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How community property law affects property division in CA divorces

California’s community property laws require marital property to be divided evenly between spouses; the division of other property can be more complicated.

For many couples divorcing in Torrance, the way property will be divided during the settlement is a significant source of concern. Many couples are familiar with laws observed in other states, which require marital property to be divided equitably, but not necessarily equally, between spouses. In California, however, marital property distribution is handled differently; under the state’s community property laws, both assets and debts are divided evenly between spouses.

Guidelines for property division

Community property consists of any assets and debts that were accrued during the marriage, regardless of which spouse purchased the property or took on the liability. Even assets such as retirement accounts, which are clearly held in the name of one spouse, are subject to community property laws. California law also makes provisions for dividing three other types of property:

  • Separate property is property that spouses acquired before the marriage, after the date of separation, as a gift or as an inheritance. If this property was kept separate from marital property during the marriage, it is not divided between spouses.
  • Commingled property is separate property that has been mixed with marital property. For instance, if a spouse uses personal assets to purchase a home while married, the value of the home is a commingled asset. The division of commingled property is usually complicated.
  • Quasi-community property is property that qualifies as community property in California but was obtained while one or both spouses were living elsewhere. This property is treated like community property during the divorce settlement.

Under these laws, the division of simple marital assets and debts may be relatively straightforward. However, the division of complex assets, such as houses and retirement income, can quickly become complicated.

Strict interpretation of laws

A case that the California Supreme Court considered earlier this year highlights how strictly the state interprets community property laws. According to The San Jose Mercury News, in 2003, a famous singer took out a life insurance policy worth $3.75 million and named his wife as the beneficiary. After the couple divorced, the ex-wife contended that the policy, which was worth $400,000 at the time, belonged entirely to her.

The man held that, since he had purchased the policy during the marriage using funds that were considered marital property, the property should be considered community property and split evenly between the two ex-spouses. Ultimately, the Supreme Court found that the policy could not be considered separate property, since the man had never explicitly stated that he was giving up his right to the property.

Navigating property division

This case illustrates how the division of complex assets can quickly become complicated in California, especially when the nature of the property is debatable. To minimize losses or oversights during the divorce settlement, most people going through divorces in the state can benefit from meeting with an attorney to discuss state property laws and how those may impact the divorce.

Keywords: marital property, divorce, distribution