Community Property in California
When a couple gets divorced in California, a court will
distribute their property according to principles of community property. Under California law, the
parties to a divorce case will get an equal share of community property,
which is defined as any property that the parties acquired during their
marriage and before the date of separation. Conversely, assets that each
partied acquired in their sole name before marriage, after the date of
separation, or during the marriage through gift, bequest, or devise, is
considered the acquiring spouse’s sole and separate property and
is, therefore, not subject to division upon divorce.
Assets That are Divisible Upon Divorce
Although the California Family Code refers to community “property”
as being divisible upon divorce, the term encompasses more than just tangible
assets like cars, furniture, and jewelry, to include investments, financial
accounts, and even intellectual property.
The central feature that courts look to when determining issues of community
property is the date that a particular asset was acquired. Moreover, all
property that the parties own is presumed to be community property subject
to equal division upon divorce. A party claiming that a particular asset
is their sole and separate property that is not subject to division must
provide clear and convincing evidence that the asset is not community property.
As a result, anything in which a party can acquire an ownership interest
can be characterized as community or separate property. For example, the
wages that a party earns as compensation from their employer are subject
to characterization as community or separate property.
The following assets have been subject to equal division as a community
asset upon divorce:
- Compensation for work
- Employment benefits
- Retirement savings and pension plans
- Royalties for intellectual property
- Business interests
- Lawsuit damages
Liabilities That are Divisible Upon Divorce
In general, community property is liable for debts that either spouse incurred
before or during their marriage. However, one’s earnings received
during marriage are not liable for premarital debts. To protect one’s
earnings from premarital debts, they must be held in a separate deposit
account from which the other spouse cannot withdraw and must stay free
of commingled community funds.
For example, funds in a joint bank account shared by spouses can be reached
to pay for a loan that the spouses received during their marriage. However,
if one spouse deposits their wages into a separate bank account that the
other spouse cannot access, a creditor who provided the couple with the
loan cannot reach those wages to satisfy their community debt.
Importantly, a spouse’s separate property is not liable for the other
spouse’s premarital debts. For instance, if one spouse receives
trust income as part of their inheritance from a deceased family member,
that income cannot be used to satisfy the other spouse’s premarital
To Learn More, Call Hanson, Gorian, Bradford & Hanich
Are you in need of legal advice regarding an issue concerning California
community property laws? If so, you should reach out to an experienced
attorney from Hanson, Gorian, Bradford & Hanich. Our legal team has
what it takes to advise you on sophisticated financial issues that arise
from California’s system of community property.
For an initial consultation, please call us at (951) 506-6654 or
contact our office online today.