California is a community property state. This means that all property acquired during the marriage is presumed to be part of the marital estate and is to be equally divided at the time of divorce or legal separation. This principle applies to all assets, ranging from homes to furniture to savings accounts to retirement funds.
There are, however, exceptions to the community property presumption or rule. Property that is inherited, received as a gift, or that can be traced to property owned prior to the date of marriage or after the date of separation is separate property. In addition, the characterization of property may be affected by a prenuptial agreement or other signed agreements during the marriage. The experienced family law attorneys at Viola Law firm will be able to assist you in determining the character of your property.
Q: My spouse has been with the same company since before our marriage. Am I entitled to his pension?
A: Contributions to a pension or other retirement account benefit made during marriage are community property and are equally divided at the time of divorce. Contributions to a pension or other retirement account made prior to marriage or after separation are considered the separate property of the contributing spouse.
Q: My spouse and I purchased a house in another state during our marriage. Is our house located out-of-state part of our dissolution proceedings if it was acquired when we did not live in California?
A: A house purchased during the marriage in another state is considered quasi-community property and the general community property presumptions apply. Quasi-community property is defined as “all real or personal property, wherever situated, acquired by either spouse while domiciled elsewhere which would have been community property if the spouse who acquired the property had been domiciled in California at the time of its acquisition.” A house purchased in another state during the marriage is treated the same as a house purchased in California for purposes of characterization and division. This rule does not prohibit one spouse from claiming a separate property interest or right of reimbursement in the asset.
Q: My spouse was laid off while we were still married and received severance pay. The severance pay was deposited into my spouse’s separate bank account. Do I have a claim to the severance pay?
A: Unless there is a pre-marital agreement which alters the character of earnings, all wages, commissions, bonuses and other payments from employment during the marriage are community property.
Q: My spouse was granted stock options during our marriage but they have not vested. Are the stock options community property?
A: Even if stock options have not vested as of the date of separation, there may be a community property interest to which each spouse is entitled. There are several ways that the community interest in those stock options can be determined. This is an extremely complicated area of the law. Please contact us in order to discuss the facts of your case.
Q: Am I required to sell the house we bought during the marriage?
A: Although each party is entitled to one-half of the marital property, it is not true that all of the assets have to be sold and the sales proceeds equally divided. In fact, it is usually more efficient and cost-effective to divide the community property in a way that keeps as many assets intact as possible. For example, if one party wants to keep the family residence, the other party’s interest in the residence can be offset by receiving a larger share of the stock portfolio or retirement accounts.
Q: My spouse incurred thousands of dollars of credit card debt. Am I responsible for any of it?
A: The community property presumption generally applies to debts in the same way it applies to assets: all debts accrued during the marriage are community debts for which each party is equally responsible, regardless of whether the credit card is in your name, your spouse’s name or both names. Of course, there are some exceptions to this rule. Debts incurred by one spouse without the knowledge and consent of the other and not for the benefit of the community can be allocated to just one spouse as his or her separate debt.
Q: According to our divorce judgment, my ex-spouse is liable for most of the credit card debt we incurred during our marriage. My ex-spouse has now filed for bankruptcy. Will that affect me?
A: If you are a co-signer on a debt, the creditor can demand payment for the debt from you, even if your divorce judgment says that your ex-spouse is liable. It is possible that the terms of your judgment require your ex-spouse to reimburse you for amounts paid to creditors for debts that were assigned to him or her. Depending on the language of your final divorce judgment, it is also possible that your ex-spouse may not be able to discharge the assigned debts through bankruptcy. The answer to this specific question depends on the details of your case.