property division in california divorce

How Are Assets Split in California?

Goldberg Jones Divorce, Divorce & Finances, Divorce Process Leave a Comment

Divorce has a huge impact on your financial future. One of the biggest parts of the process is the division of property. Because this leaves such a lasting impression, it’s important to understand how California splits assets.

There are two ways that the courts divide assets and debts in the United States. Most states, 41 to be precise, use the equitable distribution model. The remainder adheres to community property statutes.

What’s the difference between the two? How does this affect your divorce settlement? Which set of rules does California follow to split assets in a divorce?

Is California A Community Property State?

Yes, California is a community property state. Understanding what that means, how it affects the division of debts and assets in your divorce, is important.

Community property states view all marital assets as joint property regardless of title. This means that if while you are married you purchase a house (or car, or boat, etc.) and only your name is on the title, your spouse can claim 50 percent of that asset.

There are, of course, exceptions to this rule. For instance, inheritance falls outside of these guidelines. If you inherit something, it stays yours.

Many people interpret community property to mean there is an automatic 50/50 split of assets in a divorce in California, no matter what. That, however, is not the case.

Related Reading: How Is Debt Divided in California?

How is Property Divided?

If you acquire an item during the marriage, both parties have an equal claim to ownership. That much is true, no matter who appears on documents as the owner.

For example, if you use joint funds to buy a car, but put it solely in your name, the court still views it as belonging to both you and your spouse. The same goes for a house and most significant purchases.

But that doesn’t mean the court awards everyone half of everything.

When it comes to splitting assets in divorce, California courts aim for a fair and equitable division. The general idea is for exes to come out on relatively even footing and for each to enjoy a standard of living similar to that which they experienced during the marriage.

It also often impacts divorce settlements.

In some instances, it makes sense for one spouse to take an unequal division of assets in exchange for a lower support payment. This type of arrangement can be more financially advantageous in the long run.

As stated earlier, some items fall outside of community property rules. For assets to be excluded as marital property, the item must be purchased solely in one spouse’s name and maintained using money that is separate from marital funds.

Related Reading: My Ex Agreed to Pay Off a Shred Debt Then Declared Bankruptcy

How This Works:

Imagine you want to purchase a car and keep it from being considered community property.

You need to title the car in your name only and use separate funds for the purchase. Additionally, all maintenance and insurance must also come from this separate account. If you use any shared money for this purpose, the court may consider this community property. As such, it then becomes subject to the division of property.

One example is if you inherit money and use it for this purpose.

Things do often become cloudy, however. Say you use your own individual income to buy a car in your name. That purchase is subject to being divided in divorce. Under community property rules, California views money earned during a marriage as belonging to both spouses. Thus, any items purchased with these funds are considered marital property.

Regardless if you live in a community property state or an equitable distribution state like our neighbors to the north, the division of property and debts should be carefully considered. Thoughtful planning and an effective strategy can prove very effective in protecting your interests through the divorce process.

Related Reading: Bankruptcy Or Divorce: Which One Do You File First?

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