TDC FAMILY LAW BLOG

Even though California is a community property state, not all assets owned by each spouse is marital property.  If something is not marital property, then it is not included in the accounting done to determine the assets to be divided during a divorce.  If a spouse owns the property before getting married, that that might not be considered a marital asset.  Marital assets are any assets, or conversely, debt, accumulated during a marriage.

There are cases when property that is acquired during the marriage might fall outside of the realm of marital assets.  Inherited property is generally considered to be wholly owned by the spouse that inherited it.  Also, if a spouse acquires a property, the couple may sign an agreement to exclude the property as a marital asset.

You MAY notice the language used above. "MIGHT not be considered" and "MIGHT fall outside of the realm." Why do we use such unsure language?  Well, it is because there are times when non-marital property could be argued to be a marital asset.

Let's look at two examples.  The first example is real estate.  When this couple gets married, the wife already owns a vacation home.  It is not used as the couple's primary residence.  After they marry, they buy another home together.  The second example is a business owned by the husband.  He started the business years before the marriage and is the sole owner and employee of the business.

At the start, they agree that the business belongs to the husband, and the vacation home belongs to the wife.
For the first few years of the marriage, the husband works the business, and the wife also holds a job, and everything is going along great.  After a few years, the business starts to grow and outpaces the income of the wife.  They decide that the wife will put her career on hold to have kids and help with the business since it is now more than the husband can handle on his own.

The wife now begins to help with writing proposals, making phone calls, keeping the books, and even meeting with clients when the husband is too busy.  Thanks to the efforts of the wife, the business booms.  They are now able to hire additional people to work at the business.

Thanks to the success of the business, the couple can start to use the vacation home.  Well, the vacation home needs some work since it has not been used.  The husband starts to make repairs and updates to the home.  The husband hires contractors, paid for with the family's money, and makes decisions the vacation home. The home becomes a true second home to the growing family with a successful business.

As it happens, the marriage doesn't survive, and the couple opts for divorce.  The original agreement between the couple is that the business belonged to the husband, and the vacation home belonged to the wife.  But, as the years went on, did this remain true?

It could be argued that both the business and the vacation home should now be included as marital assets.  The wife placed her career on hold to take care of the family and worked to improve the business.  Without her help and input, the business would not have grown or succeeded as it had.

Due to the success of the business, the vacation home became an essential part of the family, and the husband used profits from the business to repair and upgrade the home, making decisions on the best way to proceed.

In both cases, even though the home and business started separate, each became intermingled with each other.  Money brought in to the family through the business paid for updates to the home, and as they had the ability, they used the vacation home for several months of the year, where the husband would then run the business.

While the law says that separate property can be excluded from the marital assets, to keep them separate, they have to be truly separate.  Once assets are intermingled with marital assents, arguments can be made that they are now marital assets despite what the couple might have verbally, or even contractually agreed upon years before when the marriage was brand new.

If you are getting divorced, and there are questions about what is or is not a marital asset, call the Law Office of Tracy Duell-Cazes, known as TDC Family Law, for a free 45-minute consultation.  Free consultations are available to new potential clients, and there is no obligation.

Tracy Duell-Cazes is a certified family law specialist, as recognized by the Board of Legal Specialization of the State Bar of California.  You can reach Tracy at 408-267-8484.

First, we must define what means to be a fiduciary.  A fiduciary is a person who has a legal or ethical relationship of trust. All attorneys are fiduciaries and have a trust relationship with their clients.  That means that an attorney always must act in the best interest of their clients in all cases.  When a person hires an attorney to represent them in legal matters, they know that their lawyer is always working toward their best interest.  While this is vital in all legal matters, one of the cornerstones of our society is that everyone is entitled to a defense.  In criminal matters, if attorneys did not have a fiduciary relationship with their clients, the system would break down with accused individuals never sure if their lawyer is working for them or against them.

The process is complicated and in so many ways has to do with money and finances.  To properly divide assets, there has to be a proper accounting of everything that each of the spouses own.  There must be a determination regarding separate property, and if it is actually separate or if it has been commingled to the point that it is now marital property.  There is also the matter of spousal support and, if applicable, child support.

To get a proper gauge of all the assets, each of the spouses have a fiduciary responsibility to be completely open and honest regarding assets, property, money, and other finances.  There are several parts of the law that discuss this fiduciary relationship, but they mostly have to do with “full and accurate disclosure of all assets and debts and other liabilities “in which one of both parties may have an interest.”

As with our criminal case example, if there is no fiduciary relationship, the courts would never be able to be sure that they are making decisions based on the most accurate information available, and the system breaks down.

The full scope and breadth of the fiduciary relationship is very complex and will be explained as we proceed through your divorce, though you should be aware prior to proceeding that you should be ready to disclose all of your finances.  If there are any exceptions or separate property that should be excluded or you have a premarital agreement that excludes certain property from marital assets, that information should be brought to our attention as well.

If you have any questions about the fiduciary responsibility you have to your spouse, please call us for a free consultation.