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Property Division

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Understanding California Community Property Law

California is one of only a few states recognizing the principle of community property in a marriage. Community property consists of any assets and debts acquired by either spouse during the marriage by any means other than gift or inheritance, without consideration of the income or contributions of the individual spouses. The basic principle of the law is that all community property belongs jointly to both spouses and is divided equitably (or equally) in the event of divorce or legal separation, regardless and irrespective of the inequality between individual contributions.

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The community property assets (sometimes called “marital assets”) of your marriage may include:

  • Pension plans, 401(k)s, other retirement funds;

  • Real estate holdings;

  • The ownership of businesses;

  • Overseas investments or property;

  • Automobiles (motorcycles, RVs, off-road vehicles, etc.)

  • Stocks, bonds, annuities, CDs, notes

  • Collections (artwork, classic car, boats, etc.)

 

Though the Court must attempt an equal split of such assets, this does not mean that every single asset is split down the middle. Community property can be divided in kind by considering its value when allocating other assets. There is also the option of liquidating assets in order to equally divide the monetary proceeds, such as is often the case with the marital residence.

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Dividing Community Debts

Community assets are not the only thing that gets equally divided between the event of a divorce or legal separation. The Court must also make an equal assignment of all community debt between the parties. In general, community debts are those incurred after the date of marriage, but before the date of separation.

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Debts incurred during marriage belong to both spouses equally, even if only one spouse incurred them (e.g., only one spouse’s name is on the credit card). An exception to this equal division rule arises when the value of the community debts exceeds the value of the community assets. In this situation, the law allows courts to order an unequal division of the debts by assigning the excess debts to the spouse who is in a better financial situation to pay them.

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What is Separate Property?

Separate property is a property that belongs to one spouse and is not subject to division in a divorce or legal separation. This includes property that a spouse brought into the marriage (a house, a business, pension funds) or assets or debts acquired in the name of one spouse during the marriage (an inheritance, personal injury award, or education loans). While property acquired by either spouse before the marriage is not community property, a spouse can gain community interest in non-community property by contributing to its upkeep. This can be taken into account during the division process.

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Transmutation in California Family Law 

''Transmutation'' of property is the change of the character of the property, either from separate to marital property or from marital to separate property. The intent to change the character of the property must be shown by admissible evidence. Transmutation may be achieved by the following:

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  • Mutual agreement;

  • Jointly titling the property in the names of both spouses;

  • Commingling separate and marital property; and

  • Gift

 

When separate property is “transmuted” into community property, a spouse/partner will suddenly become a one-half owner of what was once the separate property of the “owner” spouse. Property can become transmuted when the new spouse's name is added to the property, when community funds are used to maintain or care for the separate property, or when the separate property is commingled with community property. If this occurs, the community develops an interest in all or part of the separate property. Often times clients will not have realized a transmutation has occurred or intended the legal ramifications of his/her actions or decision.

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At Law Office of Channe G. Coles, we are adept in determining and arguing for and against transmutations of both separate and community property.

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Helping Clients Seek Positive Property Division Outcomes 

Often the complexities of a divorce or legal separation are amplified by concerns regarding a potentially unequal division of assets and debt. This is especially true for clients with high-value property and significant individual and marital investments and debt, including:

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  • Investment assets

  • Pensions and retirement accounts

  • Family-owned businesses and closely held corporations

  • Professional practice interests, inventory, and investments

  • High-value homes such as vacation homes and investment real estate

  • IRS tax debt

  • Credit card debt

 

At Law Office of Channe G. Coles, our goal is to achieve the most equitable property division settlement no matter the range of marital asset levels or challenges it presents. Attorney Coles works diligently with professional appraisers, accountants, and actuaries to properly value marital assets, then works diligently with you to tailor an innovative and fair proposal, or properly evaluate the other party's proposal.

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The Law Office of Channe G. Coles is here to protect your marital rights and ensure that your marital estate is properly classified, that your community property is divided in accordance with the law and that your separate property interests are protected. By choosing the Law Office of Channe G. Coles, you will have guidance throughout the process and all of your questions will be answered.

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To speak to an attorney at Law Office of Channe G. Coles about the value and division of your community and to protect your assets, please call us at (805) 617-4618 to schedule a confidential consultation.

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