How to Divide Community Property & Debt
Is your spouse trying to claim more than their fair share—leaving you with the bills and fewer assets? Dividing property and debt during a divorce can be complicated and emotionally charged. In fact, property division is often one of the most contested aspects of ending a marriage.
While negotiating a fair settlement outside of court can save time and money, it’s crucial not to agree to terms that leave you with debts you don’t owe or property you’re entitled to keep. Understanding how California handles community property and debt is essential to protecting your financial future.
How Do You Divide Marital Property vs. Separate Property in a California Divorce?
California bases property division in a divorce on community property laws. Under community property, each spouse owns an equal share of assets and income obtained during the marriage. It does not matter whether the property is titled in one name or both names. Community property is divided equally between the spouses during a divorce.
Examples of community property include, but are not limited to:
- Artwork and collectibles
- Household furnishings
- Real estate, including vacation homes and commercial property
- Motor vehicles and boats
- Financial accounts
- Retirement accounts
- Personal property
- Business interests
Separate property is not divided during a divorce. The property belongs solely to one spouse.
Examples of separate property include:
- Inheritance received before or during the marriage
- Property owned before the marriage
- Gifts received during the marriage
- Income and assets received after the spouses are formally separated
Classifying assets correctly is essential to ensure you receive your fair share of assets during property division. However, some assets may be difficult to classify.
For example, suppose your spouse inherited a home from their parents. However, marital income and resources were used to pay the mortgage payments and repair the home. In this situation, you may have an interest in the home even though it began as separate property.
High-value property and complex assets may pose unique issues when you try to divide them during a divorce. Businesses and retirement accounts could include both community property and separate property. You need to be careful and keep accurate records to prove inheritances, gifts, and other separate assets are not subject to community property rules.
What Is Transmutation?
Transmutation also complicates property division. Spouses can voluntarily change the classification of property from separate property to marital property and vice versa. Changing the classification of property can significantly impact the division of property in a divorce. If spouses agree to change the classification of property after 1984, the agreement must be in writing.
Dividing Debts in a California Divorce
Dividing debts during a divorce can also be complicated and stressful. Generally, both spouses are responsible for marital debts. However, specific factors are considered when dividing debts during a divorce.
For example, judges may consider child support and alimony payments when dividing marital debts. A judge may consider whether a spouse incurred debt for a marital affair. Likewise, the court may consider if a spouse used borrowed funds with the intent of leaving the other spouse to pay the debts.
Some debts may be secured by community property. If so, a spouse might agree to assume the debt to keep the property. Even though a debt is only in one spouse’s name, it may be considered marital debt.
How Do Prenuptial and Postnuptial Agreements Impact Property Division in California?
Prenuptial and postnuptial agreements are legally enforceable contracts between spouses. The agreements outline how the spouses manage financial matters within their marriage, including property division in the event of a divorce.
A couple can use a marital agreement to identify separate property and community property. They can agree to a different property division than would be required under property division laws.
The court may not enforce property division agreements in a prenuptial or postnuptial agreement if a spouse was forced or tricked into signing the agreement. If the agreement is unconscionable or contrary to public policy, the court may not enforce the terms regarding property division.
Learn More About Protecting Your Property Rights By Speaking to an Experienced Property Division Attorney
You do not have to guess about how to divide your property during a divorce. Our Los Angeles divorce lawyers help clients obtain fair property division agreements. Contact Berenji & Associates Divorce Lawyers to schedule a confidential consultation with a property division attorney today.
We serve all through Los Angeles, Beverly Hills, Los Angeles County, and its surrounding areas. Visit any of our offices at:
Berenji & Associates Divorce Lawyers Los Angeles Office
550 S. Hill Street STE 1467
Los Angeles, CA 90013
(213) 277-2586
Berenji & Associates Divorce Lawyers Beverly Hills Office
9465 Wilshire Blvd #333
Beverly Hills, CA 90212
(213) 277-2586