California Community Property

• California's community property rules
• What is and isn't community property?
• How to divide property, step by step
• Get help when needed
• References

Most people know that they must split assets and debts during a divorce. But California couples need to know a little bit more. 

California’s community property rules ensure couples split assets and debts acquired during marriage 50/50 in a divorce. While the concept is simple, determining what is communal and what is separate can be tricky. 

Follow three basic steps to identify and value your community property during divorce.  If you end up unable to come to a full agreement, try mediation to get there. If you cannot reach an agreement on your own, you may need to go to court.

Understand California’s community property rules

California is a community property state, meaning couples are meant to split assets and debts equally when they divorce or formally separate. 

California Family Code 760 contains community property rules. Per this statute, community property is acquired through these means:

• By a married person
• During the marriage
• While the person lived within the state

In this statute, the “community” is the couple. Their property is jointly owned. When they split up, this property should be divided evenly and parceled out accordingly. 

What is (and isn’t) community property?

California's rules seem really straightforward, but the details can get a little messy. While property is anything someone can buy, sell, or invest in, it also includes debts. And sometimes, couples bring things into (or take things out of) their union that can change the property's status. 

Three main types of property exist:

• Community property: Anything you own or owe together with purchases completed during your marriage is community property. 
• Separate property: Anything you owned or owed before your marriage belongs to you alone when the union ends. Similarly, if you're separated, anything you own or owe from the time of your separation is yours alone. 
• Quasi-community property: If you lived in another state during part of your marriage but moved to California later, debts or property is quasi-community property, but it’s typically treated just like community property.

Some exceptions to these neat-and-tidy types exist. For example, any gifts or inheritance given to just one party remains separate property. And loans used to pay for one party’s education are treated like that person’s separate property. 

How to divide community property, step by step 

Couples are required to account for all community property during a divorce. The idea can be overwhelming, but breaking the process into pieces can help. 

Step 1: Determine what is community property

California law says community property is anything you earned or borrowed while you were married and living in California. 

Begin with these:

• Marriage date: Find your marriage license, and look for the formal date on which you became a married couple. 
• Separation date: This is a little more ambiguous, but in general, your date of separation is the day one person lets the other know (by actions or words) that the marriage is over. This could be an agreed-upon conversation date, or it could be the day you served papers. 

Next, think about these:

• Assets: What did you buy as a couple between these two dates while you lived in California? Don't forget things like pension plans and retirement accounts. If you both contributed, this is communal property.
• Debts: What did you borrow between these two dates while you lived in California? One party may have debt in their name, but that's typically considered community debt. 

Step 2: Determine its worth

Some couples have a keen sense of property and its worth. Others need outside help to assess their estate's true value fairly. 

If you need outside help, you could hire these professionals:

• An appraiser: Some appraisers specialize in one type of property (like jewelry or real estate). Others can look over entire estates. 
• An accountant or CDFA: Someone like this can help to calculate depreciation rates for items like computers and televisions. 
• A lawyer: Some lawyers have community connections, and they can wrangle appraising an entire estate. You can hire a lawyer to handle just this part of your divorce. You're not required to use them in a courtroom during your divorce. Hello Divorce has attorneys on its team to help only when needed, at affordable hourly rates. Learn more here.

If you can't determine the value (or you don't agree), California courts can help. Per California Family Code 2552, courts can value all assets and liabilities before a trial, so you can both walk away with an equitable portion of the estate. 

Step 3: Divide your property and document 

If you signed a prenuptial agreement, this process could be relatively simple. The document contains instructions about how your estate is handled during a divorce. You'll simply follow those rules. Other couples have more work to do.

A written agreement allows couples to list all of their assets and how they'll distribute them during the divorce process. California courts created a sample document detailing just how a couple might use an agreement like this during a divorce. 

With an agreement written and signed, you can file documents with the court to end your marriage. Typically, you must add forms to your signed agreement, such as Property Order Attachment to Judgment (FL-345), with legal language about your estate. 

Get help when you need it 

In complex cases, it's hard for divorcing spouses to understand what is and isn't communal. A mediator, accountant, or lawyer can help to sort out the confusion and simplify the process for both parties. 

Lawyers can take just part of your case (such as assessing your estate), or they can guide your entire divorce process. If you're struggling to make sense of the process or need a little help, reach out to a lawyer you trust and ask for advice. 

Divorces are final, as are the estate designations you create. Take your time with this process to ensure you get more of what you want (a fair settlement) during your divorce. You won't be able to fix things later, so careful planning can prevent regrets down the road. 

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References