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Dividing property in California as the result of a legal separation or divorce can be complicated and costly. Understanding how the court systems view debt and community property before the process begins can save time and prevent unpleasant surprises.

The California court system defines property as anything that can be bought and sold or has monetary value. Examples are as follows:

  • Bank accounts/cash
  • Car
  • House
  • Stocks
  • 401(k)/Pension plan
  • Life insurance with a cash value

Even if the items in question have been informally divided without the court’s intervention, there still needs to be an official record of the results. Property categorization takes place during a formal separation. Items acquired before the union are considered personal property and not subject to division. Acquisitions during the marriage are considered community property. 

California’s laws regarding community property are unlike other states, which use “equitable distribution.” This complex process considers a range of factors, including each spouse’s income and the length of the marriage. The goal is to make the division of property fair, not equal.

According to FindLaw, community property laws state that upon divorce, all items of value owned by a married couple are split 50/50. This includes all income and income-related accounts, real estate and personal property acquired during the marriage and all debts incurred during the marriage.

California law mandates that all community property be subject to equal division. However, in an uncontested divorce, the affected parties may choose a different plan. As long as property acquired before the marriage or as a result of an inheritance is not in a joint account, it may remain personal property.