Dividing Assets in a Community Property State


When seeking divorce advice in Pasadena, it's important to understand what it means for California to be classified as a community property state.

California state law does not require an "in kind" distribution of each asset. The only requirement is that the net value of the assets awarded to each spouse must be equal. For example, if the wife wanted to be awarded the family residence, the husband might maintain control of the family business.

Community property laws only apply to property defined as a marital asset. Anything acquired before the marriage, given to one spouse as a gift, inherited by one spouse, or acquired after the date of separation is considered separate property belonging exclusively to one person.

Divorcing couples often think of assets in terms of physical possessions, but this is not always true. The most common example of a non-tangible asset is interest in a pension, retirement, or profit sharing plan that one spouse accumulates while working. This is considered community property and subject to division after divorce, regardless of which spouse initially earned the benefit. However, the only portion subject to division is that which was acquired during the marriage. If the employee spouse held the same job before the marriage and after the date of separation, an expert may need to be brought in to determine what part of the employee benefit plan is community property.

A business owned and operated by one spouse follows the same general rule. The value acquired during the marriage is a community asset. The value acquired before the marriage and after the date of separation is not. Determining the goodwill value of the business based on its expectation of future business, established name and reputation can be a time consuming process, but this is necessary to ensure a fair settlement.

If one spouse has a college degree or professional license earned during the marriage, the other spouse is entitled to reimbursement for his or her contribution to the cost of acquiring the degree. This includes payment for tuition, fees, and books. Some states also give a spouse the right to the enhanced earning ability of the person who earned the degree or license, but California's community property laws do not make this distinction.

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