Much is made in the United States about how to best protect your property before, during, and after an unsuccessful marriage. Part of this has to do with the high rate of divorce in the United States. While there are contracts that one can sign prior to marriage called prenuptial agreements, many people do not know what will happen if no such agreement is entered into.
In a state such as California, which is considered a community property state, there are very specific rules in determining what is community property and how it will be divided. In general, community property is any property acquired during marriage. Several considerations are common to almost all divorces taking place in a community property state.
First, many people wonder what becomes of inheritance and investments made prior to marriage. For the most part, if this property is maintained in a clearly separate account, then this property will remain what is called separate property. Commonly, the following are considered separate property in a community property state:
- anything the owner had prior to marriage
- anything inherited or received as a gift during marriage, and
- anything earned after the divorce.
Plus, there are extra considerations if you and your spouse continue to do business together during the divorce.
Another common question arises when the spouses maintained property in a non community property state prior to divorce, but were married in a community property state. In states like California, in the event this property was merged through common accounts or used by both parties, this property might be considered quasi-community property.
Another complicating aspect of divorces in a community property state is what to do with outstanding creditors who are owed money. People wonder what will happen to their share of the community property if the other spouse has outstanding debts or judgments against them. While it may not seem fair to some, it is the general law that while these creditors cannot touch your separate property, they can freely access that property which is shared by both.
So how is the community property separated once all of the marital property has been designated one way or another? It is the common rule that separate property will be maintained by the owner, and community property will be divided equally between the spouses. Because states that adopt the community property distribution do so in an attempt to provide the most equitable solution for marriages in which one partner may have not been working, it is unusual that a court in these jurisdictions will consider distributing more favorably to a party simply because of their tangible contributions to the financial health of the marriage.
By Evan Anderson
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