California outlines how the classification of assets has an impact on the division of property during a divorce. Property may include your house, autos, personal property, bank and retirement accounts, life insurance policies, stocks and business assets.
State law views marriage or a registered domestic partnership as one legal community between two people. Therefore, with limited exceptions, property that couples acquire during their marriage or partnership is community property owned 50/50 by each spouse or partner.
Community property includes all money earned by one or both partners during the relationship and all assets purchased with those earnings. Even a pension plan may be community property if earned during the relationship.
Debt acquired during the marriage or partnership is community debt. Thus, if your spouse or partner incurs debt during your relationship, you also owe that debt.
You and your partner may own quasi-community property. This is property that would be community property except for the fact that you or your spouse purchased or earned it while residing in another state. In a divorce or legal separation, quasi-community property counts as community property.
Separate property consists of assets you or your spouse or partner own individually:
- Anything you owned before marriage or registration of your partnership
- Inheritances or gifts made to one partner, even if made during the relationship
- Profits and income earned from separate property
- Property purchased with separate property
- Property acquired after your date of separation, including earnings
You may have commingled property that is part community property and part separate property, and this may complicate settlement negotiations. Other factors like prenuptial agreements may also affect your property settlement.
Knowing how assets are classified may help you choose a course of action that is best for you should you file for divorce.