What does it mean to divide “community property” in a divorce?

If you’re considering divorce or believe that your spouse is, you’re likely already aware that California is among the relatively few “community property” states. There’s a lot of confusion around just what means. 

People often assume it means that when a couple divorces, each spouse walks away with 50% of their combined assets (and 50% of their combined debt). That’s not exactly the case. Not even all community property states treat property division alike. Let’s take a brief look at what property division in California looks like under the law.

Which property is “community” property?

Under California law, “marital property” is considered community property, which is split equally under the law. That is anything (with exceptions like individual inheritances or gifts) acquired by either or both spouses individually or jointly throughout their marriage. This includes things like:

• Wages or other work-related income
• Interest, dividends and other “passive” income  
• Property bought with one or both spouses’ income

• Separate property that’s used to buy, maintain or improve marital property

That last one sometimes sneaks up on divorcing spouses. It involves the commingling of separate and marital property. Once it’s commingled, it can legally be considered community property. A simple example would be if a spouse deposited their inheritance in a joint investment account and then the couple used funds from that account to purchase a home. The non-inheriting spouse could potentially seek half of both the account and the home in divorce. (That doesn’t guarantee they would get it, however.)

Do you have to split community property equally?

If you and your spouse negotiate your own property division agreement with the help of your legal teams, you aren’t required to divide your community property equally. You can divide it any way you choose, although a judge likely wouldn’t approve an agreement in which one spouse got the vast majority of assets.

Couples can use a prenuptial or postnuptial agreement to codify some other type of property division. For example, you might stipulate that you would both walk away from the marriage with the amount of individual inheritances and/or gifts you’ve received. 

Assuming that the divorce process is easier because of our community property laws would be a mistake. Each divorce brings its own unique challenges. It’s important to have sound legal guidance to protect your rights and your future.