California is a community property state. Therefore, any income, property (real or personal) or income from community property (i.e., interest, rental income, etc.) that is earned or acquired during the marriage will be considered community property. The parties to the marriage can change community property by agreement [i.e., prenuptial (before marriage), postnuptial (during marriage), transmutation (change the title of the asset) or by settlement (after the separation)].Upon dissolution of marriage or legal separation, all community property is subject to being divided equally (50% each)between the parties.
To understand community property, it is also important to understand separate property. Separate property is all property that is earned or acquired by one party prior to the marriage or after the date of separation. Also, any property received by one party during the marriage by gift, inheritance, or from proceeds of a separate property asset will be considered to be separate property. In California, all separate property is awarded to the earning or acquiring party, unlike community property which is divided equally.
In a dissolution of marriage action, it is very important to identify all income and assets each party has earned or acquired before, during and after the marriage. The timing of the acquisition of the property will not only determine how the income or asset is characterized (e.g., community or separate) but it will also aid in what is called “tracing.” Tracing is the process by which the transactions for the acquisition of income and assets are traced back to its origins. So, if an asset derives from a separate property source and its character (i.e., title) has not been changed during the marriage, then that asset will be considered separate property. Tracing will also apply to community property sources.
Many times during the settlement process, parties discuss some issues of their property division but not all of them. When it comes time to reduce the agreement to writing, the parties find out that there are many unresolved disputes. Written property settlements are complex and detailed. Parties can generally agree on the division of household furniture, furnishings, clothing, jewelry, bank accounts and automobiles. The complicated issue are the valuation and division of real property, business, stocks and bonds, retirement and pension plans. If you have these types of property, you should seek the advice and counsel of an experience family law attorney. The attorney will review your assets, discuss their characterization and valuation and proposed division. You have worked hard for your income and assets, do not give away property to the other party out of frustration or the desire to put the marriage problems behind you. An experienced family attorney will work with you to get you the best property settlement possible. Family law attorney can explain to you the difference between separate property and community property, and can anticipate the issues that the other side may raise. Having an experience family law attorney will protect your property rights and give you the peace of mind that you received a fair and reasonable settlement from your dissolution or legal separation action.