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California’s rules for property division can be confusing

On Behalf of | Apr 4, 2024 | Complex Divorce & Property Division |

California residents who have been fortunate enough to accrue significant assets could find themselves wondering how it will be divided when they get divorced. Property division is one of the most difficult aspects of any divorce and that is especially so in community property states like California.

While most states across the nation strive for what they perceive is a “fair” outcome regarding property by using the equitable distribution model, the Golden State splits property the couple accrued while they were married in half.

In addition, categorizing property correctly can be complicated as some will be separate, some will be community and others will be commingled. As the couple decides to end their marriage, they must be aware of their rights when trying to achieve what they believe is a fair outcome.

Assessing property is essential when getting divorced

With the number of people who own a home; have automobiles; gathered collectibles; run a business; have investments and retirement accounts, property division can be an acrimonious part of a family law case. First, it is imperative to understand which properties are community and which are separate.

Property acquired after the couple was married is generally considered community property, meaning that it is jointly owned by the spouses. If they purchased a home following the marriage, it is community property regardless of who paid for it. The same is true for other properties. These will be shared as part of the divorce.

The time at which people will no longer need to share property from after the marriage can vary based on when they separated or moved forward with the dissolution. The date of separation could be when one partner informed the other that they were ending the marriage. It could also be when they decided to live in different residences.

Separate property is that which was acquired prior to the marriage. It encompasses both property and debt, so when debt is divided it is imperative to remember that both parties might not be responsible for it. If a person bought items or acquired property in exchange for property they owned before the marriage, this too will be separate property. A gift, inheritance or personal injury award will be separate property.

Commingled property is more complex and invites the possibility for disputes as to how to accurately categorize property that each side makes a claim to. A marital home is one example, but there are many. Hypothetically, if one partner used money they had before the marriage to put a down payment on the home, then this is separate property. If they used combined income to pay for the mortgage or the other partner makes or pays for improvements, then the situation is more difficult to discern.

The same is true for other assets that might have grown in value due to toil from the non-owning partner. If one had started a business prior to the marriage, it will be separate. The other partner working in the business and playing a substantial role in its increase in value could warrant it being viewed as commingled property and divided as such.

With difficult property division cases, it might be easier if the sides negotiate and perhaps exchange one property for another to avoid a long-term battle. If the sides are on good terms, this is possible. In situations where they are not, it will be harder to forge a negotiated settlement.

Property disputes can arise in any family law case

Property disputes are common in circumstances where the parties have accrued vast holdings. Still, any divorce will have separate, community and commingled property with the accompanying disagreements. When getting divorced and thinking about how to reach a fair resolution regarding property division, knowing the law and how to proceed is essential.