How to split assets in divorce is a question which need to be discussed in almost every divorce. If you are thinking about getting a divorce, you need to get some professional guidance.
Even if your first consultation is free, you should make best use of that time. Prepare for the consultation by doing a little reading or watching
videos on general divorce topics. Having a basic understanding will help you ask the attorney questions that are important to you rather than
wasting time discussing something that you can easily find on-line.
This overview of how to split assets in divorce has been written to help you in understanding some concepts, terminology, rules and exceptions.
Basic terminology you need to know in order to understand how to split assets in divorce
The basic terms you must be familiar with are:
1. Community property
2. Separate property
3. Day of separation
Community property vs Separate property
Under Calif. Family Code 770-771 Separate property is:
(1) property owned by either spouse before marriage or,
(2) property acquired during marriage by gift, bequest, devise, or
(3) The rents, issues, and profits” of their separate property, as well
as earnings acquired by a spouse while living separate and apart from
the other spouse.
To put it simply; the following things are separate property:
Everything you had before marriage
Everything you inherited
Everything you received as a gift
Everything that resulted from using your separate property
Under Calif. Family Code 760, California community property is: “All property, real or personal, wherever situated, acquired by a married
person during the marriage while domiciled in this state”.
To put it simply; everything everything spouses got during the marriage when they lived in California, except separate property.
Day of Separation
Day of separation is the day when spouses are permanently physically separated with no intent to resume marital relationship.
The day of separation is important because it determines the ownership of property acquired after the separation.
For example, if you separated July 4th, and filed for divorce November 5th. Anything that you earned after July 4th is your separate property
as well as appreciation in stock.
How is community property handled on divorce?
The general rule is that upon divorce, every community asset and liability shall be divided 50% to each spouse. However, there are some exceptions to this rule.
For example, if one of you hid any property during or before the divorce proceeding, the court will award this party lower than 50% of the
community property asset.
Another example is if one spouse has incurred educational debt, he or she needs to pay 100% of this debt even if the debt was incurred during
If the spouses own a house and have minor children, it is also permissible that one spouse cashed out another spouse. Changing the character of an assets by agreement. How assets will be split in divorce also depends what kind of agreement the spouses made before or during there marriage.
There are two types of such agreement- premarital and marital (transmutation). In prenuptial agreement, (also called “prenup”) the parties can agree just about anything with some exceptions.
They cannot agree to limit child support. The prenup can govern the disposition of properties on death, separation or divorce.
There are a very strict requirements that need to be met in order for a prenup to be enforceable. We have discussed those requirements on the prenuptial agreement page on this website.
Marital agreement, (also called “postnup” or “transmutation”) is very similar to prenup. Unlike prenup, before 1985 it could be made orally or in writing , but after 1985 in should be in writing with some exceptions. In a marital agreement the couple could agree to any of the following property transfers between spouses:
1. Transfer community property into separate property
2. Transfer separate property into community property
3. Transfer separate property into separate property.
There are special rules that apply when community property is used to improve the separate property of the other spouse, when the house was bought before marriage and mortgage payment was paid during the marriage.
There are many more complex rules applicable to each specific situation. We will address important rules regarding stock division, business
division, in our future articles on this website.
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