Is California A Community Property State? – Forbes Advisor

Before answering the question, is California a community property state, it is helpful to understand what exactly that means.

States are divided into two categories when it comes to how property is split by courts in a divorce. Here’s what they are:

• Community property states. In community property states, marital assets and marital debts are divided 50/50. It doesn’t matter who made more money or acquired more property or incurred more debt. When a couple divorces, all martial assets and all martial debts are split in half by the court.
• Equitable distribution states. In equitable distribution states, courts divide property fairly but not always equally. The court looks at many factors, including the contribution each party made to the marriage, to determine how debt and assets should be divided up when a couple divorces.

Now that you know what a community property state is, you can better understand why it is so important to answer the question, is California a community property state?

And the answer to this question is yes. In the Golden State, if you divorce, your assets and your debts acquired during the marriage will be split 50/50 by the court.

While marital assets and marital debts are divided in half in community property states like California, this does not necessarily mean you will get half of every single asset or be held responsible for half of every single debt. That’s because there are two kinds of property::

• Marital property is all property that either spouse acquired during the marriage and all debts that either spouse acquired together during the marriage. If you made money or acquired an asset or incurred a debt after saying I Do and before legally separating, it is marital property regardless of who actually took on the debt or bought the asset.
• Separate property is property and debt that each spouse brought into the marriage and didn’t co-mingle or mix with marital assets. Gifts or inheritances given to just one spouse during the marriage can also be considered separate property.

Property and debt that are acquired between the date of the marriage and the date when you officially separated are considered to be community property in California. The date of separation is the date when either spouse let the other know, by actions or words, that they wanted the marriage to end.

There are different rules for student loans, though. If one spouse acquired student loans during the marriage, that is usually treated as a separate debt. Almost all other assets and debts are considered to belong to the community, though. This can include debts you may not have known about that your spouse took out in their name only, but also assets like pension or retirement plans that one person paid into at work.

It is important to know that community property rules apply when a judge decides how assets and debts are divided in divorce. You do not necessarily have to divide up your assets in this way.

You and your spouse are generally free to draft your own settlement agreement outside of court and divide up your debt in a way that you believe is fair. As long as you both agree, you do not have to follow community property rules.

Many couples do prefer to draft their own settlement agreement outside of court and pursue an uncontested divorce rather than a contested one. It can result in better outcomes when a couple determines on their own how to split up assets and debts. The process of divorce can also be cheaper and less adversarial if a couple comes to an agreement on their own instead of letting a judge make decisions for them.

You can also create a prenuptial agreement or postnuptial agreement specifying a different division of assets. As long as you followed all requirements for creating a valid agreement and neither party entered into the premarital or post-marital agreement under fraud or duress, the prenup or postnup will be enforced by the court and dictate how property is divided.

It can be complicated to understand how property is divided in a divorce, and a lot of money and property may be at stake. You should consider consulting with a California divorce lawyer for assistance understanding your rights and creating a divorce settlement agreement that helps ensure security in the future.