California property law is a very large umbrella, covering everything from deeds, titles, mortgages and property assessment to state and local laws on renting and leasing agreements. One area of particular interest with its own complexity is California's community property law and the way state laws divide marital property when a marriage ends. While California is not the only state with this type of law, community property states are in the minority. Anyone who lives in, or is moving to California, will want to understand how these laws work.,
Need for Marital Property Laws
All states have enacted special laws that apply to property owned by married couples, most of them falling into the category of equitable division laws or community property laws. These laws have some relevance to management and control of the property during the marriage, but they are especially important to determine property rights when a marriage ends.
Given the large percentage of marriages that end in divorce, these types of laws are important. While some couples draft and sign prenuptial agreements that set out how they intend to divide property if they divorce, many do not. The state laws provide family courts with some direction of how to split up property between spouses if they haven't entered into a separate, binding agreement.
Community Property Laws vs. Equitable Division
Most states have enacted laws that provide for a fair and equitable division of a couple's property when a marriage ends. These laws do not require an equal division, simply a division that, given all of the evidence before the court, appears to be a fair one.
Other states, including California, have enacted community property laws. These laws give one-half ownership of property acquired during a marriage to each spouse. When a marriage ends, each spouse is awarded exactly half of the community property.
Community Property vs. Separate Property
In California, the community property laws define two types of property owned by a married couple: separate property and community property. Separate property belongs to one spouse; community property belongs equally to both spouses.
Generally, all property that each spouse acquires before a marriage and after a separation belongs 100 percent to that spouse. In a divorce, the court awards all separate property of a spouse to that spouse. All property earned or acquired during a marriage is community property. That means of every dollar earned by each spouse during the marriage, 50 cents belongs to the other spouse. The only exceptions are gifts or inheritances received by one spouse, which are considered separate property.
Dividing Community Property in a California Divorce
When a couple divorces in California, the court's first task is to figure out which property is separate and which is community. The court first awards each spouse all of her separate property.
The rest of the marital property is community property and is divided between the two spouses equally. This can include parts of a retirement fund, a business or personal property if community property was used to purchase it. In these instances, it's a good idea to consult a community property lawyer.
California community property laws do not require that each asset be divided exactly in two, only that each party receives half of the total value of the community property. For example, one spouse may be awarded the family home with equity of $300,000 while the other may be awarded $300,000 in stocks and bonds.
Dividing Community Property in a California Death
A marriage can end in divorce, but it can also end in death. Community property rules are important in this case as well since they determine what property a spouse can bequeath in a will. For example, if a couple lives in California and one spouse dies, community property laws limit the amount of property he can leave in a will.
Let's say that he leaves a will giving all of his property to his son by a prior marriage. The probate court judge will determine which parts of the couple's property go to the son. A spouse cannot give away the other spouse's share of the community property, only his own. Therefore, the son will only receive the deceased spouse's separate property and his share of the community property.