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Understanding The California System of Community Property

The practice of family law is even more complicated in California. The community property system (in effect in a total of eight states) is intended to strongly favor the preservation of joint, not separate property. Although the general presumption is that all property acquired during a marriage, and all debts incurred during that time are joint assets and liabilities, there are a myriad of complicated rules and exceptions which govern the ultimate determination of the responsibility of each individual in a marital situation. In addition, there are rules and procedures governing the right of ownership in property that initially may have been separate but that became community, and the apportionment of that property. This is coupled with the fact that the courts have some discretion in how property is to be valued, and what methodology is to be used to determine that value.


Community property law governs the apportionment of a business interest

How a business is to be divided upon a divorce is governed by our community property system. The actual division of a business is determined by the value of the business. To determine a business' worth, there are various methodologies that can be applied. If the business was started before a marriage, there are varying methodologies applied to divide it between spouses. If a business continues after separation while the parties are awaiting the finalization of the divorce, or, the parties have been separated for a lengthy period of time and then decide to obtain a divorce, the situation becomes more complex.


Community property law governs the division of non- business assets as well

Businesses are not the only assets that are subject to division in a divorce proceeding. Homes, investments, retirement plans, and many other assets are also subject to division, which is controlled by community property laws.


Community property law can affect the disposition of property upon death, not only upon divorce

The strong presumption in favor of community property also affects what a spouse leaves to his or her survivor upon the person's death. This can create a myriad of complications when there are children from a prior marriage or relationship.


Community property law affects the rights of individuals who have not yet entered into a marital relationship

Knowing the key principles of community property before entering into a marriage can make the difference between preserving a hard- earned estate, or diminishing it. This is of primary significance to anyone entering a second or subsequent marriage, especially if property is to be preserved for children.


Community property law affects the rights and obligations of people who are married, and have no intention of separating

The California Legislature has been moving in a direction intended to preserve and strengthen the community property system. As a result, there are various rights, duties, and obligations imposed on married individuals about which most people have no knowledge. The failure to abide by these rights and obligations can result in liability for one spouse or another.