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What Does It Mean To Be A Community Property State In California?

What Does It Mean To Be A Community Property State In California?

In a contested divorce, property division can become highly combative. Consequently, states have laws in place to deal with how property is to be divided by a couple in the case of a divorce or separation. In California, we are considered a community property state. But what does that mean?

When a couple decides to divorce or legally separate, state law provides for a division of property, assets, and debts framework that it considers fair for both parties. While any debt or assets each partner comes into the marriage with is considered separate and not subject to that division, anything acquired by the couple while they are married is considered community property and will be divided according to community property law.

What is Considered Property In California Community Property Distribution?

In a divorce matter, the term “property” can mean anything that can be bought or sold or of monetary value. Consequently, property can be

  • Houses and other real property
  • Cars
  • Furnishings
  • Clothing
  • Personal items
  • Bank accounts
  • Cash
  • Stocks, bonds, or other investments
  • 401(k)s
  • Pensions
  • A business
  • Life insurance with a cash value

At the time of a divorce, this property will be divided depending on whether it is considered community property or separate property.

How Community Property And Separate Property Differ

Community property and separate property are distinctly different under the law.

California law regards a marriage or domestic partnership as a legal “community.” Under California Family Code Section 760, “all property, real or personal, wherever situated, acquired by a married person during that marriage while domiciled in the state is community property.”

Consequently, any property or debt that the couple acquired during the marriage or domestic partnership is considered community property and owned by both parties equally.

Separate property is property that is owned by the individuals separately and not by the “community.” Separate property is any property that is:

  • Acquired prior to the marriage
  • Purchased with funds that were separate property and is now held separately, even if it was purchased during the marriage.
  • Acquired through gift or inheritance specifically to that party
  • Profits earned by separate property
  • Acquired during a separation, even though the parties were still married
  • Covered under the terms of a prenuptial or postnuptial agreement

While there are some exceptions, these two categories generally apply to any property that will be divided during a divorce.

What Is Quasi-Property And How Is That Handled During Property Division in California?

The term “quasi-property” refers to any property that is acquired outside the state of California, either by the couple or each individual, that would be considered community property under California laws. For instance, if you own real estate outside the state that would be considered community property here in California, it will be subject to a 50/50 split when seeking a divorce in California.

What Happens When Separate And Community Property Are Mixed?

Of course, property division is not always so clear-cut. There are times when the couple has inadvertently “commingled” property. Once separate property has been commingled with community property, it is then considered community property when it has to be divided in a divorce setting.

Examples of commingling property include

  • Putting a spouse’s name on an account or asset that was once separate property
  • Adding a spouse’s name to titles or deeds that were formerly separate property
  • Placing separate funds in a joint account
  • Using separate funds to pay community debt
  • Contributions made to a separate retirement account or pension plan from community funds
  • Using funds from separate property sales as a downpayment for new community property

In many cases of commingling, a forensic accountant will have to come in and follow the history of transactions to determine what is separate and what is community property to divide it fairly.

Dividing Separate And Community Property In A Divorce

During an uncontested divorce, a couple can agree to divide their property in whatever way works best for them. But when a couple can’t agree and must rely on the court to divide their property, the judge will generally order both parties to keep their separate property and divide the community property equally.

Property division in a divorce setting can be complicated, especially when considering a family home, high-value assets, or extreme debt. Complications can arise that leave neither party happy. While theoretically, a 50/50 split of community property sounds fair and straightforward, in many cases, it isn’t. When navigating property division during a contentious divorce, getting a skilled family law attorney’s assistance is critical.

Getting The Skilled Legal Counsel Of An Experienced California Community Property Lawyer

Bruce A. Mandel is an experienced California community property attorney who has devoted his lengthy career to the practice of family law and ensuring his clients’ legal rights are protected. If you are considering divorce or legal separation and have questions about community property distribution, call (424) 250-9130 to schedule a FREE confidential consultation or contact Bruce through his online form. For more information about Bruce A. Mandel and his practice, follow his Facebook page.