is a foundational step in your Southern California divorce journey. Accurately documenting and classifying your assets now is key to a smoother, more secure property division process.
A skilled divorce attorney can help ensure you complete the mandatory disclosure forms correctly, protecting your rights to separate property. This guidance is crucial for addressing complex issues, such as active appreciation, to secure a fair outcome.