When couples in California make the decision to end their marriage, they will also have to divide their property and debt. While for some, doing so might sound like something they can easily do themselves, their agreement must be approved by the court to be legally binding.
Property laws in California
When it comes to division of property, California considers three types of property. This includes:
- Community property
- Separate property
- Commingled property
Dividing community property
Community property means that everything acquired during the marriage, including real estate, furniture, vehicles and jewelry, as well as retirement and pension plans, investments accounts, savings accounts, stocks and even businesses are considered the property of both spouses. Any income earned by either spouse during the marriage is also considered community property. Additionally, debt incurred during marriage is also community property. If the couple chooses to dissolve their union, then community property is divided equally between them.
Does separate property get divided?
Separate property, which includes any property bought or acquired before the marriage or after the couple officially separates and any inheritance or individual gifts received by each spouse even during marriage does not get divided during the division of property. Neither does any debt incurred before marriage by each spouse.
How commingled property can complete things
Commingled property can complicate things because this type of property mixes separate and community funds. Retirement accounts or pensions, for example, can be challenging to divide since part of the total worth is considered separate property, a benefit earned before marriage, and part of it community property, from the benefit earned during the marriage.
The division of property can be a complicated process as the different types of property are addressed. It is important to be careful and make sure all details are covered as mistakes can result in financial issues down the road.