Most residents of Sacramento who are considering ending their marriages are aware that California is a “community property state,” but they may not know exactly what the title means. Familiarity with the state’s community property laws may assist in resolving disputes about dividing a couple’s assets and in planning for the economic consequences of a divorce.

Any married couple who has lived in California for at least a few years has most likely acquired a number of assets with significant value. These assets can include a house, automobiles, furnishings, art collections, a vacations home, and similar items. These same individuals may have acquired significant assets before getting married to their current spouse. California law provides clear directions for dividing these assets.

Property acquired by each spouse before the marriage is referred to as “separate property,” and property acquired during the marriage is called “community property.” Generally, separate property will remain the property of the owning spouse after the divorce is finished. On the other hand, community property and debts incurred during the marriage must be divided equally between the spouses. Community property includes all income earned by the spouses during the marriage, all property acquired during the marriage with income earned during the marriage and all debts incurred during the marriage. A couple can negotiate a marriage termination agreement that does not use the 50/50 formula, but the agreement must be approved by the court. Dividing certain kinds of community property can be complex, such as income earned in retirement plans, appreciated real estate and capital gains on property sold during the marriage.

Understanding the financial ramifications of one’s property division is very important, as it can help spouses move on with their lives. Anyone with questions about the effects of California’s community property laws may wish to consult an experienced divorce attorney for advice before attempting to negotiate a property settlement.