California Community Property and Separate Property
In California divorce cases, dividing community property can be a complex and emotional task. Community property typically involves assets that married couples work for years to acquire, and finding an equitable way to divide them can be a challenging task. Our Office will represent you throughout this process and ensure that your rights are protected while dividing community property.
In California divorce cases, assets are considered either community property or separate property. All assets obtained by you and your spouse together through labor or skill during your marriage are considered community property. In addition to real-estate, community property may include an interest in pension and profit-sharing benefits, stock options, other retirement benefits or a business owned by one or both of you.
Each spouse owns half of the community property. With few exceptions, any debts incurred as a married couple, including credit card bills, are equally shared. Student loans are one exception to this rule – the individual who borrowed the money is solely responsible for repayment.
In a California divorce case, community property and debts are divided equally unless you and your spouse agree to an unequal division—or unless there are more debts than assets. If your spouse agrees to pay a community debt and fails to do so, or files for bankruptcy and discharges the debt, you may have to pay the creditor.
California divorce law doesn’t require that each community asset be divided equally – only that each spouse receive property equal in value. For example, one spouse may be awarded the family home, but the other spouse will have to receive property equal to the value of half of the home, or be compensated for its value. If there is no other community property equal in value to half of the home, or if the spouse awarded the home cannot afford to compensate the other, the home will have to be sold.
In cases involving custody of minor children, the spouse who has primary custody of the children is often allowed to remain in the family home. The spouse who remains in the home must make all mortgage, property tax and insurance payments and is responsible for the home’s upkeep. The custodial spouse will typically be allowed to remain in the family home until all of the children leave home, the youngest child turns 18, or at any time agreed by both spouses or ordered by the court.
With assets such as pensions or retirement accounts, the community property is calculated by determining how many years the spouse holding the account contributed to it while married, and dividing the value accumulated while married in half. For example, if one spouse contributed to a retirement account for 30 years but was married for only 15 of those years, the community property would equal half of the retirement account, and the other spouse would be entitled to half of that.
There are two options when dividing community property such as pension plans or retirement accounts involved in California divorce cases. One is requesting a reservation of jurisdiction, meaning that the spouse who doesn’t hold the pension or retirement account can receive his or her share at the earliest time the other spouse can retire. This means that if the spouse holding the account opts to continue working past the earliest possible age of retirement, the other spouse still must be paid his or her share at that time.
A second option when dividing community property in the form of a pension or retirement account is a “cash out.” With a cash out, a professional actuary determines the present-day value of the community property in the account. The spouse holding the account is allowed to keep it, but the other spouse must receive property equal to half the value of the community property in the pension or retirement account.
Separate property is property acquired before your marriage, including rents or profits received from these items; property received or purchased with separate earnings after the date of your separation; inheritances received either before or during the marriage; and gifts to you alone, not you and your spouse. Separate property is not divided during dissolution.
The division of community property in California divorce cases can be extremely difficult, so you need an experienced, caring, family law attorney to guide you through the process and stand up for your rights. An attorney can either represent you fully by negotiating and attending all court appearances on your behalf, or help you pursue your own case with limited-scope representation. California divorce lawyer Alan Shifman has the skills you need to ensure that you receive a fair and equitable share of any community property.