When a petition for a divorce is served in California, temporary restraining orders (often referred to as ATROs) are in effect automatically. The automatic restraining orders prevent either party from destroying property, borrowing against an asset, gifting an asset, or changing any property owned by either party. The rules are designed to preserve the property of the parties until the property is divided by a court order.
When one spouse is knowledgeable about the ATROs before the divorce petition is served or filed, that party may try to circumvent the ATROs by transferring property before the ATROs apply. This tactic may seem like a good option but can backfire. For instance, if one spouse pays for the car insurance and that spouse stops the insurance before the ATROs are effective, then each spouse will be forced to obtain separate insurance. However, if one spouse gets into an accident before obtaining new insurance, then both spouses' property can be liable for the accident.
Usually a unilateral transfer in property does not circumvent the system. One spouse cannot unilaterally transfer property without the consent of the other party. A maneuver to transfer assets before a divorce is started can be harmful. If one party gifts a piece of property to a third person, sells it, or tries to hide an asset, the court can order that spouse to reimburse the community for the value of the missing asset. Even though the property is given away, the non-consenting spouse’s attorney can request that the community be reimbursed for the value of the property which was transferred. In the end, the circumventing spouse has to pay the non-consenting spouse for the property that was transferred.
Once a petition is filed, property can be transferred, but only by written agreement of both parties or a court order. Without an agreement or order, the parties will have to explain to the judge why the property was transferred. An order for a contempt of court may issue if the selling party was knowledgeable about the automatic restraining orders.
Please note that the posting of this family law blog is informational only. Specific circumstances and laws may determine the outcome of your particular situation and it is important to contact an attorney to analyze your situation.