California Community Property FAQ

Couples going through a divorce in California must decide how to divide their property and debts—or ask a judge to do it for them. But there are some important steps before that division can happen. There also are special rules for certain kinds of assets. Read on to learn more.

Is California a Community Property State?

Yes, California is one of the handful of states that follow community property rules rather than equitable distribution rules for dividing property in divorce. In community property states, assets and debts that spouses acquire during their marriage belong to both of them jointly.

When couples are divorcing, a few community property states allow judges to divide a couple's property fairly but not necessarily equally. Not so in California. Unless a couple has agreed otherwise in a divorce settlement agreement, California judges must divide the spouses' community property and debts equally (50/50) when they divorce. (Cal. Fam. Code § 2550 (2024).)

What Is Community Property vs. Separate Property?

Before you can divide your property in divorce, you need to figure out which assets are community property and which are either spouse's separate property.

What Is Community Property in California?

In California, all property—including real estate and personal property—that a couple acquires during the marriage is community property (unless it's covered by one of the few exceptions in the law). The property's location doesn't matter. All that matters is that the spouses lived in California when they acquired the property. (Cal. Fam. Code § 760 (2024).)

This rule also applies to retirement plans and accounts. Any interest or income accumulated during the marriage in a 401(k), IRA, pension, or profit-sharing plan will be considered community property.

What Is Separate Property in California?

As a general rule, any property that isn't classified as community property is considered one of the spouse's separate property. California law defines "separate property" as:

• property owned by the person before marriage
• property that one spouse inherited or received as a gift, and
• any money made from separate property (such as rents or profits).

(Cal. Fam. Code § 770 (2024).)

Separate property also generally includes anything bought with or exchanged for separate property, earnings on separate property, and any increase in the value of separate property, as long as the spouse who owns the property can trace the source for those purchases or accumulations. (In re Marriage of Mix, 536 P.2d 479 (Cal. 1975).)

Separate property belongs to the spouse who owns it and usually is not divided in a divorce.

How Does the Date of Separation Affect Whether Property Is Separate or Community?

For purposes of characterizing community and separate property, "during the marriage" means different things in different states. In California, once a couple has separated, any property the spouses acquire will be their separate property. (Cal. Fam. Code § 771 (2024).)

In this context, the separation date isn't necessarily when one spouse moves out of the family home. Instead, it's when there has been a "complete and final break" in the marriage. As evidence of that final break, one spouse must have "expressed to the other spouse the intent to end the marriage" and must have acted in a way that was consistent with that intention. (Cal. Fam. Code § 70 (2024).)

The date of separation can become a big issue if, just before the divorce, one spouse earned an unusual amount of money (for instance, got a large bonus at work or won the lottery) or spent a lot of money. If the spouses disagree about when they separated, a judge will have to look at evidence of all the relevant circumstances. For instance, when one spouse has moved out, the judge may consider whether that spouse signed a lease on a new place, or whether the couple ever did anything to show they were trying to get back together. (In re Marriage of Lee & Lin, 41 Cal.App.5th 698 (Cal. Ct. App. 2019).)

Can Separate Property Become Community Property—or Vice Versa?

Before they get married, couples may agree to treat their property differently than provided under the legal rules described above—for instance, to keep their earnings during the marriage as separate property. But these agreements must meet California's requirements for valid prenuptial agreements.

Spouses may also change community property to separate property, or separate property to marital property, through an agreement or a property transfer. This change in the classification of property—called a "transmutation"—will be valid only if the spouse who's giving up an interest in the property accepts or consents to the change in writing. But those requirements don't apply to personal gifts between spouses that don't have significant value in light of the couple's financial circumstances. (Cal. Fam. Code §§ 850, 852 (2024).)

Sometimes, a spouse might change a separate asset into a community asset without meaning to, by mixing ("commingling") the separate property with community property. However, that happens only if they're commingled in such a way that it's impossible to separate them. (In re Marriage of Simonis, 95 Cal.App.5th 1129 (Cal. Ct. App. 2023).)

For instance, say a couple buys a house, using one spouse's inheritance (separate property) for the down payment. They then use money earned during the marriage (community property) to make mortgage payments. The house will mostly be considered community property, but the spouse who contributed the inheritance to the down payment may receive reimbursement in the divorce, as long as there's evidence to document the source and amount of the funds. (Cal. Fam. Code § 2640 (2024).)

Many other types of assets can be partially community and partially separate, including pensions or other retirement accounts that one spouse contributed to or earned both before and after the marriage, or a business one spouse started before marriage and continued operating after marriage.

Whenever there's been some amount of commingling—especially with complicated assets like houses, businesses, and retirement accounts—it can be complicated to distinguish community property from separate property. You'll usually need the help of a family law attorney to sort it out.

How Are Community Assets Valued?

After identifying which assets are community property, the next step is to assign a monetary value to each of those assets. If the couple can't agree on this, a judge will have to make a decision based on evidence such as the parties' financial disclosures, appraisals, and testimony from financial experts. Usually, the judge will determine the value of an asset as close as possible to the time of the trial or hearing, unless there's a good reason for picking another time between the couple's separation date and the trial. (Cal. Fam. Code § 2552 (2024).)

It's not usually difficult to set a value on a house, using recent sales prices for comparable houses in the neighborhood, online sites that provide home value estimates, or a property appraiser. But you'll probably need the help of an actuary or other financial professional to set a value on complicated assets like a business, professional practice, or defined-benefit pension.

How Is Community Property Divided in California?

In California, a couple's community property must be divided equally between them unless the spouses have agreed otherwise in writing. This doesn't mean each asset must be divided. It simply means each spouse should receive assets worth an equal share of the overall net community estate (all community assets minus community debts).

It's up to the judge to decide how to achieve a 50/50 split. For instance, when deciding who gets the family home, the judge may award the house to one spouse while the other spouse receives other assets of equal value (such as the family business, retirement accounts, or other investments).

How are Retirement Plans and Pensions Divided in a California Divorce?

There are different rules for dividing different types of retirement accounts, including separate rules for military pensions.

Defined-benefit pensions are especially tricky to divide, because it's hard to know how much a pension is worth before the employee-spouse retires. Spouses can have an actuary estimate the present value of the community share in the pension. Then they can do a "cash-out," meaning the employee will keep the entire pension while the other spouse receives different assets worth that present value.

However, the most common approach to dividing pensions is for the judge to reserve jurisdiction over the pension. That way, when the employee retires, the other spouse will receive a percentage of each pension check.

What About Educational Degrees and Professional Licenses?

When one spouse has earned a college degree or a professional license during the marriage, California law requires that the couple's community estate be reimbursed for the costs of acquiring the degree or license, with interest.

These costs are normally limited to such things as tuition, fees, and books. Unlike in other states, the law in California does not give the other spouse any right to a percentage of the enhanced earning ability of the spouse who acquired the degree or license. However, the judge may take the increased earning ability into account when deciding whether and how much spousal support (alimony) to order.

Any loan that a spouse takes out for education will be assigned to that spouse alone in the divorce.

(Cal. Fam. Code § 2641 (2024).)

How Are Community Debts Divided in a California Divorce?

All debts accrued during the marriage (before the separation date) must also be divided between the spouses when they divorce. When a couple has more debt than the value of their assets, the judge will decide on a fair way to assign responsibility for that excess debt, after considering the circumstances—including each spouse's ability to pay off those debts. (Cal. Fam. Code § 2622 (2024).)

Be aware that even if a community debt is assigned to your spouse in the divorce, creditors may still try to collect the balance from you if your ex doesn't keep up with the payments. The best way to avoid this problem is to pay off all marital debts as part of the divorce, if that's possible. Another option might be to ask the judge to put a lien on your spouse's separate property as security for payment of a debt.

Do Judges Consider the Tax Effects of Dividing Community Property?

California judges consider the tax effect of dividing community property only when it will have an immediate, specific effect on a spouse's taxes.

In general, a gain or loss isn't recognized for purposes of federal tax when it results from the transfer of property because of divorce. (26 U.S.C. § 1041(1)(2) (2024).) Still, it's a good idea to consult with a tax planner or attorney to discuss the potential tax implications of a community property division if you have any questions about how it could affect either your state or federal taxes.

What Happens to the Family Pet in a California Divorce?

Beloved pets are often the focus of heated discussions in a divorce. In California, one or both of the parties can ask the judge to decide custody of the family pet. The judge may award ownership of the animal to one spouse alone or to both spouses jointly. When making that decision, the judge must consider the pet's care. That includes making sure the pet isn't exposed to harm and has food, water, veterinary care, and safe shelter. (Cal. Fam. Code § 2605 (2024).)