Property Division Questions

Questions related to the Division of Property in California Divorce Cases

How do California Divorce Courts divide property?

California adheres to what is known as the “community property law.” Community property states generally treat a marriage much like a business and the spouses as partners in the business. The divorce is much like the dissolution of a partnership when it comes to dividing property.

Community property law says that all assets, debts, and accumulations on those assets or liabilities associated with the debts acquired after the date of marriage and prior to the date of separation are considered to be community assets and debts. The exception is gifts and inheritances which are presumed to be the separate property of the spouse receiving the gift or inheritance.

Where California divorces get complicated is where separate property is “comingled” or mixed with community property or vice versa. If you are going through a divorce and need advice regarding what is and is not community property contact a San Diego Divorce Lawyer at Griffith, Young & Lass to discuss your case.

How do California Courts divide debts?

The general rule is that all debts acquired after marriage and prior to the date of separation are community debts to be divided equally between the spouses. However, some exceptions apply with respect to characterization of a debt acquired during the marriage as well as the allocation of true community debt upon dissolution. It is possible to have more than one half of the community debt ordered against one spouse.

Are my spouse’s student loans considered community debt?

Generally student loan debt is considered to be the separate debt of the borrowing spouse. However, depending on whether the student loan proceeds were used to acquire property or to help support the family, these debts may be allocated and treated as community debt.

What do we do if our house is upside down?

This is a common problem in today’s market. Years ago divorce lawyers were helping the parties to divide the equity in the community residence. Now, it seems that every client that walks in the door has a house that is worth less than they owe. To make matters worse often there is a hefty second mortgage attached.

In a case like this, the house is considered to be a community liability rather than a community asset. You have two choices: one party can keep the house and assume the debt along with it, or the parties can either attempt a short sale or allow the house to go into foreclosure. The caveat in a situation wherein one party decides to keep the house is that the party keeping the house is going to have to find a way to refinance in order to remove the other spouse from the loans associated with the house. This is increasingly difficult with a house that has no value.

I have helped my clients to come up with some creative solutions when it comes to dealing with an underwater community residence. Sometimes it takes some creativity and willingness on both sides to sacrifice and bend a bit, but the problem of the upside down house is not unsolvable.

Is a gift between a husband and wife considered community property?

This is an interesting and evolving area of family law practice in California. The short answer is that it depends. Current case law in California says that whether a gift between spouses is considered to be a “transmutation” of that property from community property to separate property depends on the value of the gift compared to the overall value of the marital estate.

If the gift is substantial compared to the value of the estate, then the gift will probably be deemed community property. Conversely, if the gift is relatively inconsequential when compared to the value of the marital estate then the court will probably find that the gift is the separate property of the giftee.

Who gets to keep the engagement ring upon divorce?

An engagement ring is a gift given in contemplation of marriage and considered to be a conditional gift. The condition is satisfied upon the marriage taking place. If the wedding is canceled and the engagement terminated, the one “calling it off” is the loser. In other words, the woman gets to keep the ring if the man calls off the engagement. Once the parties are married, the engagement ring is just like any other piece of property brought into the marriage—it is the separate property of the party bringing it into the marriage (generally the wife).