Community property division during a California divorce is a complicated process. First, spouses must identify the assets and debts that they share. Certain assets may be separate property that the spouses don’t need to divide. Most of the property and income acquired during the marriage is subject to division under community property rules.
The spouses may need help determining the fair market value of their assets. They then have to negotiate a settlement where they split their property and financial obligations. If spouses cannot reach an agreement with one another, then a judge can divide community property based on state statutes.
Many people focus on their assets during property division proceedings, but the distribution of debts can be equally important. For many young and middle-aged couples, student loans may be some of their largest financial obligations. Are student loans typically subject to division when couples divorce?
Student loans are often separate property
When allocating financial obligations during a divorce, the courts usually focus on the intent behind accruing the debt and the date of acquiring the debt. The name on the account isn’t the main concern. A credit card in the name of one spouse used to buy groceries or pay other household expenses is likely subject to division as part of the marital estate.
Student loans are an exception to that general practice. Typically, the courts treat student loans as separate property even if a spouse took those debts on during the marriage. There are a few complicating factors that can influence student loans during divorce proceedings.
Perhaps there was a promise between spouses, possibly in a marital agreement, to share responsibility for educational expenses. Maybe one spouse was the cosigner for the other’s student loans. In those scenarios, the student loan might be subject to division in the divorce or may influence how the courts handle other property division matters. In most cases, each spouse is likely responsible for their own student loans regardless of when they took on that debt.
Individuals with significant financial obligations and complex marital estates may need help preparing for asset division negotiations or family court litigation, and that’s okay. Learning more about the nuances of community property division can be beneficial for those preparing for an upcoming divorce.
