Division of Marital Property in California: The Basics
Identifying and dividing complex marital assets is a tremendous challenge in a high asset divorce. While most spouses tend to settle their property disputes, things can get pretty dicey when there is more property to divide.
For example, a spouse or partner may own a legal, medical or dental practice, or there may be a family owned and operated business to divide. Problems can also arise when a spouse or partner contributes a large financial investment in a residence, or when there are complex retirement and pension benefits to divide.
When you and your spouse or partner goes to court the stakes get higher. Family law litigation by its very nature results in the divorce process getting longer and more expensive for everyone involved. While litigation may be a necessary evil towards resolving your divorce, the financial and emotional cost may also be high.
An experienced divorce attorney should advise you to consider the additional time and expense of litigation. Taking time to understand community property and the basics of property division in California will help you better understand your contributions to assets during the marriage so you can begin planning your next step in the divorce process.
When lawyers and judges talk about classifying marital property during divorce we are essentially talking about categorizing assets and debts as separate, community, or quasi-community property. In some instances, property will have attributes of both separate and community property.
The definition of community property can be found in Section 760 of the California Family Code and is applicable to domestic partnerships in California. Generally, property that is acquired during a marriage, and is owned on the date of separation, may be subject to community property law in California. What community property actually means is that each spouse has a 50% ownership interest in all community property, and equal rights of management and control with respect to such property.
In addition, community property will include all assets and any debts in a marriage. This is important when determining any third party creditor rights, and when figuring out who will be responsible for any debts during martial dissolution (divorce) or legal separation.
Another important consideration when classifying property for purposes of divorce deals with property acquired by spouses or partners outside of California. People have a tendency to move around a lot today. We change jobs more frequently than our parents ever did, and it’s not uncommon to acquire property in another state that does not recognize community property law and subsequently move to California. How will a Judge in California classify these assets?
We have a concept under California law generally referring to these types of assets as “quasi-community property," which is a hyper technical legal term developed with the intent to deal with circumstances where spouses acquire property while domiciled in another state, who move to California, after which a spouse dies or one of the spouses files for divorce.
In a marital dissolution, nullity or legal separation proceeding, “quasi-community property" is treated as part of the “community estate" and will be divided as if it were community property. Essentially, quasi-community property is determined under California community property law. Therefore, California property law during divorce gives equal treatment to quasi-community and community property when parties changed their domicile to California. In addition, quasi-community property is also treated as community property for purposes of satisfying community debt. To the extent the community estate is liable for a spouse’s debts, so is quasi-community property.
With respect to an inheritance, the Probate Code also recognizes quasi-community property law for purposes of a spouse’s inheritance rights upon the owner spouse’s death. However, for this purpose, quasi-community property does not include out-of-state real property.
An important point to make is that treatment of common law separate property as quasi-community property is the requirement that both spouses must have established a California domicile. The law has found that when one spouse moves to California, but the other remains in a common law state and has no contact with California, the out-of-state separate property is not treated as quasi community property.
It’s very important to remember the context we are discussing here deals specifically with a family law. Spouses owning real estate located outside of California and tax treatment under Federal law are not within the scope of this article, and it’s important for you to contact a divorce lawyer from Castellanos & Associates, APLC to discuss quasi-community property as applied to the facts and circumstances of your case.
Understanding differing property classifications under California law can be confusing because of the legal jargon involved. You should not confuse the term “Quasi-Marital" with “Quasi-Community" property. “Quasi–Marital" property refers to property that would have been classified community or quasi-community under California law but for a defect that affected the validity of the marriage. Quasi-marital distribution of property often occurs during nullity proceedings and is not be something you typically consider during a traditional divorce.
One of the more contentious issues during family law litigation is the classification of property as separate property. California Family Code Section(s) 770-772 sets out the definition for separate property in California. Generally, California Family Code Section 770 defines “separate property" as all property owned by a spouse before marriage and after date of separation, any property acquired after marriage by gift, bequest, devise, or descent; and, any rents, issues, and profits of such property. Generally, if property cannot be classified as community or quasi-community property, it will be treated as a spouse’s separate property under California law.
Southern CaliforniaDivorce & Division of Property
Understanding how a judge may identify and characterize marital property involves learning about some of the unique characteristics that define separate, community and quasi-community property in California. The information provided to you here is not meant to be exhaustive, and is only intended to provide you with an overview of property characterization and distribution of martial property during divorce.
The division of property during divorce can be a complex process depending on the number and exact nature of assets making up your marital property. If you would like to discuss marital property division, contact a Los Angeles divorce attorney from Castellanos & Associates, APLC and request a FREE initial consultation at (323) 655-2105.
We look forward to helping you move on with confidence and peace of mind!