Community property is all property acquired through labor or skill during the marriage. This includes interests in pension and profit-sharing benefits, stock options, other retirement benefits or a business owned by one or both of you. Each spouse owns half of the community property. This is true even if only one spouse worked outside of the home during the marriage-and even if the property is in only one spouse’s name.
In California, any property acquired during marriage is a marital asset and presumed to be community property. Any marital asset acquired from a community property source is also presumed to be community property. Both parties to the marriage have equal rights to the control and management of community property. A spouse cannot give or sell community property without the consent of the other spouse. One spouse cannot dispose of nor transfer community property without the consent of the other. Further, the couple must jointly consent and participate in any leasing, sale, or encumbrance of community real property. Community property automatically passes to the surviving spouse when one spouse dies unless the couple has entered into an agreement and made other arrangements for the property.
In the state of California, during a divorce all community property is divided equally unless both parties agree to an unequal division. Community property is all property that you and your spouse acquired, through labor or skill, during the marriage. This includes interest in pensions, profit-sharing benefits, stock options, other retirement benefits, and any business owned by one or both of you. Each spouse owns half of the community property. This is true even if the property is in only one spouse’s name.
Read more about dividing marital property by clicking here: Dividing Marital Property
More information about community interest in retirement plans can be found by clicking here: Dividing Retirement Plans
Examples of Community Property
- Any income received by either spouse during the marriage.
- Any real or personal property acquired with income earned during the marriage. This includes vehicles, homes, furniture, appliances and luxury items.
- Any debts acquired during the marriage.
Community Property Assets
A community property asset includes the money earned by either spouse during marriage and all property bought with those earnings. Any community property assets are owned equally by husband and wife. Likewise, community property debts incurred during marriage are generally debts of the couple. There are many Community property assets often overlooked or not considered during the divorce process.
There are many Community property assets often overlooked or not considered during divorce.
- Family Pets: In California pets are considered personal property. The family pet will be given to one spouse while the other will receive money compensation for half the value.
- Family Photos: All photos taken during a Sacramento marriage are community property assets. One spouse will receive copies while the other will retain the originals.
- Lottery Tickets: A ticket purchased during a your marriage is considered community property asset and subject to an equal division between spouses. Each spouse would receive one-half of the lottery winnings and the tax liability.
- Life Insurance Policies: A life insurance policy which has a cash value is typically referred to as whole life or universal life insurance policies is a community property asset. Each spouse would receive one-half the value of any policy.
- Airline and Credit Card Rewards: Reward points accrued during the marriage is a community property asset and subject to division in the divorce. Each spouse would receive one-half the value or half or the points.
- Cemetery Plots: Very often a valuable piece of real estate. The spouses will need an agreement to determine who has burial rights.
- Capital Loss Carryover: A loss that exceeds the allowable deduction in a single year and which can be carried over to future years to reduce tax liabilities is a community property asset. The spouses will have to agree on who is to take the loss and compensation for the spouse who does not get the loss.
- Retained Earnings: Corporate earnings which were retained from a period prior to separation is a community property asset that should be divided.
- Accounts Receivable: Money owed to the community by another party is to be divided between the spouses. Alternately, one spouse can get a credit for payments made solely to the other spouse.
- Trademarks, Copyrights, and Patents: An community property asset that may increase in value over time and the value of which should be addressed at divorce.
Read more about dividing marital property by clicking here: Financial Disclosures
Pension & Retirement Plans
Community property pension is the portion earned by a married person while living with a spouse. In California, the law requires that a community property pension be divided equally unless there is a written agreement otherwise. You have an interest in your former spouse’s retirement plan if any contributions were made during your marriage. If so, you can immediately begin receiving your interest in your former spouse’s retirement plan.
The pension community interest is the amount of money accrued in a spouse’s pension during marriage. This amount is community property which is divided equally upon divorce.
Discover more about community interest in retirements by clicking here: Retirement Plans
Learn more about divorce requirements by clicking here: Divorce Reimbursements
Find out more about reimbursements by clicking here: Epstein Credits & Watts Charges Reimbursements
Read more about community interest in pensions by clicking here: Community Property Pension
CalPERS Retirement System
The CalPERS Retirement System is more formerly known as the California Public Employees’ Retirement System (CalPERS). This agency is part of the California executive branch and is responsible for the management of pensions and health benefits for California public employees, retirees, and their families. As part of the divorce process, all community assets are divided, this includes the vested amount that one spouse may have in a CalPERS pension. Your pension can be divided using the following methods known as Model A, Model B, and Model C.
Read more about community interest in retirements by clicking here: CalPERS Retirement
Separate property is property acquired before marriage (including rents or profits received from these items); property received after the date of separation with separate earnings; inheritances that were received either before or during the marriage; and, gifts to you alone, not you and your spouse. Property of this nature is not divided and belongs solely to the spouse who owns the property. Problems can arise when separate property has been mixed with community property. When this occurs, the community acquires an interest in the separate property. However, you may be entitled to receive your separate property back even if it has been mixed. Debts incurred before your marriage or after your date of separation are considered your separate property debts.
Examples of Separate Property
- All property owned by a spouse prior to marriage.
- Property obtained by a spouse after a legal separation.
- Any property received as a gift or inheritance during the marriage from a third party that remains separate from community property.
- Pre-marriage debts.
Family Business Interest
A family business or professional practice can be categorized as community property that needs to be divided during the divorce process.
The first step is to determine when the family business or professional practice was started. If it was created during the marriage it will be classified as community property. However, if one spouse used their own separate funds, it may be classified as separate property. If the family business was created before the marriage it will be classified as separate property, but the other spouse may still have an interest in the increase in value gained by the business during the marriage. This increase in value will be classified as community property which is divided between the spouses upon divorce.
Marital Assets include all property acquired during the course of the marriage, regardless of ownership or who holds the title to the property. Examples of marital assets may include, homes, cash, stocks, bonds, cars, pensions, and insurance. In a divorce proceeding, all marital assets are considered community property to be divided between the spouses.
Often Forgotten Marital Assets that are Community Property, include:
- Family Pet – considered personal property, the family pet will be given to one spouse.
- Family Photos – all photos taken during a marriage are community property and are divided by providing one spouse of copies while the other keeps the originals.
- Lottery Tickets – a ticket purchased during the marriage is community property and subject to an equal division between spouses.
- Life Insurance Policies – a policy which has a cash value typically referred to as whole life or universal life insurance policies.
- Airline and Credit Card Rewards – reward points accrued during the marriage are community property and subject to division in the divorce.
- Cemetery Plots – very often a valuable piece of real estate you will need an agreement to determine who has the right to burial.
- Capital Loss Carryover – a loss that exceeds the allowable deduction in a single year and can be carried over to future years if the to reduce a tax liability.
- Retained Earnings – corporate earnings retained from a period prior to separation.
- Accounts Receivable – money owed to the community by another party.
- Trademarks and Patents – an asset that may increase in value over time.
For more information on community property, click on one of the following links:
Quit Claim Deeds Transmuting Property