When a California couple decides to end their marriage, they must face the question of how to divide their property. Most states use the “equitable division” method in which the property is divided in a way that is fair to both parties. California recognizes two kinds of marital property: community property and non-marital property. Community property must be divided equally between the spouses, whereas non-marital property is awarded to the spouse who owns it. The rule is simple enough, but its application can be complex.
Property is anything of value. It may include tangible items, such as a house, an automobile, furniture and works of art, and intangible items, such as bank accounts, pension plans, 401(K) plans, life insurance and stock in a business. Non-marital property means all property owned by a spouse before the marriage is formalized. Non-marital property also includes property received by one spouse by way of gift or bequest. Community property is all property acquired by the couple during the marriage. Community property includes income earned by the spouses, assets acquired jointly, such as a house and the cumulative value of shares in a pension plan or other retirement plan.
When a couple ends their marriage, community property must be divided equally between the spouses. Non-marital property is given to the spouse who owns it. A couple may agree before they marry to divide their property differently from the statutory mandate, but in the absence of such an agreement, the community property rules apply.
Complications arise when one spouse uses non-marital assets to purchase an asset that would otherwise be community property. Under California law, such an asset is presumed to be community property. If a spouse wants to challenge this presumption, he or she must show by a preponderance of the evidence that the property was purchased with non-marital assets. Anyone who owns substantial assets may wish to consult an experienced divorce attorney for advice on how the California community property laws apply to those assets.