Community vs. Separate Property

In the United States, there are two methods of dividing a married couple's property in a divorce: community property and equitable distribution. California is one of nine states that follow the community property method of distribution.

Under California's community property laws, each spouse is entitled to 50 percent of the marital or community property in the event of a divorce. However, not all property is considered "community property."

Community or marital property refers to all assets and property acquired during the marriage. In contrast, separate property refers to assets and property acquiredbefore the marriage or after the separation.

Separate property also includes: inheritances, personal injury awards, and gifts, regardless if they were acquired before or during the marriage.

Comingling Separate Property

Sometimes separate property can be comingled with marital property, for example, when a spouse owned a home before the marriage, but after the wedding, their new spouse began paying the mortgage or used their income to fund a $30,000 remodel. In that case, a portion of the asset can be considered "community property."

In the absence of a prenuptial or postnuptial agreement, all assets and property acquired during a marriage would be subject to a 50/50 split, regardless of which spouse's name was on the title, or who earned the money.

Examples of community property:

  • Art
  • Land
  • Cash in bank accounts
  • Income earned by either spouse
  • Real estate
  • Automobiles
  • Investments
  • Retirement accounts (e.g. 401ks, IRAs)
  • Anything else of value

Just because both spouses are entitled to half of the community (marital) property, it does not mean that everything has to be split down the middle. In a California divorce, the spouses can agree to almost any property division arrangement so long as it's fair and doesn't leave one spouse penniless.

If one spouse tries to receive the lion's share of the marital estate, the judge will not be inclined to sign off on it. The spouses need to make every attempt to sign a marital settlement agreement that is reasonable and fair given the circumstances.

If the spouses cannot agree on a property division arrangement, then the judge will have to decide for them, which is less than ideal. Generally, spouses prefer to maintain control over their property division arrangement as opposed to leaving it up to a judge who does not know them personally.

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