Divorce is almost always a turbulent and challenging time, full of mixed emotions and fears. In California, it’s also a time when divorcing spouses have to worry about how the court will divide their property. According to California’s community property divorce laws, divorcing couples must divide all marital assets 50/50. Section 2550 of the state’s family code requires couples to either reach an agreement for the equal division of marital property together or let the courts decide.
Before a divorcing couple can determine how to equally split their joint property in a way that’s agreeable to both, it’s important to understand the differences between nonmarital and marital property in the eyes of the California court.
What is Nonmarital Property?
When a person goes into a marriage, they may already have assets in their own name. Some examples of separate, non-marital properties include the following:
- Real estate owned before the marriage
- Cars, jewelry, heirlooms, and other valuables owned before the marriage
- Investments and accounts owned before the marriage
- Any rent money or profits made during the marriage but from property or accounts owned prior to the marriage
- Anything purchased through funds from separate property
- Any gifts or inheritances given to a person in their name alone during a marriage
Once a couple separates, any further property they acquire is non-marital property. Debts a person has before they marry also remain nonmarital property.
Understanding Marital Property in California Divorce
Because California is a community property state, the marriage between two people becomes a “community” in legal terms. Domestic partnerships also become “communities.” Once this community is established, any property, assets, or debts acquired by one or both partners becomes community property. Any money earned by either partner during the marriage is community property.
Some examples of community property include:
- All bank accounts opened and used during the marriage even if opened in only one spouse’s name
- The family home and any real estate property purchased during the marriage
- Investments, stocks, and savings accrued during the marriage
- Pension plans
- All cars, home furnishings, appliances, technology, books, artwork, and home decor acquired during the marriage, even if purchased with one spouse’s income
- Any debt accumulated during the marriage even if acquired by only one spouse
Acquiring assets as community property ceases from the moment a couple decides to separate and takes separate residences.
What is Commingled Property?
In some cases, the division of property into marital and nonmarital assets can become a little murky. For example, if one spouse came into the marriage with a nonmarital property that was later sold or traded in for a new property during the marriage, it becomes a commingled property. Another example of a commingled property is a rental property that belonged to one spouse prior to marriage but was then maintained, enhanced, and improved by the other spouse. A car owned by one spouse but repaired and improved upon by the other, or an antique owned by one spouse prior to marriage but then refinished and improved by the other are all examples of commingled properties.
For commingled property, a judge may decide to give the property to one spouse in exchange for another property of equal value to maintain the 50/50 division as fairly as possible.
Divorce Agreements in California
Under California family law, divorcing spouses may decide on their own property division once a monetary value is assigned to each asset to ensure the division is as close to 50/50 as possible. One spouse can trade or “buy out” an asset or property they want with one of equal value. They may also agree to continue jointly owning community property, such as rental properties if both parties agree and are able to openly communicate to manage joint property or businesses together. Typically, a judge will simply sign off on a private divorce settlement agreement made between divorcing spouses as long as it’s fair.
When a couple can agree to their own division of marital property through open negotiation—often with the help of divorce lawyers and mediation—they keep the decision out of the impartial court and in their own hands.
