Division of Community Assets and Debts

Property is generally referred to as anything that can be purchased or sold (house, car, furniture, etc.) or anything that has value (bank accounts, retirement plans, stocks, life insurance with cash value, a business, etc.). In California, a property is characterized as a community or separate property.

“Community property” is generally defined as property acquired during marriage. “Community debts” are those incurred while married. Each spouse owns one-half of the community property and is responsible for one-half of the community debt—even if only one spouse incurred the debt during the marriage. Usually, community property and debts are divided equally between the spouses.

“Separate property” is generally defined as property acquired as follows:

(1) Before marriage

(2) By gift or inheritance (even during the marriage)


(3) Produced by separate property (such as rents or profits)


(4) Acquired after the date of separation.

You may have a situation where you are separated from your spouse, but still legally married, and you acquire property. Such property is considered separate property, with some exceptions.

A similar concept applies to debts. The court will look at when the debt was incurred for determining the debt’s character. Some debts, such as student loans, regardless of when incurred, will remain the student spouse’s separate debt.

There are situations where a property item is of mixed character, meaning part community property and part separate property. This is often the case with bank accounts and retirement accounts.

For example, a bank account belonging to one spouse prior to marriage can become partially community property if that spouse deposited his or her income earned during the marriage into this account. Similarly, a retirement plan acquired by one spouse during marriage can become partially separate property if that spouse continues to contribute to the plan with his or her separate earnings (such as income earned after separation).

During a divorce proceeding, you and your spouse will be required to comply with the procedural requirement of disclosures. Each party, prior to a divorce judgment being entered, must complete a disclosure packet called the “Preliminary Declaration of Disclosure”. The completed packet must be served on your spouse (or their attorney if they have one). Proof of such service must be filed with the court.

All assets and debts, regardless of their character as community, separate or mixed, must be disclosed to your spouse and vice versa during the divorce case. Certain penalties can apply for nondisclosure of an asset or debt.

Once the disclosure requirements are met by both of you, you can then engage in a dialogue with your spouse and/or your attorney about how the various assets and debts can be divided, assigned and distributed.

Spouses who are unable to reach an agreement as to what belongs to whom will have to let the court decide at a hearing or trial.

Your final judgment for divorce will outline the complete division of assets, debts and any equalization owed by you or your spouse.

Distinguishing community property from separate property can become complicated. For more information about how the court addresses the division of community assets and debts, contact us for a free, confidential phone consultation.