Frequently Asked Questions About Community Property
Property is a part of divorce that is often extremely complicated and the cost of making a mistake is high. Here are answers to some community property FAQs in California.
What Is Community Property?
Community property is generally everything that spouses or domestic partners own together or got while married (or in a domestic partnership) that is not a gift or inheritance.
What Is An Example of Community Property?
Any property that you and your spouse acquired during your marriage is considered community property in California. Some common examples of community property include:
- Vehicles
- Wages earned
- Home and furnishings
- Real estate
- Retirement accounts
- Joint bank accounts
- Personal belongings
- Cookware
- Art
- Computers and other electronics
How Is Community Property Divided in California?
A couple’s community property must be divided equally unless there is a written agreement (like a prenuptial agreement) that requires a particular division of property. Equally divided means that the net value of the assets received by each spouse is equal.
Related: Community Property Laws in California
How and When Does a Court Value Community Property?
Most courts value community property by looking at fair market value. Assets are appraised at a time as near as possible to the date of trial.
Who Gets the House Under California Community Property Laws?
In divorces involving children, it is likely that the primary custodial parent will be allowed to live in the marital home with the children until the divorce is finalized. In some cases, a judge may award the marital home to the custodial parent permanently and offset that by granting the other spouse a larger share of the marital estate.
In situations where a couple can no longer afford the marital home or don’t have minor children, a judge will typically order the couple to list and sell the home, then split the proceeds.
Related: How to Divide Property in a California Divorce
Is My Car Community Property?
If you bought a vehicle prior to your wedding, that is not considered community property. However, if you bought the vehicle during your marriage, or even continued payments on the car into your marriage, that is considered community property.
Is Debt Included In Community Property?
Yes. If you or your partner accrued debt while you were married, that debt can be considered community property.
Is An Inheritance Considered Community Property?
No. In California, an inheritance is not considered community property. If it was left to only one of you, it is considered separate property. However, if the inheritance was left to both you and your spouse, it is considered community property. However, monetary inheritance can become community property if left in a joint bank account.
Related: How to Protect Your Assets in a California Divorce
Are My Pension Plan and Employment Benefits Community Property?
Yes. Under California’s community property laws, any interest or income accumulated in a 401(k), pension, military pension plan, or profit-sharing plan during a marriage is considered community property.
How Are Pension Plans Divided?
Pension plans are generally divided in one of the two following ways:
- Reservation of Jurisdiction
Reservation of Jurisdiction is the most common route divorcing couples take in order to handle pension plans. This means that when the employed spouse retires, the other spouse will receive a percentage of each pension check. This percentage is calculated by dividing the years when the spouses were married by the total number of years that the employed spouse has been participating in the pension plan - Cash-Out
The other method of handling a pension plan involves obtaining actuarial evaluation. In a “cash-out”, an actuary will review the plan description as well as the accumulations on the account of the employed spouse. The actuary will then determine the present value of the community share of the pension plan. With a cash-out, the employed spouse receives the entire pension plan and the other spouse receives other community property assets of equal value.
If My Spouse and I Agree on How To Divide Our Property, Do We Have to Follow Community Property Laws?
No. Divorcing couples are free to negotiate pre-nuptial, martial, and settlement agreements to distribute their property. However, if a couple cannot reach an agreement, the court will use the principles of community property in order to divide the estate.
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If you and your spouse have more questions about community property or need to split up your assets, contact us. We’ll get you in touch with the most qualified attorney for your unique legal matter. Get your free consultation with one of our California Property Division Attorneys today!