Hi, I’m Claudia Brown Coulter with Pivotal Peace. I’m your go-to mediator for navigating divorce while parenting children with special needs. I’m also a Legal Document Assistant (LDA) based in the greater Los Angeles area. If you’re not familiar with what an LDA does, I help you file your divorce paperwork, which can be quite challenging due to the ever-changing court rules. Welcome to Step Two Tuesdays, where we talk about the financial disclosures that often stall the divorce process.

Understanding Community Property in California

Division of Joint Accounts

California is a community property state, meaning that most assets acquired during the marriage are considered jointly owned, regardless of whose name is on the account. This includes joint bank accounts. While the standard approach is to split these accounts 50/50, you and your spouse can agree on a different division if it works better for your situation.

When you decide to divide a joint account, several outcomes are possible:

  • Split the funds and close the account: This is the cleanest method, ensuring both parties get their share and the account is no longer active.
  • Remove one party from the account: Some banks or credit unions might allow you to remove a name from the account. Check with your institution to understand their specific rules.
  • Maintain the account until further notice: If removing a name isn’t an option, you may need to keep the account open until you can safely close it without issues.

Handling Joint Debts

Joint debts, such as credit cards and loans, are also considered community property. This means that even if a debt is in your name alone, it may still be considered a joint responsibility. It’s crucial to reach an agreement on how these debts will be paid off.

Here’s how to handle joint debts:

  • List all debts in your financial disclosures: Be transparent about all debts to ensure everything is accounted for.
  • Decide on responsibility: Work with your spouse to determine who will be responsible for each debt. This should be clearly stated in your divorce decree.
  • Monitor payments: If your spouse is responsible for a debt, ensure they make the payments to protect your credit. Consider selling assets to pay off joint debts if necessary.

Practical Steps for Managing Accounts and Debts

Automatic Temporary Restraining Orders (ATROs)

When you file for divorce in California, ATROs go into effect immediately. These orders prevent either party from making significant financial changes, such as draining accounts or making large purchases, without the other party’s consent. It’s essential to adhere to these rules to avoid legal complications.

Addressing Mortgages and Property

If you own a home together, the mortgage remains a joint responsibility until it is refinanced, assumed by one party, or the house is sold. Simply signing a quitclaim deed does not remove a party from the mortgage. It’s crucial to handle this properly to avoid future credit issues.

Equitable Division

While California law defaults to a 50/50 split of community property, mediation allows for more creative and equitable solutions. Consider what is most important to each of you and be open to negotiation. This could involve trading assets or adjusting the division to reflect individual contributions and needs.

Seeking Professional Advice

Legal Advice

Even if you are handling your divorce amicably and without lawyers, seeking legal advice is highly recommended. An attorney can provide crucial guidance on protecting your rights and ensuring the agreement is sound. Many couples consult with an attorney to review their agreements before finalizing anything.

Financial Consultation

Consider consulting a Certified Divorce Financial Analyst (CDFA). They can help you understand the financial implications of your divorce settlement, including tax consequences and long-term financial planning. This step is especially important if you have complex financial situations, such as commingled funds or significant assets.

Additional Resources

For more information and resources, check out these reputable sites:

Final Thoughts

Navigating joint accounts and debts during a divorce can be challenging, but with clear communication and the right support, it’s manageable. Remember to gather all necessary documentation, stay organized, and seek professional advice when needed. Mediation offers a flexible and collaborative approach to dividing assets and debts equitably.