How to Navigate California’s Community Property Laws
Dividing property and debt following divorce or legal separation can be complicated. Here’s everything you need to know about whether California is a community property state.
Yes. California is a community property state, which means both spouses have equal rights to all marital assets. Understanding different property types is crucial to separating assets in a divorce. Property type determines whether an item is split 50/50, or sole ownership is retained.
Property in Community Property Laws
Property is any owned item of value. It may be bought or sold, and is physical or intangible. Physical property includes:
- Houses
- Cars
- Clothes
- Cash
Intangible property is nonphysical and includes:
- Debt
- Pension plans
- 401(k) plans
- Bank Accounts
- Insurance
- Stocks
In California, courts maintain the final verdict on property division. Even if property is informally divided, both parties share equal responsibility until the judge signs a formal order. Different types of property under California community property law include community property, quasi-property, separate property, and commingled assets.
Community Property and Quasi-Community Property
Community property describes all items both partners own, excluding gifts or inheritances. Because California identifies the union of marriage as two members of one legal community, every item obtained during the marriage belongs to this community. Community property also includes paychecks received during marriage and items purchased with these earnings. Under California community property law, each party must receive equal shares of divided assets.
Debt is also subject to community property laws in California. Each partner owns half of all debt incurred during marriage, including personal debt (such as purchases made from a spouse’s own credit card).
Quasi-community property refers to property obtained during marriage in another state that must now be divided as part of a California divorce. Items are considered quasi-community property if the property was purchased in another state AND would be considered community property in California. California courts classify quasi-community assets as though they were purchased in California, and may therefore treat them as community property.
Related: Quasi-Community Property in California
Separate Property
Separate property is property one spouse owned before or after marriage. Items inherited or received as gifts may also be categorized as separate property, even if collected during marriage. Purchases made with funds acquired before or after marriage are separate property as well, regardless of marital status. In California, no separate property will be divided.
Establishing an official separation date determines whether property is considered community or separate. Examining how an item was bought can also help you determine whether it is community or separate property.
Related: Community vs Separate Property in California
What is Commingling?
Commingling describes property classified as both community and separate. This “mixed property” often applies to house mortgages or pension funds, where initial contributions were separate property, but transmuted into community property during marriage.
Because pension funds are valuable assets, special rules apply when determining awarded amounts. California community property law requires a Qualified Domestic Relations Order (QDRO), and must be prepared correctly to ensure employer compliance. If done incorrectly, the process can hurt one spouse’s ability to receive their portion of the other spouse’s pension plan. QDROs are complex and crucial to finalizing pension plan division, so contact an experienced divorce attorney to prepare the form for you.
Related: Qualified Domestic Relations Orders (QDROs) in California
FAQs About Community Property Laws in California
Can a Prenuptial or Postnuptial Agreement Affect Property Division Under California Community State Property Law?
A prenuptial or postnuptial agreement can change property division outcomes by overruling California’s community property laws. Prenuptial and postnuptial agreements may also be used to decide which assets qualify as community or separate property. Every couple’s contract terms can be customized for their unique needs, so contact a lawyer to determine if your agreement nullifies California’s community property laws.
Are Pets Considered Property in California?
Yes. Pets are considered property under California community property laws, and are treated like other inanimate objects. However, judges can act in a pet’s best interest when awarding ownership during the separation process.
Who Receives the House Under California Community Property Laws?
In circumstances involving children, judges often grant the primary custodial parent residency until the divorce is finalized. The custodial parent with legal residency in the marital home may be held responsible for all payments (mortgage, utility bills, etc.). If one parent gains the house permanently, the other will receive property of equivalent value under California community property laws. The simplest option for divorcing couples is often to sell the house and split the proceeds.
How Is the Value of my Assets Determined in a California Divorce?
When appraising marital property, a third-party professional can help you appraise your assets. Professional property valuations will help the court award each party equal settlements.
What is the Process for Dividing A Spouse’s Pension Plan in a California Divorce?
The most common way to divide a spouse’s pension in a California divorce is through reservation of jurisdiction. The court will require a portion of the retired spouse’s pension check to be given to the other party. To calculate this percentage, divide the number of years married by the employed spouse’s total number of years using the pension plan.
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If you or a loved one would like to know more about if California is a community property state, get your free consultation with one of our California Divorce Attorneys today!