We live in a community property state, which means the things you acquired during your marriage belong to both you and your spouse. But what is community property in California, and how will it impact your divorce settlement?

Here’s what you need to know.

What is Community Property in California?

Figuring out property division can be incredibly difficult, and when a couple has many assets or debts, it’s often necessary to hire professional help. However, in order to understand property division, you have to know what the term “property” means when it comes to divorce.

Property is anything that can be bought or sold, or that has value. Examples of property include:

• Houses
• Vehicles
• Furniture
• Clothing
• Bank accounts and cash
• Pension plans and 401(k) plans
• Stocks
• Life insurance that has cash value
• Businesses
• Patents

If you acquired any of these things while you were married, they’re usually considered community property. That means they belong to both you and your spouse – even if only one of you made it happen.

For example, if you bought a house a year into your marriage, the law considers it community property. That’s true even if only your name (or only your spouse’s name) is on it. Likewise, if you bought a car, invested money in stocks or even started a business, you have community property.

Related: How is credit card debt split in a California divorce?

How Do You Divide Community Property?

You and your spouse are free to come up with your own agreements on dividing community property. You might trade one thing for another, or you might choose to each keep things that primarily belong to one of you (such as your own vehicles).

If you arrange trades, you might offer your spouse the china cabinet you purchased in exchange for the dresser in your bedroom. Perhaps you and your spouse agree that one of you gets the sofa and one of you gets the bar stools and dining table.

What About High-Value Assets and Businesses?

In some cases, particularly when it comes to high-value property (like a business), one spouse offers to “buy out” the other. For example, if you opened a candle shop in downtown Stockton while you were married, you’d probably hire a valuation expert to find out how much it’s worth. When the valuation expert gives you a dollar figure – say $150,000 – one spouse might offer to pay the other $75,000 to give up any control of the business.

What if You Don’t Have Cash Lying Around?

Sometimes these buyouts occur without actual cash changing hands. The buying spouse may offer the other spouse items of an equal value, such as a house or a vehicle in trade. As long as the judge agrees that it’s a fair trade, and provided that you both agree to it, the trade can become part of your divorce settlement.

What if You And Your Spouse Can’t Divide Your Community Property?

Community property, in California (and many other states), must be divided fairly. Fair doesn’t always mean 50-xdr50. The judge in your case can take several other factors into account when determining what’s fair, such as whether one spouse earns a lot more money than the other does.

But if you and your spouse can’t agree on dividing your property, your attorney might suggest that you work with a mediator. A mediator is an impartial third party who can help you and your soon-to-be ex-spouse find solutions you can both live with.

If you’re able to eventually reach an agreement, the judge will determine whether it’s fair to both parties. In the event that the judge finds it fair, it’ll become part of your divorce settlement.

Related: Animal custody in California

Do You Need to Talk to a Lawyer About Community Property in California?

If you’re not sure how to divide your property, or if you need help negotiating a fair settlement, we’re here for you. Call us at (209) 395-1605 to schedule your consultation today.