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What’s Mine and Yours… The Problem of Debt and Gifts in Divorce

Disclaimer: This article does not constitute legal advice. If you have any questions about your individual situation it is best to seek the advice of an experienced legal professional.

When a couple has assets in a marriage, one or both partners feels they have fairly and squarely earned what they own within the marriage. But what if the property comes from elsewhere, or if the couple have debts to people outside the marriage? Another complication: the property is not money, or even an asset like a house, it’s an object that one partner gifted to the other, perhaps an inherited heirloom. It can be anything from furniture to an antique car, to a musical instrument – an example being Kurt Cobain’s guitar, which caused conflict between his daughter, Frances Bean Cobain and her ex-husband.

Material property can be the most contentious during a divorce. There is often no way of piecing up this property – it’s all or nothing and a sacrifice must be made. To make a decision over property with this emotional significance, values must be carefully pinned down and discussed. When people can identify what matters most to them and feel their values are honored, unexpected compromises can be worked out. At BCS we use a combination of math, psychoanalysis, legal and financial expertise to mediate divorces with property disputes. A finely tuned analysis of property is necessary when there are emotionally complicated assets like debt and inheritance.

It Seems Simple But it Isn’t

Couples in California might assume that they can DIY their divorce or tune out and let their attorneys handle it. However, California community property laws are not simple. The rules about property that’s “mine” before the divorce and “ours” after, get very muddy when spouses mingle their finances during divorce or gift an inherited object to their spouse. It’s best to seek qualified advice before proceeding. If you choose divorce mediation, you can use it to help you:

  • Negotiate with your Spouse over Inherited Gifts You may have given your spouse a family heirloom, or you may have let a spouse have the use of property for so long (say with an antique car or other item) that no one remembers clearly if it is a gift. You may have used inherited funds during a marriage. Mediation can help you determine the use and meaning of the property you shared so you can decide how to divide it. Material “stuff” typically carries emotional associations that can be better handled in the neutral context of the mediation room, rather than the adversarial context of litigation.
  • Honor a Spouse who has Contributed to a Business or Family Businesses started before a marriage, a homemaker who has used “your” funds to pay for necessary expenses; many endeavors that are technically “yours” demand the time and finances of your spouse. In mediation you can look at the history of your marriage in a less legalistic and more human way to determine a fair division of property.
  • Determine your Responsibility for Paying Back Loans and Student Debt Debt can also be mingled in marital finances, even if the debt was shouldered before the marriage. Rather than washing your hands of an indebted partner or overstretching yourself to handle debt alone, consider how you both can carve out an exit strategy that maximizes your assets. Working together can spare you conflict and insolvency down the line (especially if you have kids). At BCS we are financial experts who can help you integrate debt into an overall future plan for mutual benefit and moving on with your lives.

Who We Are and How We Can Help

We are caring, well-educated mediators who are skilled in applied financial mathematics, the law, psychoanalysis, and game theory. We strive to efficiently comprehend your situation and its opportunities for sustainable and agreeable resolution. This may include a review of your parenting plan, spousal support calculations, community property equalization, settlement agreement, and all other aspects of your case. We can either confidentially present you with a private analysis, or mediate the conflict with both of you until resolved. Any resolution you come to will be informed by a deeper analysis of the conflict that can be psychoanalytic and/or more financially-focused. Conflict analysis can result in a more optimized understanding of the net community property, which adds value to the overall estate, benefiting you both. Our specially trained divorce mediator-accountants can also help reveal and investigate the proven financial facts of a divorce to make a full financial appraisal of your divorce and to suggest creative solutions for financial planning after divorce. Our high-level divorce mediation services are tailored to the needs of people with complex lives. You can visit us at our offices in Campbell, CA, Irvine, CA and San Diego, CA. We can also be reached by Telephone, Zoom or Facetime. We are available 7 days a week and at urgent notice. Please contact us to see how we can help.

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