When you choose to initiate a divorce, you’ll naturally have many questions about the process and its impact on your life. If you possess a considerable number of assets, you might worry about the future state of your finances, the fate of your house, and what assets will remain in your possession after the divorce. In California, since it operates under community property laws, you and your spouse will equally share almost all property acquired or contributed to during your marriage when you divorce. However, the rule isn’t as simple as it seems.
What counts as community property?
You consider as community property nearly everything you earn or purchase with earnings during your marriage. Typically, community property includes items like:
- Wages and any other income
- All real estate bought while married
- Vehicles such as cars, boats, or recreational vehicles purchased during the marriage
- Pensions, 401(k) plans, and other retirement account earnings from the marriage period
- Banking and investment accounts, including stocks, bonds, and other acquisitions during the marriage
- Any business ventures or intellectual property developed during the marriage
You must also split any debts incurred during the marriage equally with your spouse, including credit card debt, mortgages, or car loans.
What are the exceptions to community property?
Some properties don’t classify as community property in a divorce. Generally, if a spouse owned property before the marriage and kept it separate, it remains theirs after the divorce. This rule also covers property purchased with separate funds during the marriage. Additionally, any gifts or inheritances one receives during the marriage usually count as separate property. When separate property becomes mixed with community property, you may need an attorney to clarify ownership.
Moreover, certain debts are considered separate property. For instance, student loans incurred before or during the marriage remain the responsibility of the person who took them out. Similarly, any debts one spouse incurs without the other’s knowledge are the sole responsibility of the person who incurred them.