Couples considering a second marriage often have many questions about their assets.
Should they continue deposits into their IRAs? Would their pre-marital assets be exposed if their new spouse were sued?
Should they get a prenuptial agreement?
What Is Community Property?
So far, just nine states and the U.S. Territory of Puerto Rico have adopted a community property system. California is one of the states with community property laws in effect.
First, let's take a look at what constitutes community property. In California, it is any asset either acquired or earned (as in income) by a married person living with a spouse.
What about your inheritance from Grandma Betty that you received prior to your wedding? That inheritance will remain as your separate property.
How the Law Treats IRAs and Retirement Accounts
When a married person accumulates an interest in a pension, retirement, profit sharing, or other employee benefit plan during the marriage, the part that was accumulated during the marriage is community property and subject to division if a divorce occurs.
If you have an IRA, it's advisable to start a new one after your marriage. Doing so protects your investments and only retirement funds deposited into your new account will be exposed during a divorce.
Can We File Separate IRS Return as Married Couple?
Married spouses are allowed to file separate IRS returns. However, each spouse will be taxed 50% of the total community property income regardless of which spouse acquired it.
How do the Courts Divide Community Property?
The courts endeavor to equally divide the net value of assets acquired during the marriage. For example, if during the marriage you purchased a home and investment property, then one spouse would receive the home and the other spouse would receive the investment property, provided they were of equal value.
I Supported My Spouse in College
Let's say that after you remarried your spouse decided to return to school to get a Ph.D. In California, you can be partially reimbursed for expenditures on tuition, fees, and books. However, you will not be entitled to a percentage of the enhanced earning ability of the spouse who acquired the advanced degree.
Do you have questions about custody, guardianships, children's issues, or spousal support? If so, call me or schedule a consultation with the Law Offices of James V. Sansone at 707-623-1875 or contact me by email. You can find additional information on family law, children's issues, spousal support, domestic violence as well as a list of resources you'll find helpful on our website.