Division of Property and Debts in California

Posted almost 2 years ago. Applies to California, 4 helpful votes

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California law recognizes that both spuses make valuable contributions to a marriage. Most property will be labeled either community property or separate property.

Community Property is generally ALL property that you and your spouse acquiored through labor and or your or your spouses skills during the marriage. Most parties have more community property than they think when starting a divorce process. For example, you may have an interest in your spouses pension plan, profit sharing benefits, stock options and other retirement benefits, including but not limited to social security.

I advise my clients that the court will begin with what I call a weak general assumption that both spouses have a claim on one-half the value of each community property which is considered an asset if it has any value. As part of your divorce or legal separation you will be required to list all of your assets in what is called a Schedule of Assets and Debts. This is a mandatory form in which each spouse completes their own version listing all the assets and all the debts, and declares a value for the assets. Often times my cleints ask if it matters if their is property that is only in one partys name. The answer to that question is NO. Often a house or vehicle may be in only one spouses name, yet because it was acquired during the marriage, even if only one spouse worked, it is still community property.

With very few exceptions, most all debts acquired during the marriage are community debts. These too will be listed on the Schedule of Assets and Debts. The most common exception to debt acquired during marriage that is NOT considered community debt are student loans. Other debts that come from acticities of one spouse that has NO benefit for the marital community can be deemed separate property debts. One very common example is gambling debts that are the result of being unknown to the other spouse.

Community property possessions and debts are divided equally unless you and your sppuse agree to an unequal division, or unless there are more debts than assets. However, under California law if there is a debt in both parties name and the Court orders one spouse to pay the debt, the creditor is not bound by that order and may still hold the other spouse liable.

When dividing community assets and debts, each party should get legal advice, even if you and your spouse agree on everything. There may be certain rights that you are not even aware of. Because many things such as cars, houses, and furniture can not be split in half, the division of community property and debts is done on a valuation basis, thus a big part of the process is agreeing on the value of all of the assets. Division can occur by offsetting debt with assets and vice versa.

Separate Property is property acquired before your marriage, after your date of separation, or at any time by gift, devise, or bequest. This can include rents, income, and profits received. Separate property is NOT divided during a divorce or legal separation process. Problems often occur in identifying what is or is not separate property, especially when separate property has been mixed with community property. However, you may be entitled to receive your separate property back even if it was mixed with community property. There are requirements for tracing that may have to involve the hiring of a forensic accountant. Debts that were acquired before your marriage or after your date of separation are also separate debts and will NOT be divided. However, the same rules exist that if it is also in both spouses names, then both spouses may be held accountable by the creditor.

Additional Resources

If you have any further questions, please visit my website at www.danwlaw.com and request a consultation. I am located in Central California and practice throughout the State of California.

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Related Topics

Divorce

Divorce is the process of formally ending a marriage. Divorces may be jointly agreed upon, resolved by negotiation, or decided in court.

Dividing Community Property in Divorce

Community property refers to property that is acquired after marriage and considered owned by both spouses. Nine states use this system.

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