Most Californians who are contemplating a divorce are aware that California is a community property state, but they are not certain how those laws will affect the division of their property. The effect of the community property statutes is especially important for couples who have accumulated a large amount of property beyond their main residence and its furnishings. For these couples, how their property will be divided can have a significant financial impact on their post-divorce lives.
The community property rule can be simply stated: property acquired during the marriage is deemed to be owned by both parties and will be divided equally between them, regardless of which spouse acquired the asset. Assets acquired before the marriage and assets acquired by gift or bequest are not considered community property. All marital property is presumptively deemed community property, and the spouse that wishes to challenge that presumption bears the burden of proving otherwise.
The most important rule of community property division is that the total amount of marital property must be divided equally, but this rule does not mean that every asset must be split into two equal shares. Rather, the final property division must award each spouse an equal amount of the couple’s community property.
Negotiating the division of assets in a high-asset divorce can be complicated. Each spouse is likely to retain several experts, including a lawyer, an accountant and a property appraiser. Other experts may be retained for special valuation issues, such as investments in pension and retirement plans, expensive artwork, interests in closely-held corporations and the value of non-residential real estate.