How does California classify property in a divorce?
“What is yours is mine and mine is yours,” may have worked while you were happily married, but should you divorce you must find a way to divide your property (and debts) and no one wants to feel like they did not get their fair share. The following is a brief overview of how California classifies property in a divorce.
What is community property?
California is a community property state meaning that when a couple marries, they make two individuals one legal “community.” Any property that is not separate property is considered community property. This includes any property obtained during the course of your marriage as well as earnings made regardless of who purchased the property or earned the income. A good rule of thumb is to remember that if something was purchased with money earned while you were married, then it belongs to the community and both spouses have a 50% interest in it in the event of a divorce.
What is separate property?
Separate property is that which is owned by one spouse only and is not included in the divisible estate. This includes any property you owned prior to your marriage, inheritances and gifts made to you only. If you earn money from separate property, for example if you own a rental home and make a profit off it, those profits are considered separate property. Separate property also includes money earned and property purchased after the date you separated from your spouse. However, separate property can be transformed into community property in the event of commingling.
What is commingling?
If separate property combines with community property in a manner that the separate property can no longer be traced, then the separate property will be considered community property. For example, if you owned a home prior to getting married and while married sold it and used the funds from the sale to buy a new home, then the equity in the home will have commingled and will be considered community property.
Learn more about property division in California
Determining whether an asset is separate property or community property can be challenging especially if commingling is a factor. This post is for educational purposes only and does not contain legal advice. Those who want to learn more about property division in California are invited to explore our firm’s website for further information.