Community and separate property
California is a community property state. Property acquired during the marriage is presumed to belong to both spouses equally and is divided equally at the end of the marriage. Property owned before marriage, or received by either spouse as a gift or inheritance, is generally separate property and stays with that spouse.
When the lines blur
Many cases turn on situations that are not clear-cut:
- A home bought before marriage but paid down with income earned during the marriage
- A business started before the marriage that grew while the spouses were married
- Separate funds deposited into joint accounts or used to buy community property
- Stock options, restricted stock and deferred compensation earned partly during the marriage
Tracing the source of funds and documenting separate property contributions can support reimbursement claims or a share in growth.
Businesses and the self-employed
Dividing property well means identifying and valuing everything, tracing separate property contributions, pursuing reimbursement claims, and understanding the tax consequences of who keeps what. For self-employed spouses and business owners, retaining a forensic accountant is often necessary to present this evidence to the court.
Retirement accounts and debts
The portion of a pension, 401(k) or IRA earned during the marriage is community property. Many retirement accounts are divided by a separate court order sent to the plan administrator. Debts incurred during the marriage are generally divided as well, which is just as important as dividing assets.
What you can do now
Gather statements for every account, property and debt, including statements from around the date of marriage and the date of separation. Keep copies of documents showing any gifts, inheritances or property you owned before the marriage.
Family Code §§ 760, 770, 2550, 2552, 2640, 2610