What is Marital Property and How Is It Divided During Divorce?

Even under the best of circumstances, divorce is stressful and complicated. One major issue in many divorces is dividing marital property between the parties. Trying to navigate marital property division during a divorce can lead to expensive and life-altering mistakes. As decisions about the division of marital property will have long-lasting effects on your life and your financial stability, getting the advice of an experienced California family law attorney is crucial.

Trust a divorce lawyer at Evans Kingsbury LLP who can help you determine your best course of action in negotiating and litigating issues related to your marital property division. Contact us today at (707) 596-6090 and schedule a meeting with us about your divorce case.

Community Property in California

California is a community property state. As a result, people who marry create a legal community, and all property they acquire, all money they earn, and debts they incur during the marriage are community property and debts.

Under California Family Code §760, “Except as otherwise provided by statute, all property, real or personal, wherever situated, acquired by a married person during the marriage while domiciled in this state is community property. ”In a community property state, each spouse is half-owner of all community property and half-responsible for all community debts.*

Types of Community Property

Community property involves several different types of property. Earnings from your work during marriage are community property, as are any assets purchased with money from your earnings.

Community property also includes real property or real estate that you acquired during your marriage, such as your home, rental or vacation homes, and undeveloped property.

Personal property that you can buy or sell is also a major component of community property. Some common types of personal property include:
• • Vehicles, including cars, boats, motorcycles, ATVs, tractors, and jet skis
• • Personal effects, such as clothing and jewelry
• • Furniture, appliances, artwork, and home décor

Intangible property is another type of community property. You cannot necessarily buy or sell intangible property, but you may be able to transfer it, and it is inherently valuable. Intangible property includes:
• • Pensions, 401(k)s, and other retirement plans
• • Cash and bank accounts
• • Life insurance policies
• • A business and any assets owned by the business

Separate Property

Even in a community property state like California, some property is separate, despite the parties’ marriage. Separate property is generally all property that one spouse owns before the marriage, any money or assets a spouse earns or acquires after they legally separate, and any property that a spouse separately inherits or receives as a gift. However, this property does not remain separate unless the spouse who owns it keeps it separate from all other property and does not commingle or mix it with marital property.

Any property that a spouse purchases with separate property is also separate property. For instance, suppose a wife inherits $200,000 from her grandmother during her marriage and keeps the money in a savings account solely in her name. She then withdraws $25,000 from the bank account, purchases a car with the money, and titles the car solely in her name. In this case, the car would be the wife’s sole property.

Furthermore, any earnings on the separate property, such as rent or interest income, remain sole property. For example, if the wife places her $200,000 inheritance in an investment account solely in her name and account funds earn $20,000 in investment income throughout the parties’ marriage, that investment income from the wife’s account is her separate property. However, suppose the wife commingled her inheritance funds in an investment account containing $100,000 in marital funds in both spouses’ names. In that case, commingling has occurred. The wife will have a much more challenging time claiming that any investment income or the inheritance funds are her separate property.

Dividing Property in Your Divorce

Generally, the community property in a California divorce is divided equally. However, in most cases, separate property remains with the spouse who owns it.

An equal division of community property does not mean that every property item is physically split equally between the parties. There are various ways that the parties can divide their community property, all of which are based on the property’s value.

Each party prepares a list of property and debts, including the fair market value of each item of property and whether it is community or separate property. The attorneys for the parties then compare the lists to determine any areas of disagreement. In many cases, the attorneys will use creative methods to effectuate an even split of the property, such as by selling a home to distribute the proceeds between the parties or by one party making an “equalizing payment” to the other.

Pensions, 401(k)s, and other retirement plans are the most complex assets to divide in a divorce. You will need the services of an experienced family law attorney to assist in preparing a Qualified Domestic Relations Order (QDRO) or the court order necessary to divide one of these plans between the parties during a divorce. These orders are unique to each retirement plan and the company that administers the retirement plan. The parties, their attorneys, and the judge must approve the QDRO. Likewise, the plan administrator must approve the QDRO before it can take effect.

The parties can agree on how to divide their property as part of a marital settlement agreement. If the parties cannot agree, the case may proceed to trial, and the judge will decide how to divide the parties’ property.

We Can Represent Your Interests in Your Divorce

You can rely on a family lawyer from Evans Kingsbury LLP to represent your interests in handling your divorce or family law case. We have the skill and knowledge to help you explore the full range of options, answer your questions, and explain what you can expect from the divorce process. We can help you navigate all aspects of your divorce or other family law proceedings. Contact us today by calling (707) 596-6090 or reaching out to us online.

*If you and your spouse signed a prenuptial, premarital, or any other type of financial agreement that addresses your property and debts before your marriage, the statements in this post may not apply to you. Seek the advice of an experienced California divorce attorney to determine how this agreement affects your rights in a divorce.