Couples considering divorce in California may have questions about how their property will be divided as the marriage ends. They might receive advice from family and friends regarding what they are entitled to, or they may have their own ideas based on celebrity divorces. This article will briefly highlight how real and personal property is divided according to California law.
California is recognized as a community property state, meaning that the law recognizes that both spouses make contributions (monetary or otherwise) to the marriage. As such, they are equally entitled to the assets and property they acquire as husband and wife. The community designation applies even if only one spouse worked during the course of the marriage. Community property is a broadly applied term. Essentially, all property acquired through labor or skill during the marriage is considered community property. This can include business interests, pensions, stock options, and other retirement benefits. Most debts incurred during the marriage are considered community property as well, and are thus divided equitably once the marriage is dissolved.
Separate property is all property not included in the marital estate, and generally includes assets acquired prior to the marriage and those acquired after the parties split (before the divorce is finalized). The same principal applies to debts; those incurred before the marriage and after a separation are also considered separate property. Since it is not included in the marital estate, separate property is not divided. It automatically passes back to the rightful party. Property acquired by gift or inheritance is commonly considered separate property, even if it is received by one of the spouses during the marriage.
However, a number of problems may arise in identifying separate property, especially after it has been commingled with community property. For example, if one spouse's inheritance (which is commonly separate property) is used to purchase property that is used in a family business, the separate property interest may be difficult to ascertain. Nevertheless, the law allows for separate property to be recouped even if it has been mixed.
Determining whether property is community or separate may be complicated, and it is always prudent to seek the advice of an experienced family law attorney before signing any property division agreement.