During this unprecedented time, the effects of Covid-19 and the home isolation most of us are weathering will put many marriages to the test. Research tells us that the kind of stressors involved in 24/7 togetherness amplify existing cracks or highlight the strengths of our intimate relationships. For those considering separation, becoming acquainted with the framework of property division can only be an asset in the long run. Knowledge is power. 

In the course of a marriage we accumulate many things, ranging from memories to real property to investment accounts. When you get divorced you will take inventory of all this “stuff” and decide how to divide it. While property division during a divorce can be acrimonious, it does not have to be. If divorce may be on your horizon, it is never too early to familiarize yourself with the lay of the land and get organized.

Become Familiar with the Basics

In California, the community property system dictates how marital property will ultimately be divided at the time of divorce. All property acquired during the marriage is presumed property within the community estate, with few exceptions. Community property can be wide ranging and includes the marital residence, the pension plan(s), the timeshare, the family home movie collection, the royalty stream, both spouse’s vacation pay, and the cherished family boat. I have seen each one of these be a “hot button issue” for couples going through a divorce. If an asset is in the name of one spouse, this will not necessarily preclude the asset from being considered community in nature, even though it is not “jointly owned.”  Because marriage is seen as a partnership, everything acquired by either party during the partnership, including debt, is considered jointly owned and divisible 50/50. California is one of the seven states that have some form of this system of property ownership. The other states are Arizona, Idaho, Louisiana, New Mexico, Nevada, Texas, Washington, and Wisconsin.

Understand the Difference Between Separate and Community Property

If you find yourself with time on your hands and you want to do additional preparation, a great first step is simply to list everything you or your spouse owns of value. As you inventory everything you own, create different lists for separate and community (or joint) property. The legal system in California categorizes your assets into these two categories before division can begin: 

Separate Property

There are a few different ways to accumulate separate property which is not subject to the 50/50 division rule.  Assets owned before marriage are, with few exceptions, separate property. Assets acquired after the date of separation are also separate property. Consult with legal counsel regarding what defines the date of separation in your individual case. Lastly, during the marriage itself, assets can be acquired from non-marital sources which are considered separate property such as bequests, inheritances and gifts.  

Community or Marital Property

As referenced, property that was acquired during the marriage (which could mean earned, bought or even gifted to both of you by a third party) is considered community property. Note that some property could be “mixed” in nature such as a business started before the marriage that one spouses continues to work at during the marriage. Do not forget, labor and efforts by either spouse during a marriage are considered community property. 

Be Honest as You Inventory

It can be a tedious process to gather documentation for every asset (and debt) that needs to be divided. If you chafe at gathering documents for your taxes each year, the process of disclosure during a divorce will be equally, if not more, punishing. We call it “divorce homework” for a good reason. Nobody likes homework, but it is necessary.  The process of dividing property starts with an inventory of everything you own as a couple and as an individual. Accuracy from both spouses will ensure that discussions are made in good faith and statutory disclosure obligations are fulfilled. Willful failure to list community assets can result in surprisingly severe “penalties” including losing 100% of the interest in that asset. The best way to ensure partnership “trust” with your soon-to-be-ex-spouse is to be accurate and complete in your inventory. 

Keep it Civil

Separating marital assets can be emotionally trying. It is not easy to take stock and reduce to a list what may feel like a lifetime of valuables built together. And then let half go. This is a lot to digest  — financially or psychologically. Experienced legal counsel can help you through the process, mediate, provide guidance, and ensure that a fair agreement is reached. Consulting with counsel early in the process will be a benefit.