California Law on Division of Property
Since classification of property and its division can become one of the most contentious issues in a divorce, seek the advice and assistance of a divorce attorney experienced with California laws on community property and property division. The lawyers of Milligan, Beswick, Levine & Knox LLP in San Bernardino County have the experience to help you.
What is Community Property?
California is a community property state and California defines community property as all property, both real and personal, which a married person living in the state acquires during the marriage. This includes property that is located outside the state as well as within the state. With the exception of separate property, no matter how property is titled, and, in the case of income, no matter who earned it, if it is acquired during the marriage it is considered part of the marital community estate.
Upon dissolution of the marriage, community property, absent an agreement between the parties, is divided equally between them. However, an absolute equal division of each asset would not be possible or even reasonable in many cases. For example, to achieve an equal division of every asset would require sale of each asset and division of the proceeds. For many families, forcing the sale of the family residence at the time of the dissolution can cause disruption to the family and result in even more inequity than awarding the residence to one spouse while awarding another asset of equal value to the other spouse. As a result, valuation of assets may become one of the major points of dispute between parties.
California law sets out exceptions to what is included in the marital community estate. The exceptions include property acquired by a spouse prior to the marriage and property acquired by a spouse during the marriage by gift or inheritance. The rents, proceeds or profits generated by separate property are also treated as separate property.
While it is usually clear what is and isn’t considered community property, disputes often arise over the classification of property. The classification of property can change during the course of the marriage. For instance, one spouse may own a home prior to marriage. After marriage, however, the home becomes the family residence, mortgage payments are made from income acquired during the marriage, the home is refinanced and several improvements and updates are made. It is likely the home would no longer be considered separate property and would be divided as an asset of the community estate.
Spouses or prospective spouses may make agreements as to the classification of property both prior to the marriage and at the time of dissolution.
In California, agreements made prior to marriage, called prenuptial agreements, must conform to certain requirements that protect either party from coercion to enter into an unfair agreement. For instance, the parties must each be represented by independent counsel or must have waived in a separate writing the right to have independent counsel.
The use of prenuptial agreements is becoming more common. This is true not only in situations where the parties may have large estates acquired prior to marriage, but also in the instance of spouses who have children from prior relationships. A couple contemplating marriage, each of whom has children from a prior marriage, may wish to ensure that their own children receive their rightful share of the property.
Married couples may also make agreements regarding the classification of property subsequent to their marriage. Enforcement of an agreement, if disputed, will likely hinge on the validity of the agreement; whether it appears that the parties each had full disclosure of assets, whether there is any evidence of duress and whether the agreement is fair to both parties.
Contact an Experienced Property & Asset Dissolution Attorney
In complex situations such as dissolution of marriage, the resolution of a property classification dispute requires the assistance of legal counsel experienced in California community property law. The family law attorneys at Milligan, Beswick, Levine & Knox LLP in Redlands, CA can assist you in resolving your property division issues.