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How property division works in California divorce

by | May 28, 2020 | Property Division

Dividing marital property in a divorce can be quite complex, especially for long marriages in which the couple shares significant assets. California is a community property state, which means that divorcing couples have an equal stake in both assets and debts.

Explore the factors involved in property division and strategies for ensuring a fair arrangement.

What is community property?

Under California law, community property includes all assets and debts acquired by either partner during the marriage. Even purchases and financial obligations in the name of only one spouse fall into the category of community property. Retirement funds and pensions also constitute community property, which means both spouses can expect to receive half the value of these accounts.

The state also recognizes quasi-community property. This term refers to property such as real estate the couple bought in another state. If California has jurisdiction over your divorce, these assets fall into the category of community property and are also subject to equal division.

What constitutes separate property?

California only considers very specific assets and debts as separate property in a divorce. This category includes:

  • Anything you owned before marriage
  • Gifts or inheritance only one spouse receives
  • Money earned from separate property, such as interest, rent or other profit

However, most married couples commingle separate property, which can complicate asset and debt division. For example, say you owned a house before you met your spouse. After getting married, you continue to make mortgage payments with your salary. However, because your salary falls into the category of community property, equity in the separate home becomes community property.

Another common example occurs when one or both partners has a retirement fund or pension plan before the marriage. Contributions to the account the person makes after getting married, as well as the interest growth on those contributions, constitutes community property. Because division of commingled assets is so complex, couples who have many separate and shared assets should tread carefully when it comes to property division.

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