Is California a community property state? Read on for the answer and everything you need to know about community property in CA.
Yes, California is a community property state which means that most property acquired during a marriage is considered to be owned equally by both spouses.
But community property laws vary from state to state, so how does community property and property division work in California?
In this article, we'll cover everything you need to know about California community property laws, including what qualifies as community property and how it gets divided during a California divorce.
Community property states are states that consider property and assets acquired during a marriage to be owned equally by both spouses, subject to limited exceptions. In the event of a divorce, couples are required to divide community property and assets equally, which in most cases means a 50/50 equal split.
By contrast, equitable distribution states are states in which marital property is divided equitably (or fairly) between the couple during the divorce process. In equitable distribution states, courts determine a fair allocation of property based on a list of factors and guidelines which vary by state law.
California is a community property state, along with eight other states in the U.S., including Arizona, Idaho, Nevada, and Texas.
When considering property division, distinguishing between separate and community property is crucial.
Separate property is the property a spouse owns upon entering a marriage. California law defines separate property as:
Under California community property law, the day a couple decides to end their marriage is crucial in determining what is considered separate property as opposed to community property.
Some factors that determine the date of separation include:
The date of separation can coincide with the day a spouse decides to move out or the day a couple agrees that the marriage is over.
In either case, from that day forward, what either party earns is no longer considered community property.
In California, community property is property owned equally by each spouse in a marriage. This property is generally acquired during the marriage and is subject to a 50/50 split for each party in the event of a California divorce.
Under California community property law, and in the absence of a prenuptial agreement or postnuptial agreement between a couple, the court is required to ensure all community property is divided by an exact 50/50 split.
Community funds are funds earned during a marriage by either spouse, such as income, and therefore belong to both spouses.
Under community property rules, any assets acquired by community funds during a marriage are considered community assets.
For example, if a spouse purchased a car using community funds, the car would be considered community property in California, regardless of whose name the purchase was under or who drove the car.
Examples of California community property can include:
Community property in California can take many forms, but again, the key is that the property was acquired during the marriage.
As noted, the general rule is that all property acquired during a marriage in California is community property. But what are the exceptions to this general rule?
First, as noted above, gifts and inheritances acquired during the marriage are considered separate property and thus treated differently.
Second, prenuptial and postnuptial agreements can also designate that a certain type of property will remain (or be treated as) separate property instead of community property. (For example, if spouses sign a prenuptial agreement stating that their respective income will remain separate property).
A final exception to community property is property acquired after the date of separation. Any property or assets acquired after the date of separation will not be considered community property, even if it is acquired before the divorce is finalized.
Under California law, debts are treated the same way as other assets and property. Any debts acquired during a marriage are considered community debts and therefore shared equally by spouses.
Likewise, all community debts are required to be divided equally among a couple during a California divorce. Common types of debts that are typically divided equally among a couple are mortgages, car loans, or credit card debts.
In California, community property must be divided equally by a 50/50 split, except if there is a written agreement (such as a prenuptial or postnuptial agreement) stating otherwise.
When dividing community debts, a judge will subtract a couple's debts from their community assets to establish the net community estate. Each spouse will then receive one-half of the net community estate.
Note that California law only requires that the total net value of assets received by each spouse is equal. It does not require every piece of marital property to be divided exactly equally. Indeed, some things cannot be split 50/50, such as a family home.
So, for example, if one spouse receives the family house, the other spouse might receive other community property of equal monetary value.
While these community property assets are not being individually divided equally, each spouse is getting assets that are equivalent in value. In this case, since the total net value of the assets and property received by each spouse is equal, the division is acceptable under California law.
And remember, a spouse's separate property is not divided during a California divorce.
Quasi-community property is property acquired during a marriage while living in a state other than California that would have been considered community property had the spouse(s) been living in California.
These assets are only quasi-community property if they would have been considered community property had they been acquired in California.
Quasi-community property is treated similarly to community property in California.
To be considered quasi-community property, the assets must have been acquired while both parties were living together out of state. Additionally, in order to designate property as quasi-community property during a divorce, both parties must be residing in California.
A court will designate property as quasi-community property if:
If a California court designates property or assets as quasi-community property, it will be divided the same way as community property (i.e. 50/50 split).
Oftentimes, a spouse mixes--or commingles--their separate property with community property. This results in the separate property losing its status as separate, which is called transmutation.
Commingling separate and community property can complicate the division of community property as it can make it difficult to distinguish between the two types of property.
Commingling most commonly occurs when a spouse adds their income to a bank account they had before the marriage.
No, an inheritance is not considered community property in California. Gifts and inheritances are in fact the only assets that don’t automatically become community property when acquired during a marriage.
Gifts and inheritances are generally separate property and are, therefore, not required by California law to be divided equally in the event of a divorce.
Note that if gifts or inheritances become commingled into a joint bank account, the court may declare them to be community property.
So, is California a community property state? Yes, it is, and California law requires community property to be divided equally by a 50/50 split.
Under California community property law, community debts and quasi-community property are treated the same as community property and are therefore divided equally between spouses.
Separate property, meanwhile, is not divided and remains the sole and separate property of a spouse following a divorce.
If you have questions about divorce in California, you should consider speaking with an experienced divorce attorney to discuss the specifics of your case.