California is a community property state, which means that all assets and property acquired during marriage are joint and equally owned by both spouses. With a few exceptions such as gifts and inheritances received during marriage, at the time of divorce all of the community property is subject to division. Normally, if the couple can come up with an agreement they can divide all of their assets however they see fair. But if an agreement cannot be reached, the Court will divide all of the community property evenly.
Community Property vs Separate Property
Community property is defined as all property and debt that was acquired during marriage, meaning from the date of marriage until the date of separation. It includes personal property, real property and the earnings of the parties.
Property obtained before or after marriage and gifts and inheritances received by one of the spouses while married are considered to be separate property. And such property is not divided during divorce.
In addition to community and separate property, there is also quasi-community property. It consists of assets acquired during marriage in another state before the parties move to California.
Quasi-community property is treated very similarly to community property even if it cannot be fully classified as such.
While the distinction between the types of property seems simple enough, in reality the assets often commingle or change form causing the property type to become subject to interpretation. For example, an expensive car owned by the husband before marriage is later sold and the proceeds together with family savings accumulated during marriage are used to buy a minivan and a commuter car.
An experienced attorney can help you navigate the legal intricacies, understand the methodology of tracing and ensure that the property is divided fairly.
How to Divide your Property and Debts
In California divorce community property is divided right in the middle. However, that does not necessarily mean physical division since some assets, like your house, cannot be split in the middle.
This is where asset valuation comes into play. During the evaluation process each item of the community property is assigned fair market value with the goal to determine entire value of the community estate.
Each of the spouses is entitled to a half market value of the total community estate. However, when assigning market values and deciding who will take what property, please keep in mind that neither one of the spouses is entitled to half ownership of a specific asset. Therefore, when it comes to larger items such as real estate or vehicles, both spouses will be awarded equalized assets or equalizing payments at the end.
Further, community debt can also be used to balance out one of the spouses getting more property.
Just like community property, community debt should be balanced out and divided between the former spouses. It is important to know, however, that even though the couples debts are divided by a mutual agreement or by a court order, the creditors do not have to honor that division. They can go after the spouse who signed the credit agreement (like credit card application), regardless of which one of you agrees to take responsibility for repayment of that specific debt.
Business, Investments and Retirement Plans
Please note that evaluation and division of business, investments (such as stocks) and retirement account fall under a different more complicated set of rules. You should consult an attorney knowledgeable in the legal regulations regarding these complex assets.
Please contact Womens Divorce Center at (619) 630-4765 or (858) 461-9237 for assistance with your marital property division.’