Property Division

In California, property and debt acquired during marriage is equally divided between the parties. The division need not be physically dividing an object, only the net value of the assets received by each spouse must be equal. While this conceptually sounds simple, in practice it tends to get complicated. If the parties to the divorce cannot come to agreements as to how to divide the property, the judge will decide how to how the marital property gets distributed.

Community Property and Separate Property

Under California law there is a string presumption that assets and debts acquired during marriage are community property. Property one spouse owned before marriage, or acquired by gift or inheritance during the marriage, is that spouse’s separate property. Items purchased with or exchanged for separate property, earnings on separate property, and any increase in value of separate property generally maintain their status as separate property. Any property acquired before divorce but after the date of separation is considered separate property.

The date of separation is not necessarily when one party moves out of the marital home, instead, it is the date that one spouse decides the marriage has ended and the parties cannot reconcile their differences. Generally, date of separation is not an issue unless one party acquires a large asset such as a large bonus at work or wins at the lottery.

Some assets can be partially community property and separate property. An example is a retirement account where one party contributed to it before marriage and during the marriage. Distinguishing between community property and separate property can get complicated if one spouse owns a business to which the other party contributed funds or labor during the marriage. If the parties cannot decide on the valuation of a property it may be necessary to get a CPA or other professionals involved.

A prenuptial agreement, carefully negotiated between the parties, can regulate all aspects of how separate property and community property assets and liabilities are treated. Under California law, prenuptial agreements cannot regulate child custody and child support. As long as the agreement regarding spousal support is not unconscionable, i.e., unreasonably unfair, a prenuptial agreement controls.