How Asset Division Really Works In A California Divorce

In this article, you can discover…

• How “community property” is defined in California.
• How pensions are divided during a California divorce.
• What to do if you fear an unfair asset division ruling from a judge or court.

What Does “Community Property” Mean In California Asset Division?

In California, “community property” means everything that is earned or acquired during the marriage with community funds. It belongs to the marriage, not to you as an individual.

It doesn’t matter how you hold the title or who earned it. It doesn’t matter if you kept two separate accounts or never shared funds. If it was acquired during the course of your marriage, the default assumption is that it’s community property. You and your spouse operated as one legal unit; everything is owned by the two of you, and when you get divorced, you each own half.

What Does “Separate Property” Mean In California Asset Division?

“Separate property” means the asset belongs to one party as an individual and that it does not have to be shared or divided in the event of a divorce. Separate property includes anything you owned before marriage or obtained with those funds, inheritances, and gifts. However, if you co-mingle your separate property with communal property, the other party can acquire an interest in that separate property.

For example, if a wife owned a house before marriage, this house becomes the family home. Let’s say the wife works, the husband is a stay-at-home dad, and the wife continues paying the mortgage with her income. Should this couple divorce, the husband has earned an interest in the home as the mortgage was paid for with money earned during the marriage.

Determining what that interest is will take specific calculations, but legally speaking, half the money that was paid into the mortgage each month after marriage was the husband’s, allowing him a legal interest in the home for that amount.

Attorney Jordana Better is a skilled, respected divorce attorney serving California. Since 2016, she’s helped clients just like you navigate asset division, protect what truly matters, and negotiate for outcomes that are more flexible, fair, and tailored.

Have questions, or in need of legal guidance? Reach out to the Law Office of Jordana N. Better for an initial consultation today.

Can I Protect An Especially Valuable Personal Collection From Division In A California Divorce?

Possibly, but you must be able to prove that your collection (such as a record collection) is pre-marital, separate property, and was only added to using pre-marital assets.

For example, if you bring a record collection into the marriage with you and only use funds from a pre-marital trust fund to buy more records, this record collection would remain separate property. But if you have bought more records over the years with community funds (including your income), the collection becomes community property.

It is extremely important to understand what actually counts as separate property in California, and why. If you do not understand these nuances and cannot trace where money is coming from, you will not be able to legally separate and protect your pre-marital property from division in a divorce, but you might be entitled to a reimbursment.

How Are Debts And Assets Typically Divided During A California Divorce Settlement?

This depends on the type of debt. Normally, debts are associated with an asset (such as car payments). Therefore, whoever keeps the asset after the divorce would keep and be responsible for the debt.

Credit card debt works a bit differently and is generally considered joint, parties share the debt up to the date of separation. Depending on the intricacy of the accounts, It may be worth your while to hire a forensic accountant to determine which credit card debts were acquired after you physically separated from your spouse to avoid being responsible for those debts. Credit card debt acquired before you separated, however, would be considered shared debt, making you responsible for half.

How Are Pensions, 401(K)S, And Other Retirement Accounts Split During Divorce In California?

From the day you got married to the date of your separation, anything earned by 401(K) accounts and other retirement accounts is considered community property in California. My firm often uses the services of personal valuation and QDRO firm Moon, Schwartz & Madden to help value and divide those assets.

Once you divorce is entered with the court, my firm will send your 401(k), pension, and other retirement account information to this or another respected QDRO specialist. They’ll work their magic and send back a Qualified Domestic Relations Order (QDRO), which we then file with the court and provide to the financial institutions.

Division is not the only option, it may be possible to negotiate to keep your 401(k) in the negotiations with your spouse during settlement. The best thing to do would be to sit down with your divorce attorney, explain your goals, and allow your lawyer to help you negotiate for those outcomes.

Advice To Clients Who Worry That Their Property Split May Be “Unfair”

Our legal and court system is what it is, and it’s the only court system we have. If you view community property laws as unfair and do not want to risk receiving a subjectively unfair order from a judge, you would be much better served by using my firm to mediate rather than going to trial.

A trial is simply going to follow the law. In settlement, however, you can negotiate to ideally keep your 401(K), keep the vacation house, or keep your children while giving up something else to the other party.

Once you go to trial and the judge gives that order, that order is what you must follow. Mediation, negotiations, and settlements, on the other hand, give you a much better chance of an outcome that is more workable, fairer, and better tailored to your needs and expectations.

Still Have Questions? Ready To Get Started?

For more information on asset division and California divorce law, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (310) 351-4745 today.