Division of Community Property: What’s Considered Fair?

The division of community property can be a complex and emotionally charged issue for couples going through a divorce. Under California law, both spouses are considered to have an equal interest in all property acquired during the marriage, regardless of which spouse actually earned the income or acquired the property or debt. To facilitate a fair and equitable division of marital property, divorcing couples should understand what community property is and the factors considered when dividing it.

One of the reasons why understanding the division of community property is so important is because it can significantly impact a couple's financial future. Property division can determine the financial resources each spouse will have post-divorce, which can have far-reaching effects on their ability to move forward. Therefore, each spouse must clearly understand their rights and responsibilities concerning property division.

At Claery & Hammond, LLP, we protect the best interests of those divorcing in Los Angeles. Schedule a consultation by contacting usat (310) 817-6904.

Community Property vs. Separate Property

The distinction between community and separate property is critical for couples divorcing in California. Understanding the difference can help ensure an equal division of assets and debts.

In California, community property is generally defined as any assets or debts acquired by either spouse during the marriage. This can include income earned by either spouse and any property purchased with that income.

On the other hand, separate property is generally debts or assets owned by either spouse before the marriage or acquired by one spouse after the date of separation. This can include property owned before the marriage, gifts or inheritances received during the marriage, and any income earned by one spouse after the date of separation.

California is a community property state, meaning that absent an agreement to the contrary, property acquired during the marriage is generally community property. However, exceptions to this general rule exist, such as property acquired by one spouse through inheritance or gift or acquired with funds earned before marriage.

Factors Considered in the Division of Property

Property division aims to ensure an equal distribution of assets between spouses, with each receiving a fair share of the community property.

A primary factor a court considers when dividing community property is the valuation of assets and debts.

To determine the monetary value of the community estate, the following may be considered:

  • Financial statements
  • Expert testimony
  • Appraisals

This allows the court to accurately determine the value of assets and debts subject to division.

The net community estate, which is the total value of community property assets minus debts, is divided equally between spouses. This ensures that each spouse receives a fair share of the assets acquired during the marriage. However, this doesn't necessarily mean that each spouse will receive half of every asset.

To facilitate a fair division of property, the court may consider various other factors, such as the following:

  • Each spouse's earning capacity
  • Contributions to the acquisition of community property
  • The needs of each spouse

One spouse may receive a larger share of certain assets if determined to be equitable based on these factors. For example, one spouse might receive the home. Conversely, the other spouse gets the family business if the equivalent values are equal.

For the split of community property to be considered fair, each spouse should have an equal property value after the division is complete.

Common Issues and Solutions

Several issues can arise concerning marital property division. Two of the most common concern the division of retirement accounts and the family home, which can be separate and community property.

Retirement accounts can be complex to divide, as they may include both community and separate property contributions. Possible solutions to this issue include each spouse keeping their own retirement plan or one spouse keeping their retirement plan while the other spouse receives property of equal value.

The family home is often a source of contention in divorce proceedings, as it's not always clear how to divide the property fairly. One possible solution is for the couple to sell the home and split the proceeds. Another option is for one spouse to “buy out” the other spouse's interest in the home, with the value of their share being determined through the valuation process.

Other common issues that may arise during the division of marital property include the division of business interests, stocks and other investments, and personal property such as vehicles and furniture.

Speak to Our Team About Your Case

While the division of marital property can be difficult and emotional, working with an experienced family law attorney can help individuals navigate the process and protect their rights. Whether dealing with the division of retirement accounts, the family home, or other assets, a lawyer can provide valuable guidance and help seek a fair and just outcome.

At Claery & Hammond, LLP, we understand the challenges individuals face when dealing with the division of marital property. We're here to provide compassionate and knowledgeable legal support in Los Angeles to help you through this difficult time.

Please reach out to usby calling (310) 817-6904.