In California, each spouse owns half of all community property. Additionally, each partner is responsible for one-half of all debt.
What Is Community Property?
Community property includes everything spouses, or domestic partners own together. It includes anything you purchased or received while you were married, except for gifts or inheritance. Additionally, community property consists of all earnings acquired by both spouses during the marriage or anything that either person purchased during the marriage with those earnings. Anytime something was bought using money that one spouse earned during the marriage, it will likely be considered community property.
Community property also refers to any debt incurred during the marriage, even if only one partner was responsible for it. For example, if a spouse used a credit card with only their name on it, the purchases would still be regarded as community property.
What Is Separate Property?
Separate property is anything you acquired before you got married or registered your domestic partnership. Gifts and inheritance, even if received during the marriage, are also considered separate property. Additionally, any debt you incurred before the marriage or domestic partnership is also held to be separate property.
What Happens When You Mix Community Property And Separate Property?
When you start mixing separate and community property, it’s called commingling, and it can make dividing up assets much more complicated.
Example: Partner 1 owned a house before getting married. Partner 1 marries Partner 2 and decides to sell the house. Partner 1 then uses some of those proceeds for the down payment for a home they purchase together with Partner 2. Partner 1 and Partner 2 move into the house, and both pay a portion of the mortgage.
In the example above, the down payment is separate property that has now been commingled, making it more difficult to divide.
What Happens To Community Property In California?
Generally speaking, when a marriage or domestic partnership ends, the courts must divide all community property equally. It doesn’t matter whose name the property is in so long as it was acquired during the partnership. For example, Partner 1 has a fully paid car, and Partner 2 has a vehicle with $5,000 still owed. If both cars were purchased during the partnership, the cars, including the debt, will be split equally between the two parties.
It’s important to note that California law doesn’t require that each piece of property be divided equally. The law simply requires that the net value of assets ends up being equal.
Sometimes the situation might be a little bit more complicated. If Partner 1 has a pension from a job that they had before the marriage but also held during the marriage, how should it be split? Anything Partner 1 contributed before being married is considered separate property. Anything they contributed during the marriage becomes community property.
However, this is a situation that is more nuanced and will likely require an experienced professional. Any time there is property that has been commingled, it’s advisable to hire an attorney who can help you determine what you are entitled to.
What If There Is A Prenuptial Agreement?
If you live in California, but you and your partner signed a prenuptial agreement before getting married, that will override the community property laws as long as the prenuptial agreement was executed correctly. California will not uphold a verbal prenuptial agreement. It must be in writing.
How Are Businesses Divided?
Businesses can be tricky to divide. If one of the partners developed the business during the marriage, it is considered community property. When dividing up business assets, the court has to determine not only the value of the business but they must also evaluate the goodwill of the business. The goodwill refers to an intangible value of the business that is determined from expected earnings in the future, based on an established brand, name, or reputation.
What About Educational Degrees?
In California, if one partner obtains a professional degree during the marriage, the other partner may be entitled to reimbursement for some of the costs of tuition, fees, and books. California does not give the other partner a percentage of future earnings that are enhanced by the degree.
Find An Experienced Attorney Who Can Help
If you have questions and need help regarding separate or community property, don’t hesitate to reach out to Bruce A. Mandel. Bruce A. Mandel is an experienced attorney who has been practicing law for more than 30 years. You can be certain that Bruce will do everything in his power to help you get the outcome you want and deserve.
Call 424-250-9130 for a free consultation. You can also submit a request for a call back by using our online form. Additionally, you can follow Bruce A. Mandel’s Facebook page to learn more about his firm.