Three Equitable Ways to Divide Your Assets

By Richard Pasco

Sad but true, a divorcing couple usually wastes inordinate amounts of time quibbling over who gets the TV, how much the car is worth, whether the furniture is junk or antiques, etc. When people are in the middle of a divorce, agreeing on anything can be a real hassle.

Under California laws, almost anything acquired by a couple during their marriage is community property, with few exceptions. It is not the intent of this article to give a rigorous definition of community property (you should consult your lawyer for an opinion on any specific property you may have). But bear in mind that "your" car, camera, and mechanics' tools are community property if you acquired them after you married, and your wife is legally entitled to half of their value; similarly you are entitled to half the value of "her" jewelry, kitchen appliances, and objects of art.

Often the easiest way to divide personal assets is for each party to retain those articles he/she is most likely to use. If the parties can agree to this, it is the fastest and most painless way of doing things. But often they can't agree.

If you argue over items of small value (less than a few thousand dollars) in court, your legal expenses could easily exceed the cost of the items. Moreover by wasting the judge's time on small tangibles you're not likely to win his favor in your much more important custody actions.

One ERF member recently complained at a meeting, "She's claiming that my tools which I'm keeping are worth $1000 and I need to pay her that much, but I say they're only worth $50." This simple example has a simple solution: If she thinks they're worth $1000, she should be delighted to buy them for $250; if he thinks they're only worth $50 he should be delighted to sell them for $250. This logic extends to three simple plans for resolving property conflicts.

All community property whose ownership is disputed is placed into a kitty and one of the following three plans is invoked to divide it. With these plans, it is not necessary for the parties to acccept the opinion of an outside appraiser as to the value of any article. And because each party has a large degree of choice in its outcome, neither can claim that the other is making out like a bandit.

1. The Alternating-Choice Plan. This plan is one which was used to choose up teams in my high school gym classes, but it also works well for household goods. A flip of a coin determines who draws first. The parties take turns, each choosing one item from the kitty at a turn, until all items have been selected. Obviously, this plan is fairest if there are a large number of articles in the kitty. Debts and liabilities can be included in the kitty; the last person to draw gets stuck with the worst item.

2. The Auction. Despite incredible hostility and anxiety, my wife and I were able to pull this one off. The kitty of disputed articles is auctioned off to the parties, one item at a time, in any order. It may be helpful to have a third party to act as auctioneer, but with a minimal amount of civil behavior this is not necessary. The first item goes on the auction block and the parties alternate bids until the item is sold. No actual money need trade hands, but you should record who buys each item and for how much. Repeat this procedure for each item until they are all sold. Now total how much each of you has spent. The person having spent less gets the difference in cash "off the top" of the community savings (or the person having spent more gets the difference in debt from the community liabilities) before the remainder is divided equally.

3. One Divides, other Chooses. This one is the easiest to implement, but is more likely to mismatch people with personal possessions. The parties flip a coin. The winner of the flip divides the kitty into two piles. The second party gets to choose which party keeps which pile. Because the second party will always go for the bigger pile, it behooves the first party to make the piles as nearly equal as possible.