How Does California Deal with Marital Property during Divorce?
California is a community property state, which means that courts divide marital property 50/50 between couples who separate or divorce. Marital property refers to all property acquired by couples domiciled (with permanent and fixed residences) in California during their marriage.
How courts divide marital property is not up to debate. However, the points of contention in a divorce are often whether you characterize property as separate or marital. Community property generally includes—
- Income appreciation
- Trust income distributed or withdrawn that is community property
- Trust income appreciation that is community property
Separate property includes:
- Property each spouse owned before marriage
- Property one spouse acquires during marriage by gift or inheritance
- Rents, issues, and profits earned by any separate property (i.e. rent income from a piece of rental property)
- Income earned by each spouse individually after separation
Separation in this case means that the couple dissolved their relationship with the intention of no longer remaining together or reconciling.
California Family Code Section 770-772 establishes these separate property rights.
When property division becomes challenging
Property ownership becomes confusing and presents the most challenges when couples commingle their assets. For example, one spouse has a piece of real estate acquired prior to the marriage, but during marriage both spouses provide funds to pay for property taxes, maintenance, or mortgage payments. Because all wage income during marriage is community property, even if you kept a separate bank account using money from your earned wages to pay for the property, the courts would consider that money as community property. If you had an investment prior to marriage that provided you with income, you could use that money for property upkeep and retain the separate characterization of the property. Or you could use rental profits to pay property taxes and upkeep.
Working with an experienced divorce lawyer can help you deal with the challenges of property division.