Division of Assets and Debts

When divorcing or dissolving a California registered domestic partnership, spouses and partners may decide how they are going to divide their property and debts, or a judge can do it for them. To accomplish a division of property and debts you must determine 1) whether property/debt is community or separate, 2) value community property, and 3) divide the community property. But what is community property? California law views married couples and registered domestic partners as one legal “community.” Generally, all assets and debts acquired during your marriage are community property, and each spouse owns community property equally. The assets and debts you acquired before your marriage are your separate property and belong solely to you.

Spouses/partners can transmute (change) one’s separate property into community property (or vice versa) or into the other’s separate property, and sometimes what was one’s separate property at the outset of the marriage can become partly community property based on the conduct of the parties during the marriage. Assets such as your residence and retirement accounts can be partly community property and partly separate property. What if you own a business to which your spouse contributes their labor or money?  What if you are living in California, but own property and other assets in other states or countries? What seemed like a straightforward exercise in distinguishing community from separate property, and then valuing and dividing the community property, can, in actuality, become a complex endeavor.