Dividing property can be one of the harder parts of a divorce. A couple may need to decide what happens to their home, cars, bank accounts, retirement savings, furniture, and debts. California rules help determine what belongs to each spouse.
An experienced Sherman Oaks property division attorney can help explain which property may be shared and which property may belong to only one spouse. The answer often depends on when the property was acquired and whether a prenuptial agreement applies.Â
California Community Property vs. Separate Property
California is a community property state. In general, property and income either spouse earns during the marriage belong to both spouses. This may include:
- Wages and other income
- A home bought during the marriage
- Cars and other valuable property
- Bank and investment accounts
- Retirement benefits earned during the marriage
Separate property usually belongs to only one spouse. It may include property owned before the marriage, gifts or inheritances given to one spouse, and income earned after the date of separation.
How California Community Property Is Divided
California law generally calls for the community estate to be divided equally. The spouses may divide things so each receives about the same net value.
Spouses can agree on their own division of property. If they cannot agree, a judge may decide what community property is, what is separate property, what the assets are worth, and how to divide them.
When Separate and Community Property Get Mixed
Property becomes harder to divide when separate and community funds are mixed. For example, if one spouse bought a home before marriage, but the parties later used community income to pay down the mortgage, the community may gain an interest in part of the home’s equity. Bank statements, deeds, loan records, and other family law documentation may be needed to trace the source of funds.
Both Spouses Must Share Financial Information
California divorce cases require spouses to exchange financial information. These disclosures help both sides understand what property and debts exist before they reach an agreement or the court decides.
Spouses generally need to identify assets such as real estate, vehicles, bank accounts, investments, and retirement plans, as well as debts such as mortgages, credit cards, and loans. If they disagree about what something is worth, they may need an appraisal or another type of professional valuation.
What Happens to Retirement Accounts?
Retirement benefits earned during the marriage may also be community property. This can include part of a pension, 401(k), or other retirement plan.
The part earned before marriage or after separation may remain separate property. Some workplace retirement plans require a special court order, often called a Qualified Domestic Relations Order (QDRO), before dividing benefits.
How Debts Are Handled During Property Division
Courts also consider debts during property division. A debt incurred during the marriage may be treated as a community debt, even if only one spouse’s name appears on the account.
Other debts may belong to only one spouse depending on when they were created and what they were used for. Property and debt issues can overlap, so spouses must look at the full financial picture when dividing a marital estate.