In California, property is shared communally by spouses or domestic partners. In divorce proceedings California law requires that all community assets be divided equally if they are community property. Many marital assets are considered joint property, but not all assets are considered shared assets. Who owns how much of an asset can be difficult to determine. Some assets are not divisible at all. This summary hints at some of the complex financial issues that a divorce may raise.
In California, a couple's time, skill, and labor are shared equally. The products of that time, labor, and skill belong jointly to each spouse as well. Savings, real estate purchases, investments, royalties and license fees, and motor vehicles are all considered community property. This is generally true, but there are many exceptions.
The more complex the couple's finances, the more like issues of community property and comingling are to arise. California law gives judges broad discretion in how equal distribution of assets is achieved.
Assets inevitably get mixed up in many marriages. Homeownership commonly raises the comingling problem. You purchase a home together and build equity in the home. Does the home belong equally to each partner or does it depend on how much money each partner contributed to the mortgage payments. Joint savings accounts and investments raise the same question.
Deciding who owns how much of a comingled property can be complex. Tracing of legal documents may reveal who owns what share of the asset, or not. Sometimes the relevant documents have been lost or never existed. You should consult a California divorce attorney if you have questions about assets that were comingled during the marriage.
The most common exceptions are gifts to one spouse. A rare piece of art purchased to be displayed in the home would be community property, but a piece of art given to the other spouse for a birthday may be separate property. An inheritance left to one spouse, not the couple is considered separate property.
Division of Property
As a community property state, California law requires that community assets be divided equally. Comingling makes this more difficult to do in practice. The distinction between a gift and piece of community property may be disputed. Was that expensive painting a gift from one spouse to the other, or was it a piece of joint property.
Many properties simply cannot be divided. A piece of raw land or a vacation home are two examples of this. The house cannot be shared. The land could, in theory, be divided into equal-sized plots. The vacation home might have to be sold, unless the other spouse can receive other assets of equal value. California law requires that the values balance out, so each partner gets a 50% share of community property.
There are some exceptions to the rules about dividing community property. Fraud is grounds for not sharing assets equally. A spouse who withdraws funds and hides them after the parties have separated violates the fiduciary duties owed by spouses towards each other and is subject to sanctions. Lastly, a spouse who neglected his or her fiduciary duties to the family is likely to find their share of a divorce settlement reduced.
Dissipation of assets, a legal term for wasting joint financial assets, can be a form of misappropriation but is often discussed in legal writing on divorce. If one spouse suspects another of spending down their savings or investment income in advance of a divorce, that spouse can be punished by the court. Many activities can qualify as illegal wasting of assets:
- Giving expensive gifts to friends
- Giving money to a lover
- Running up massive credit card bills
- Buying stocks
If someone suspects their spouse of wasting assets while a divorce case proceeds, they should call an attorney at once. The attorney may be able to take steps to freeze the assets in question.
Dissipation is not an issue with separate property, such as $5,000 inheritance left to one spouse. However if one spouse files for divorce, neither spouse may encumber, sell or spend separate or community assets without the other spouse’s consent, except for the purchase of necessaries of life.
Given the high divorce rate in the United States, anyone with significant assets should consider speaking with an attorney before getting married. Anyone contemplating divorce should definitely consult an attorney if their financial situation is complicated by numerous assets in different classes. Contact a California divorce attorney if you have specific questions about your property.
DISCLAIMER: The materials available at this web site are for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem. Use of and access to this Web site or any of the e-mail links contained within the site do not create an attorney-client relationship between Law Office of Barbara J. May and the user or browser. The opinions expressed at or through this site are the opinions of the individual author and may not reflect the opinions of the firm or any individual attorney.