California is a community property state. Assets and income accumulated during the marriage are typically subject to division in the event of a divorce. Community property rules require an even split of marital or community property in most cases.
Those trying to strategize for optimal financial recovery after divorce frequently seek to retain as much of their resources as they can. That process may involve identifying separate assets that are not subject to the community property standards enshrined in state statutes.
Understanding what resources are separate and which ones are subject to community property statutes can help people begin strategizing for divorce and planning for their financial recovery after this process is finalized.
What property might be separate?
The law recognizes that some assets belong to one spouse rather than to the marital estate. Most of the time, assets acquired before marriage and income earned before getting married remain the separate property of one spouse. Spouses can also theoretically protect assets and money received as a gift or as an inheritance.
However, those resources may potentially be vulnerable to claims of commingling. If people add their spouses to ownership documents or combine their separate property with the marital estate, that can muddy the waters during property division negotiations. The use of marital income or assets to maintain or improve separate property could also potentially lead to allegations of commingling and more difficulty protecting those resources as separate property.
Prenuptial agreements can also clarify what assets are separate property. Spouses sometimes intentionally designate certain resources, such as their retirement savings accounts, as separate assets for the purposes of property division if they ever divorce. Those who have valid prenuptial agreements with their spouses may need to review the terms included in those documents to determine if they have any assets set aside as separate property.
Identifying separate property can be quite challenging. Spouses preparing for divorce may need to go over financial records carefully to disprove allegations of commingling or trace the origins of their resources.
Provided that they identify their separate property, spouses can generally retain the assets that they acquired before marriage, as well as any gifts or inherited property granted to them as individuals that have not been significantly commingled. Going over financial records and ownership paperwork with an attorney is often a key part of establishing a property division strategy in a California divorce.