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Property Division in Laguna, Orange County

Divorce affects people from all social economic classes. However, as you can imagine, the complexity of divorce cases corresponds with the length of the marriage, amount of income, property, debts, and children that may be present in any given marriage. In cities that have more wealth than others such as Laguna Woods, Laguna Hills, Laguna Niguel, and Laguna Beach, divorcing couples often have so much more at stake.

Division of Assets and Debts in the Laguna Cities

Community Property

The general rule is that property accumulated during marriage is presumptively community property. This applies to family residences, bank accounts, cars, boats, retirements accounts, artwork, collectibles, credit cards, businesses, and so much more. The longer the marriage, the more community interest is likely created.

Separate Property

On the other hand, separate property is any property or debt that has been accumulated before the date of marriage and after the date of separation and any property or debt that has been acquired by bequest, inheritance, or gift.

The commingling of either separate property to a community property or vice versa can create some significant complexities as there would be a need to calculate the portion of community interest and separate interest. These need to be determined before the parties in fact divide such assets and debts or “buy-out” the other’s interest.

Please find some common types of property that are typically divided in a divorce for couples residing in the cities of Laguna.

The Family Residence

When parties are involved in a divorce case, there are a couple of options of what happens to the family residence:

  • Buy-out: For the in-spouse (the one who wants to remain in the residence), the out-spouse must be “bought out.” This means that the in-spouse must pay the other spouse half of his or her community interest.
    • This could be in the form of a straight cash buy-out, or off-set by a taking on other assets that have the equivalent value of half of the community interest.
    • For any loan remaining on the mortgage(s), the in-spouse will then be responsible for all remaining payments.
  • List for Sale: This option may be best if neither party wants or can buy out the other party’s interest in the home.
    • The employment of a real estate agent/broker will be needed to list the home for sale.
    • Any net sale proceeds will be then distributed between the parties according to their agreement or court order.

For more information about the division of a family house in divorce, click here.

Bank Accounts

To divide bank accounts appropriately, the account balance at the date of separation must be determined. If all funds in a bank account were accumulated during the marriage and before the date of separation, then the entire amount in the bank account is presumably community property and should be divided equally. If any part of the funds can be traced may be separate property, then a tracing of the funds needs to be conducted. Then, the parties can have an accurate number as to how much in fact is community and how much is separate for division purposes. Just because an account is labeled as a “joint account” or “separate account” may not make a difference. What it comes down to is the “character” of the funds in the account and the ability to trace funds in accordance with the date of marriage and the date of separation.

Retirement Accounts 

For retirement accounts, a couple of options exist as to their division:

  • If the parties want to divide the retirement accounts, a Qualified Domestic Relations Order (QDRO) will be prepared in most cases, which is the document necessary to divide most retirement accounts that may have community interests in them. In addition, the opening of a roll-over account may be an option to accomplish a division of some kinds of retirement accounts.
  • The parties can always offset the community interest value with some other asset/debt so that the hiring of a QDRO attorney will not be necessary. No division would then be needed.

 The division of retirement accounts can be complicated, especially when the accounts are federal pensions, state pensions such as teacher’s retirement accounts, and other similar assets.

Vehicles

  • When the community owns more than one car, each spouse will likely receive at least one vehicle. Any excess vehicles will be treated the same way as a family residence. A valuation of the vehicle must be done (through Kelley Blue Book or otherwise). Then, the party who wants to keep the excess vehicle must pay the other to keep that vehicle.
  • Otherwise, the vehicle must be sold and the proceeds, if any, will be distributed between the parties.

 High-Valued Assets

  • For high-valued assets that are more difficult to value such as artwork, collectibles, and businesses, employing an expert to value them would be prudent especially when trying to maximize their values for division.
  • Each unique asset has a specific expert who specializes in valuing that asset.
  • Once a value is placed on the asset, the parties can determine how to divide the asset or whether it should be off-set by another asset or debt.  If the parties cannot decide on how to divide their property, the court will take on that task.

For more information about high-asset divorce in the Laguna Cities, click here.

Businesses

Dividing a business is normally more complicated than dividing personal property and real property as it involves a more thorough analysis of finances.  Typically, business valuation experts are involved to determine the value of a community business.

Step 1: Community Property Business or Separate Property Business: Applying the concepts of community property law above, there must be a determination as the “character” of the business which depends upon when the business was created (which may be the incorporation date). Was it formed before the marriage or during the marriage?  Did the opportunity for the business arise during marriage?  These are important questions.

Step 2: Business Valuation: If there is a dispute as to the value of the business (as there usually is), a business valuation must be performed by an expert (called a 730 expert after California Evidence Code Section 730). The parties can either choose a non-biased 730 expert to perform the business valuation or request the court appoint a 730 expert. The valuation itself will include an analysis of many factors including income, goodwill, expected revenue stream, assets, and liabilities. In the end, a detailed report is provided to the parties and the court.

Step 3: What to do with the business: The in-spouse (the one who wants to keep the business) must “buy-out” the out-spouse (the one who doesn’t want to be involved in the business) of their community interest in the business. If the in-spouse is unable to “buy-out” the out-spouse, then the parties must sell the business and distribute the proceeds, if any.

This process can last a long time depending on the complexity of the business involved. The smaller the business, the less financials must be analyzed which reduces the length of time of the process. The larger the business, the more financial must be analyzed which extends the length of the process. The process can last many months or even years. Staying organized and detailed can greatly reduce the time it will take for the business valuation to be completed.

Wilkinson & Finkbeiner, LLP provides divorce and family law legal services to clients in all areas of Laguna, including Laguna Woods, Laguna Hills, Laguna Niguel, and Laguna Beach.

Laguna Woods

Laguna Woods is predominantly known as a retirement community as 90% of the city consists of Laguna Woods Village, a retirement community. Although the U.S. Census Bureau has not conducted a full evaluation of the city in the past 2 years, in 2015, the city had a population of 16,406 whereby 79.5% of the population was aged 65 years and older.

History

Laguna Woods Village was once known as Leisure World until Ross Cortese, a former fruit stand owner turned retirement community developer, developed Leisure World into what is now known as Laguna Woods Village. It was incorporated in 1999 as Orange County’s 32nd city.  Laguna Woods Village is now an age-restricted community for active adults aged 55 and over. The average age of the residents in Laguna Woods Village is 78 years old. The community has fourteen guarded gates with a private security department that provides traffic enforcement, patrol service and gate control 24 hours per day. The community’s housing is plentiful with one and two bedroom cooperatives; one, two or three bedroom condominiums; and single family homes. Laguna Woods provides plenty of recreation opportunities such as multiple swimming pools, a 27-hole and 9-hole golf course, 2 fitness centers, multiple tennis courts, horse stables, four paddle tennis courts, multiple clubhouses, woodworking and art studios, a sewing, lawn bowling courts, shuffleboard courts, ping-pong tables, pool tables, and other amenities.

Laguna Woods is bordered by Laguna Hills on the north and east, Aliso Viejo on the south, Laguna Beach on the southwest, the Crystal Cove State Park on the west, and Irvine on the northwest.

Laguna Hills

Laguna Hills is a relatively affluent community with a higher than average median income than many other cities within Orange County. From 2011 to 2015, the median household income in Laguna Hills was approximately $89,754.

History

Laguna Hills sits on top of one of the major land grants developed during the Rancho Era. When Mexico gained its independence from Spain in 1821, lands were given to those who served in the government or friends of those in the government for purposes of cattle grazing. An individual named Don Juan Avila was granted 13,000 acres of Rancho Niguel, which covers part of the western portion of the Saddleback Valley, on which Laguna Hills is currently situated.

Then, in 1874, Lewis Moulton purchased Rancho Niguel from Don Avila and increased the land to 22,000 acres. Lewis Moulton and his partner, Jean Pidera Daguerre, used the land to raise sheep and cattle. Then, in the early 1960s, the ranch was then subdivided, part of which is recognized as Laguna Hills.

There was a desire to incorporate the area which was finally achieved in March of 1991 with 86% of the residents voting to form the city of Laguna Hills. Laguna Hills officially became a city in December of 1991.

Laguna Niguel

Known as a suburban city, Laguna Niguel serves as a bedroom community for the job centers of northern and central Orange County. It is located in the San Joaquin Hills in the southeastern corner of Orange County.

Laguna Niguel is a relatively affluent city with a median household income which is 31% (approx. $95,536 in 2015) above the Orange County average (approx. $76,509 in 2015). In fact, Laguna Niguel’s median household income nearly doubles the United States average of $53,889 in 2015.

Laguna Niguel is known for its mild coastal climate, low crime rate (1.12 violent crimes per 1,000 and 8.52 property crimes per 1,000), and numerous parks and public trails. In 2016, Laguna Niguel was rated #11 on the list of 50 safest cities in California. Over 1/3 of Laguna Niguel is public open space and is divided between 31 city parks and 4 county parks.

History

The area of Laguna Niguel was first inhabited by the Acjachemem Native Americans, who may have had a village near Aliso Creek. During the Spanish colonization of the Americas, Spanish missionaries established the nearby Mission San Juan Capistrano to convert the Acjachemem to Christianity.

Just like Laguna Hills, the 13,000 acre Rancho Niguel was granted to Juan Avila who then sold it to Lewis Moulton and Jean Daguerre in 1895. The Moulton Company oversaw 19,000 acres of local land which was used for orchards and sheep grazing. In 1951, the land was divided between both the Moulton and Daguerre families. The Daguerre families inherited the 8,000 acres in the future location of Laguna Niguel.

In 1959, a real estate management firm known as Cabot, Cabot & Forbes partnered with Paine Webber to form the Laguna Niguel Corporation. The corporation purchased the Daguerre land and developed one of California’s first master planned communities. The name of the city was created from Laguna, a reference to the tidal lagoon that once formed at the mouth of Aliso Creek, and the name of the Acjachemem village, Niguili that occupied the area prior. Laguna Niguel was designed so that families could fulfill their economic, social and cultural needs by facilities within the community. The plan emphasized parks and open space. In 1959, the Laguna Niguel Corporation raised $8.2 million from investors. In 1962, the first tracts were completed, consisting of 565 homes. In 1960, the Moulton Niguel Water District was established to import water from the Colorado River Aqueduct since the area had insufficient natural water supply. Then, in 1964, Crown Valley Parkway was completed from highway I-5 to the Pacific Coast Highway which facilitated transportation. By 1965, the population grew to 1,000.

Laguna Niguel has a history rich in landmarks including the Laguna Niguel Regional Park and Chet Holifield Federal Building (the “Ziggurat”). The Ziggurat was intended to bring 7,000 jobs to the area which was completed in 1971. In fact, the Ziggurat houses millions of microfilms which documents land agreements made between the US government and the Native American tribes of the southwest U.S. Laguna Niguel is also the home of the Western Regional Department of Homeland Security and the California Service Center of the United States Citizenship and Immigration Services.

In the last decades of the 20th century, Laguna Niguel’s population spiked from 12,237 in 1980 to 61,891 in 2000. The population quintupled in a span of 2 decades. However, the population growth became significantly slower since 2000 with only a population of 65,806. Unfortunately, Laguna Niguel’s history of development has been riddled with construction issues mainly due it being situated on an artificial slope that had been affected by landslides.

Laguna Niguel contains multiple high-end neighborhoods including Bear Brand Ranch, Ocean Ranch, Laguna Crest, Laguna Sur. Coronado Pointe, South Peak, Crest de Ville, Niguel Coast, Palmilla, and Monarch Point. Laguna Niguel borders the cities of Aliso Viejo, Dana Point, Laguna Beach, Laguna Hills, Mission Viejo, and San Juan Capistrano.

Laguna Beach

Laguna Beach is known as a seaside resort city located in the southern part of Orange County, California. With an affluent community comprising of a median household income of $94,325, it is known for its mild year-round climate, scenic coves, environmental preservation, and artist community. The beautiful climate and scenery provides makes it one of the leading locations for surfing competitions and mountain biking. The coastline is protected by nearly 6 miles of state marine reserve and an additional 1.21 miles of state conservation area. Laguna Beach’s primary industry is tourism as 3 million people visited Laguna Beach yearly. Laguna Beach holds such notable events as the Pageant of the Masters, Festival of the Arts, Sawdust Art Festival, Art-A-Fair, Bluewater Music Festival, and Kelpfest. In 2004, Laguna Beach was the locale of a very popular television series known as “Laguna Beach: The Real Orange County.” It aired on MTV for three seasons.

History

After the Mexican-American War ended in 1848, the area of Alta California was ceded to the United States. The treaty provided that Mexican land grants such as Rancho San Joaquin be honored. Rancho San Joaquin included north Laguna Beach which was granted to Jose Sepulveda. After a drought in 1864, Mr. Sepulveda told the property to James Irvine. The majority of Laguna Beach was never included in any Mexican land grant. After the American Civil War, settlers planted groves of eucalyptus trees in Laguna Beach. Laguna beach was settled in the 1870s and officially founded in 1887.

In the early 1900s, the scenic beauty of the coastline attracted painters to the area. In 1918, the first art gallery opened which later became the Laguna Beach Art Museum. Due to its scenic beauty and proximity to Hollywood, Laguna Beach became a favorite filming location. Silent films and long production shoots were plentifully made in Laguna Beach. Laguna Beach became a noted artist community due to the arrival of painters, photographers, filmmakers and writers. Laguna Beach became incorporated as a city in June of 1927.  It was incorporated as a city in 1927.  In 1927, the number of residents in Laguna Beach rose significantly from 1900 to more than 10,000 residents in 1962. In the late 1960s and early 1970s, Laguna Beach became the center of southern California alternative hippie culture.

Laguna Beach is bordered by the Pacific Ocean, Crystal Cove State Park, Laguna Woods, Aliso Viejo, Laguna Niguel, and Dana Point.