Property Division During Divorce in California Is Complex

Planning for a divorce isn’t something that most people do when they get married. In some cases, however, planning for a possible divorce doesn’t have anything to do with wishing the marriage would fail. Instead, it has to do with making sure you are cared for if the marriage does end. In California, which is a community property state, almost all assets and debts are split equally if the couple divorces.

There is an interesting exception to this rule. According to California Family Code 2640, one spouse is entitled to be reimbursed for any separate property used to buy, improve or reduce principal on a mortgage. The spouse can waive that right in writing.

Of course, if the couple has a prenuptial agreement, property is divided accordingly. Another exception to the community property law deals with property that is owned by a spouse prior to the marriage. That property wouldn’t be divisible under community property laws. The same is true for gifts and inheritances that are gained during the marriage, as long as they are specifically for one spouse only.

One way that a person who is gifting something to someone in a marriage can ensure the gift will be for only one spouse to claim in the event of a divorce is to make the stipulation in writing about which spouse is actually being given the gift. Larger gifts, such as those over $14,000 in 2014, are subject to a gift tax. That gift tax return can solidify the issuance of a gift if need be.

All of these exceptions to the community property law highlight how complex property division can be during a divorce. Knowing how laws and exceptions to them will help you determine your rights if you get a divorce.

Source: SFGate, “Answers to questions on helping child buy a home” Kathleen Pender, Jul. 23, 2014

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