Before creating your divorce agreement, you need to know, from a legal standpoint, what belongs to you, what belongs to your spouse, and what belongs to both of you. In states like California, this is where the concept of community and separate property comes in.
What You Need To Know About Community Property
So what is “community property”? Community property is an asset or debt that both spouses have an equal right to. You own it equally, benefit from it equally, and have equal claim to it.
Here’s the important thing to remember about community property: under California law, all property acquired during your marriage is presumed to be community property. This is true whether both of you bought it together, and even if one of you bought it individually.
Yes, you read that correctly: even if you bought something individually and put only your name on the title, it’s still presumed to be community property. Your spouse has an equal right to that car you bought on your own, with your own money, even if only you are on the title. The only way it is considered “separate property” is if it meets one or more specific criteria.
What You Need To Know About Separate Property
Separate property is basically the opposite of community property: it’s when only one spouse has the legal right to an asset or debt. But when is something considered “separate property”?
To be considered separate property, an asset or debt has to meet one or more of the following conditions:
- Acquired by one of you before the marriage
- A gift made to one of you and not the other
- One (and not both) of you inherited it
- Acquired by one of you after the date of separation (more info on date of separation here)
- Social Security, military service benefits, and certain other federal benefits
So What Does All This Mean?
The bottom line is that in California, you and your spouse have the right to divide property in any manner you want in your divorce agreement (as long as you’re not trying to do something illegal, like defraud creditors).
This applies to both community and separate property—if you want to give some of your separate property to your spouse in exchange for something like a higher level of spousal support or ownership of the family home, you have the right to do so.
A key thing to keep in mind is what’s community and what’s separate property will play an essential role if you end up going to court. California courts will split community property 50/50, and each of you will keep your separate property. This can have major implications for assets that can’t be split up, like your home. You might be ordered by the court to sell your home so you can split the proceeds 50/50.
So if you want something other than 50/50 split of all community property, it’s important to reach an agreement with your spouse. Most couples are happier with their agreement when they’re the ones who decide, rather than a judge.
Other Terms to Know
We’ve already covered the most important concepts about property, but some other property types might be relevant for your divorce.
Mixed property – This is property that is mixed community and separate property. For example, if you jointly purchase property using both community and separate property funds, it is mixed property. In California, you can divide up mixed property however you want if you reach an agreement outside of court.
Property held in tenancy – As you look through your titles, deeds, and other paperwork, you may come across terms such as joint tenancy, tenancy in common and tenancy in the entirety. The important thing to know is that assets held in these ways are all considered community property in California. You can divide them any way you want between you and your spouse, but absent an agreement a court will split them 50/50.
Out of State Property – Property located outside California, such as a home or raw land, acquired during your marriage, is referred to as “quasi-community property.” The courts treat this the same as community property. As with community property, you and your spouse can decide how to divide out state of property in your agreement.