California is a community property state, which means that barring an airtight prenuptial agreement being in place, couples split all their assets by half. Although all couples circumstances are unique to their relationships and families, often we find that our clients are better served by seeking larger portions of the retirement assets and foregoing the house in divorce.
Why is that, you may wonder. You’re attached to your house and would like to keep it.
The problem is that although California real estate carries a high price tag, it can become an albatross around your neck. Both 401k’s and property values are subject to market vagaries and economic uncertainties. But if you are in your 20s, 30s or even early 40s, your retirement accounts have a longer period in which to rebound.
However, it you were to lose your job tomorrow, how long could you afford to keep your home? Even if it has already been paid off, the property taxes in San Jose can be very high. There is also the regular maintenance that can strain a tight budget. In a buyer’s market, you could take a deep hit trying to unload a property that you can no longer afford to maintain.
Even if you ultimately decide that the house is worth fighting for, make that decision with a clear head and not a sentimental heart. Your financial adviser is a good source to turn to for advice on your financial picture going forth as a single person after your divorce. Together with wise counsel from your California attorney, you will then be prepared to make the decisions you need to make regarding the property settlement in the divorce.