Dividing Property in California

One of the most challenging and contentious parts of a divorce is property division. Couples must figure out who gets what. Who gets the house? Who gets the furniture. How do debts and personal property get divided? California is a “community property” state. This means that, absent agreement between you and your spouse, property acquired during the marriage is considered marital property and will be evenly split upon separation (see CA Family Code section 2550).

What Is Community Property in California?

First, you should know that you and your spouse can make an agreement on property division. However, if you cannot come to an agreement, the courts will get involved. Generally, the courts will consider income earned, as debt and property acquired during the marriage to belong equally to both spouses. This is the community estate. At separation, the community estate ends.

For example, you and your spouse purchased a home just after you married for $500,000. You have a mortgage and have been making mortgage payments during the marriage. At the time of separation, the home is now valued at $1 million dollars with a loan value of $100,000. This leaves a community property interest of $900,000, or $450,000 in cash or other property owed from the spouse who wants to keep the house.

What about debt, like credit card or student loan debt? Let’s say you have a credit card and used it during the length of the marriage. At the time of separation you have a debt of $500. That balance is divided equally between you and your spouse and you are each responsible for $250. There may be an exceptions.

Student loans may or may not be a community debt depending on how long before the divorce it was taken out and whether there was a substantial benefit to the community because of the education received by that spouse (see, CA Family Code section 2641)

These are very simplified explanations and it can become complicated due to a number of factors, such as whether separate property was used. It is best to speak with a lawyer.

What is Quasi-Community Property in California?

Quasi-community property is any property you acquired during the marriage in a non-community property state that would be considered community property if it were acquired in California. For example, if you and your spouse purchased the home in the above example in another state that is not a community property state, in California it would be treated as community property when the marriage ends.

What is Separate Property in California?

In California, separate property is anything you owned or or currently own, but acquired before marriage or after separation, received as an inheritance or a gift during the marriage, anything you acquired using separate property funds, or money received from separate property.

For example, before you were married you owned a home. That home is considered your separate property. During the marriage, you sell that property. The proceeds from the sale are also separate property.

However, you should know that sometimes separate property and community property may get combined or “commingled”. This can complicate the property division. For example, you used your grandmother’s financial gift to make a down payment on a home for you and your spouse after you married. The money used for the down payment would be considered your separate property. However, if you used income earned during the marriage to pay the mortgage, then the mortgage payments are considered community property.

This all sounds pretty simple but, it can be a challenge for a few reasons such as commingling, valuations, or even concealed property. If you have questions or need help a lawyer can help.