Your Guide Through Challenging Times

How does community property laws work?

| Jan 13, 2021 | Property Division |

California is one of only a few community property states in the country. The concept of community property applies in a divorce when dividing assets and debts. 

According to the California Courts, community property is the idea that all assets or debts you and your spouse obtained during your marriage belong equally to each of you. There are exclusions for inheritances and gifts. 

Property

Community property laws encompass all assets, including any money you make during the marriage. This includes money from wages or salaries and money through other means, such as investments. The law extends to anything that you buy with the money you earn during the marriage. 

It does not matter if you buy something with money you earned only and put the asset in your name. The item would still belong to both of you if you bought it during your marriage under community property laws. 

Debts

You may not realize it but the court will also divide debts in your divorce. The same rules apply to debt. It is not relevant in whose name a debt is or who created the debt because as long as the debt occurred during the time of your marriage, then it belongs to both of you. 

Commingling

While the general rule is that anything you obtained prior to the marriage is yours alone and not part of your community property, there are exceptions. You may commingle separate property with community property. If this happens, your separate property may become community property. For example, if you own a car before you marry, then that car is your separate property. However, if you sold the car during the marriage and bought a new car with it, then the new car becomes community property. You cannot claim separate property for the money you used to buy the new car.