If you are headed for divorce and you are a resident of California, soon you will learn that California is a “community property” state. In the United States, marital property is either divided under the theory of “equitable distribution” or “community property,” and California follows the community property model.
According to the Internal Revenue Service (IRS), nine states have adopted the community property system, including California, Nevada, Washington, Texas and others.
The theory behind community property is that each spouse has made valuable contributions to the marriage, even if one was a homemaker during the marriage or underemployed, thus, both spouses automatically own a 50% interest in the marital property, regardless of:
- Who earned the money
- Who acquired the asset
- Who purchased an item
- Whose name is on the title
- Whose name is on the account
In addition to having an automatic 50% interest in the community property, spouses are also equally responsible for each other’s debts, regardless of who incurred the debt or how it’s titled.
What counts as community property? Community property refers to property that is acquired during the course of the marriage. Separate property is not subject to division in a divorce.
So, what qualifies as separate property? Separate property is all property acquired before the marriage, and property acquired by one spouse during the marriage in the form of a gift, inheritance or a personal injury award – those are not subject to division.
Do We Have to Agree on a 50/50 Split?
The courts prefer divorcing couples to decide how to divide their community property amongst themselves with the help of their respective attorneys. Do you have to agree to a 50/50 split? No, not necessarily.
If you and your spouse are on good terms, you can reach an agreement about dividing your property that deviates from the 50/50 formula, so long as it’s reasonable and doesn’t leave one spouse penniless.
However, if you and your spouse cannot reach a divorce settlement, the judge will have to take over and decide on a split that is in accordance with the state’s community property laws.
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