How is property divided in a California divorce?

On Behalf of | Oct 3, 2023 | Family Law |

As a community property state, most people believe that the division of property during a divorce in California always results in a 50-50 split. However, it is quite a complex process to divide assets and debts, and the result is sometimes an equitable rather than equal split.

Community, separate and transmuted property

In California, there are three different ways property can be categorized during a divorce. There is community or marital property, which includes the assets and liabilities a couple accumulates once married. There is also separate property, which includes property and liabilities incurred before marriage, inheritances and individual gifts, and property bought with separate funds. Finally, there is a third category, which is transmuted property. This refers to property that has changed from community to separate or vice versa, for example.

What constitutes community property?

You and your spouse will need to list and identify all your assets and debts before negotiations can begin regarding the division of property. Community assets and liabilities can include:

• Income and savings

• Retirement and investment accounts

• Property such as real estate, vehicles, artwork or high-end furniture

• Debts such as mortgages, car loans, credit cards and any other liabilities incurred during marriage

The division of property

Once you and your spouse have assigned all your assets into the three categories, can begin to negotiate. You might want the space, time and privacy for the negotiations to be done discreetly, particularly if you are going through a high net-worth divorce. Through this process, you and your spouse might agree to terms that might not necessarily result in an equal split of the assets and debts. However, if the court determines the agreement is equitable and created in good faith, even if the division is not a 50-50 split, the court will usually approve the divorce settlement.

Divorce negotiations, of which the division of property is a major part, should result in an agreement that allows both spouses to receive a financial settlement that they are both content with. Prepare for this process, and be open to honest communication, so you can achieve the best result possible.