Property Division

California is one of the few states with a community property law.

It means that all assets and debts spouses own or incur during their marriage are joint or community property. Some examples include cars, houses, stocks, retirement benefits, and mostly any other items holding a monetary value or financial liabilities.

California state laws grant each spouse a 50% interest in everything that constitutes community property. So, in case of divorce or legal separation, each party will receive an equal share of any joint assets and debts (Family Code, § 2550).

However, several rules prevent the assets from falling into the jointly owned category, making some items separate property.

Generally, a prenuptial or post nuptial agreement can act to clarify community and separate property. If you have such an agreement, contact us today at The Stratte Firm to ensure that your agreement is honored during the divorce.

What Is Community Property in California?
Property laws in California say that any assets or debts acquired by any spouse during their marriage are owned and owed by both of them. And it does not matter which spouse earned money to buy something.

In a divorce, all this marital property will be split 50/50.

Despite its simple definition, community property law is a complex concept because it’s not always possible to divide each item of property right down the middle. As we know, “split the baby” does not always work out so well.

In addition, some properties, such as pensions, may not be immediately accessible for the division if the person hasn’t reached a certain age. Further some stock options are not able to be divided to a non-employee spouse even though the community has an interest. Therefore it is essential to partner with an experienced lawyer at the Stratte Firm today to ensure you receive your share of all assets in the community during your divorce or legal separation.

The community property principle in California applies to all types of property, such as houses (also called real estate), financial assets, pensions, stocks, businesses, and debts. As long as these property items were acquired during a marriage, they are considered joint marital (community) property.

Here are several examples of what can be community property in California on condition that these items were purchased, acquired, or occurred during the marriage:

• Personal income (wages, commissions, bonuses)
• The family home and other real estate
• Bank accounts and investments
• Pensions and retirement benefits (401(k)s, IRAs)
• Vehicles, furniture, electronics, household equipment
• Business interests, stocks, patents
• Credit card debts, mortgages, and other loans
• Sometimes, the community and separate property can commingle.

For instance, the spouses buy a house and pay the mortgage together, but the down payment is made with one spouse’s money they earned before marriage.

Separate property in California is every property acquired before the wedding date and after the separation. Some items, such as inheritance and personal gifts during the marriage, also belong to this category.

California Family Code defines separate property as:

• owned before marriage
• acquired by gift, bequest, devise, or descent during the marriage
• profits, rents, and issues from separate property

While the start of a marriage is easy to determine, the date of separation sometimes needs clarification. Most couples consider it the day one spouse moved out, meaning they stopped physically living together to dissolve the marriage.

In the most common sense, all community property in California must be divided equally between spouses. However, there are some exceptions.

Although the marital property is subject to division during divorce, not every item will be split in half.

It’s common practice to award spouses with different types of assets. This is where negotiating an agreement is the best solution. Partner with the Stratte Firm to start your divorce process to ensure you receive the assets in the divorce that are the best for your future.

For example, one partner gets the house, and the other receives retirement benefits. And if the property’s value is uneven, the spouse with a higher amount of assets should make an equalization payment to the other spouse. The Court prefers cases where the spouses can make an agreement and having a partner in your divorce such as the Stratte Firm will make all the difference in your outcome.

Also, if the couple has a prenup or a settlement agreement, they can divide their property unevenly, and the court would not object. In addition, each spouse will receive their separate property, which belonged to them before marriage, or if it’s an inheritance or a gift.

Another essential factor that California courts consider is the fairness of division. If for some reason, the 50/50 split is unfair, the judge may order unequal division. They usually make this decision based on each spouse’s contribution to marital property and their earning capacity.

California family law does not establish a specific period that the couple must be married before they obtain the right to half of the marital property. In addition, the spouses will not get half of everything; they will only have 50% of jointly acquired property and debts during the marriage.

Therefore, if one party purchased a car and then got married, the other party won’t receive half of the value of this car since it’s not community property. Thus, a couple can be married for one day and be eligible to split the marital assets they obtained during that one day.

Community property is divided by the judge if the parties cannot agree during a court trial or by spouses via agreement. It can be a prenuptial agreement that the couples had signed before getting married or a divorce settlement agreement drafted after they decided to end their marriage.

The important aspect of dividing community property is to ensure that each spouse receives assets with equal value. California’s divorce rules do not require dividing every physical item 50/50 between spouses. However equity is essential in a divorce judgement. Even though spouses can agree to unequal division, without an agreement the judge will seek the most equitable division for a judgement after trial. This is why it is essential to partner with a law firm that will work with you and for you. Contact the Stratte Firm today to get started.

Instead, the court may assign each spouse portions of property equal in net value. For instance, if one spouse receives the family home, the other may obtain several assets with the same net worth.

Another option is for one spouse to buy out the other party’s share of an asset or sell it and divide the proceeds. It may work well with real estate and businesses. However, it’s not uncommon for some couples to keep owning such property together even after divorce.

Many couples believe that the family house is their most valuable asset.

However, often this real estate property comes with ongoing mortgage payments. In addition, some parts of it may be one spouse’s separate property, such as money paid for the down payment or improvements to the house.

A common method to divide the marital house is by selling it and dividing the proceeds 50/50. If one party covered the down payment, they must be reimbursed the money in this case and then receive half of the net proceeds. Another option is for one spouse to keep the family home and to buy out the other party’s ownership interest in the house. However, this path will be more complicated since it includes determining the home’s market value. Plus, the spouse keeping the house should refinance the mortgage with a new loan in their name only.

California laws do not require that one spouse leaves the family home while a divorce is pending. Both spouses have the right to live in the house until the final decree is issued.

However, the divorcing parties have a few options to decide who stays and who moves out. First is when the spouse who continues to live in the marital residence pays the other party the home’s rental value.

If there is evidence and danger of domestic violence and child abuse, the protected spouse may obtain a restraining order to make the other party move out to ensure their safety. The Stratte Firm is an expert in these types of situations. If you find yourself in harms way by your spouse, contact the Stratte Firm for a solution for your protection today. If you are immediate danger, please call 9-1-1.

The portion of pensions and retirement benefits obtained during marriage is also deemed community property in California and must be split equally between the parties.

However, a common complication in dividing retirement assets is that all pension plans require a person to reach a certain age to start receiving benefits. If the parties try to withdraw money earlier, they will pay income tax and penalty fees. Fortunately, there is a penalty-free way to give one spouse their share of the other party’s retirement assets via a Qualified Domestic Relations Order (QDRO). Partner with the Stratte Firm to get started on dividing retirement assets today.

The portion of any 401(k) accounts earned during the marriage is community property in California and must be divided equally. Dividing it requires getting a QDRO to protect the tax shelter qualities of this asset, which will instruct the custodian of this 401(k) account on how much money to transfer to the other spouse without penalty.

A part of an Individual Retirement Account (IRA) funded by community income is considered marital property in California. Also, this account can only be split by a court order, again to protect the tax shelter status of this asset. This is typically part of a divorce judgment. If one spouse takes out any money before receiving the court order, they will pay state and federal taxes and penalty fees.

Any business assets acquired by a California couple during their marriage are community property regardless of who has run the business.

However, if one spouse started it before the wedding, its pre-marital portion, including generated income, will be treated as separate property.

Divorcing couples running a family business have several ways to deal with its division. The simplest option is to sell it to a third party and split the proceeds. However, this might leave one or both spouses unemployed. Another option is for one spouse to buy out the other party’s ownership interest. It will include many complicated steps, such as determining the value of all hard assets (bank accounts and equipment), debts, and income that this business generates.

Business valuation and division is a complicated aspect of high asset divorces. It is essential that you partner with a trusted resource in the Stratte Firm to achieve desired results.

Investment properties such as land or buildings used for earning rentals or capital appreciation can be considered community property if acquired during the marriage. Otherwise, California law will treat them as separate property, not subject to division.

Investment properties can be split by either selling them and splitting the proceeds or trading them for other assets equivalent in value. In addition, the spouse who wants to keep these investments can pay the other party 50% market value of the property. Contact the Stratte Firm today to get started.

There are a couple of methods to determine value for cars in a divorce. These include hiring an appraiser or using online valuation tools. The value will depend on the car’s model, mileage, year, make, etc.

Equal distribution of assets in a California divorce requires understanding their value. To determine their worth, courts (or the parties) use an expert evaluation process and should complete it right before the trial or final hearing. The Stratte Firm has trusted experts and will partner with you to ensure the highest valuation of assets to maximize your community portion.

Property items the spouses possess can be valued using different methods. For instance, real estate appraisers and realtors can estimate the value of a family residence.

However, they will charge additional fees. As for the price tag, the house’s value will not be the same as it was when the spouses had purchased it; instead, it is the potential current market price. This means that the valuation method will vary depending upon your desired outcome. This is why your choice in divorce attorneys can make all the difference in your property division outcome. Contact the Stratte Firm today to get started.

Some items are more difficult to evaluate than others. For instance, business evaluation is complicated, mainly because its fair market value consists of many tangible and intangible parts. In particular, a business generates income, unlike hard assets such as money in bank accounts, real estate, and vehicles. Therefore, determining the company’s value may require hiring a business appraiser who will use several evaluation methods, such as market capitalization or a revenue multiplier method.

There are a couple of methods to determine value for cars in a divorce. These include hiring an appraiser or using online valuation tools. The value will depend on the car’s model, mileage, year, make, etc.

Whether the inheritance will be divided in a divorce in California depends on which type of property (separate or marital) it belongs to.

For instance, if one spouse had inherited cash or a car before marriage, these items are separate property. They won’t be divided if they were kept segregated and not commingled with community property.

However, if these assets are commingled with marital property, for example, if a person placed the inherited money into a joint account, the judge may divide them between the parties, unless a forensic tracing can be accomplished and the money is not depleted. This is why hiring the right attorney will result in a better outcome in your divorce asset division. Call the Stratte Firm today to get started on your divorce.

The general rule in California is that inheritance is a separate property of a spouse who received it. So, if you have kept your inherited assets separate from marital property, your spouse will not get half of it upon divorce. However, other factors may come into play, so it is important to contact a knowledgeable law firm to help you in this process such as the Stratte Firm.

Until the divorce is over, any current house bills are the spouses’ joint responsibility if they are living in the house. The best option to continue paying them is to keep a joint account while the divorce is pending. If it’s not possible, the parties can split the responsibility equally. The responsibility for the type of bill depends upon the living situation of the parties and their income. This is why it is important to partner with an experienced lawyer early in your divorce process to ensure that you have sufficient resources to handle upkeep on the assets before the divorce is finalized. Contact the Stratte firm today.

If the spouses cannot agree on an amicable solution, the judge may issue temporary orders assigning a part or all of the payments to one or both parties.

Temporary support for a spouse is an important consideration. If you are in need or may be subject to an order to pay, contact the Stratte Firm today to ensure you have fair treatment during this process.

In California, community debts incurred between the date of marriage and separation will be divided 50/50 (Family Code, § 2550). By contrast, debt incurred before the wedding day is a separate debt of the spouse who incurred it and will be their sole liability (Family Code, § 2621).

Some examples of community debt can be credit card debts of both spouses, car loans, mortgages, medical bills, and other personal loans. Student loans are frequently considered separate debt and are assigned to the spouse who received the education.

Community debt in California is usually divided equally between the parties upon divorce. For instance, the court assigns the debt on the part of credit cards to one spouse, while the other spouse will take responsibility for paying up the rest of the credit card debts. The same goes for loans and leases.

However, the court order is insufficient to stop being responsible for the debt. In addition to that, a spouse taking a property item with a debt owed against it must refinance their name on loan if the property is divided by Court order. Otherwise, if they fail to pay the debt, the creditor will hold both parties accountable. This is why an experienced attorney can assist you with creative solutions if you are unable to manage this alone. Contact the Stratte Firm to get started.

Both spouses often come into a marriage with some property, such as houses and vehicles.

By contrast, couples with a settlement agreement don’t have to spend time in court and can divide assets without court involvement. A less expensive divorce is a divorce by agreement. Contact us at the Stratte Firm today to get started.

The answer is no if the property stays separate from other assets and community funds, and the spouses can prove it with documented evidence or written agreement (Family Code, § 2581).

On the other hand, some parts of separate property sometimes mix with marital property. For instance, if improvements made to this property during the marriage increased its value, at least some of that value became marital property. These considerations are essential when dividing assets in a divorce. Contact The Stratte Firm to ensure your results are maximized.

Upon divorce, all these assets and debts will be distributed 50/50 between the parties.

The process of property division in a California divorce is often complex, especially for marriages with substantial assets or a lack of agreement between spouses. This is why you need the Stratte Firm team on your side.

By contrast, couples with a settlement agreement don’t have to spend time in court and can divide assets without court involvement. A less expensive divorce is a divorce by agreement. Contact us at the Stratte Firm today to get started.

Under California Family Code §770, all gifts are the separate property of the person who received them.

However, a judge requires a formal discovery of whether it was a personal gift or one from which both spouses could benefit. In addition, high-value gifts, such as vacation homes, artwork, or antiques, may sometimes be treated as marital property.

No, California is one of nine states using community property law. It means that any assets, real estate, debts, and other property a couple acquired during the marriage will be split in half if they divorce.

Separate property of each spouse can become marital property via commingling or transmutation. For instance, different assets can get mixed up, as in putting money from the separate property into a joint account with the clear intent to make it marital property.