Note: The following is a very brief summary of California Divorce law. It is for information purposes only and is no substitute for the advice of legal counsel. For advice and information regarding your own legal situation, be sure to consult with an attorney. To find a collaborative team to help, click here.
California Laws Affecting Your Divorce
Numerous California laws may be applied when you make the decision to divorce. These laws govern areas including:
- Assets and property, including businesses and real estate
- Debts incurred before and during your marriage
- Division of assets, property, and debts
- Income, employment benefits, and retirement accounts, including pensions and Social Security
- Spousal Support
- Child Support and Child Custody
- Estate planning issues, including wills and trusts
Learn more about considerations which can help you protect the things important to you and preserve family relationships through the divorce process.
1. All assets you and your spouses acquired during your marriage are presumed to be community property in California. Income earned during your marriage from the individual efforts of either of you is community property.
2. All benefits which come from either spouse`s employment during your marriage are community property, as long as they were earned and/or accrued during the period of your marriage. This can include retirement benefits, pensions, savings plans, stock purchase plans, 401k plans, sick and vacation pay, and stock options.
If these benefits are not fully vested at the time of your legal separation, an allocation is made between the community and separate interests.
3. Separate property is defined as:
- Property owned before your marriage by one spouse as an individual
- Property acquired during marriage as a gift or from an inheritance
- Property acquired after your legal date of separation
Earnings, income or appreciation from separate property sources remain separate property. If there is a dispute about whether an asset is separate property, you must have proof that you acquired the separate property in one of these ways, and have documentation to trace the separate property back to the original source.
4. If you use separate property to acquire property in joint names during the marriage, you are entitled to reimbursement only for the amount of the separate property contributed (no interest or appreciation) and again, you must be able to trace the contribution back to the separate property source.
5. If you own a business prior to your marriage, the “community” may acquire an interest in the business if the business increases in value during the marriage, depending upon the reason for the increase in value.
6. If you own a home in your own name as separate property, and community funds gained during your marriage are used for mortgage payments that pay down the principal on a loan, the community will acquire an interest in the value of the property. This is limited to the percentage proportion or ratio from the total amount you paid against the principal as it relates to the total property purchase price. The community will also be reimbursed for the amount paid down on the principal. (These rules do not apply if the property title was put into both your name and your spouse’s name in joint ownership. For example, this can happen when refinancing a loan. Then the rule listed above applies).
1. Debts incurred during your marriage are presumed to be the obligation of both spouses, or community obligations. The only debts which remain the responsibility of one spouse are debts which are completely unrelated to the community. These can include child support for children from a previous marriage; gifts or expenses related to a romantic relationship other than the marriage; or criminal acts which do not financially benefit both spouses (the community). Even if your spouse takes on a debt you did not agree to and did not approve of, such as a car loan, it would still be a community owned debt and both spouses are still responsible to pay it off.
2. Debts incurred before your marriage remain the responsibility of the person who originally incurred the debt. If community funds from your marriage are used to pay off these debts, there may be a right of reimbursement for the community. Special laws apply depending upon the type of debt, and whether other types of assets or income were available to pay it.
1. If you divorce, your community assets and debts acquired during your marriage are equally divided (subject to various adjustments).
2. If you own a home together, and one spouse continues to reside in the home after your legal separation, he or she might owe “rent” to the community, subject to an offset for payment of the costs of the home.
3. If one spouse pays on community debts after legal separation, he or she will generally be reimbursed for those payments. There are exceptions; the most common is if debt payments are intended to take the place of direct support payments, and are paid instead toward the debt.
- Employment Benefits earned during the marriage are community property. This includes vacation time, paid time off, travel points, stock options and restricted stock units. If the benefit is awarded during the marriage but hasn’t vested yet-like a stock option or restricted stock unit. There is a formula that is applied to apportion the community property portion of the asset verses the separate property portion.
- Pensions and Retirement Assets earned during the marriage are also community property. However, that portion of the retirement asset earned before the date of marriage and after the date of separation is separate property. In such cases where a retirement asset is mixed as separate and community property, a financial specialist can apportion the asset between community and separate property. Sometimes parties will need to prepare a special document called a “Qualified Domestic Relations Order” (or “QDRO” for short) to divide the retirement asset. The QDRO, which describes how the asset is to be apportioned and divided, is forwarded to the plan administrator for the pension or asset. The plan administrator then divides the asset. There are complicated rules regarding retirement assets. For more details regarding a specific retirement asset or employment benefit, consult your collaborative attorney and collaborative financial specialist.
- Social Security is not a community property asset and is not subject to division at divorce or legal separation. However, if a couple is married for longer than 10 years, then the lower earning spouse may be entitled to “derivative benefits.” This means the lower earning spouse may be able to base his or her social security on the earnings of the higher earning spouse rather than his or her own lower earnings. The derivative benefits are an extra benefit for the lower earning spouse and do not affect the social security payments of the higher earning spouse.
1. Each spouse owes a duty of support to the other under California law. Spousal support (also known as “alimony”) can be ordered by the court after your legal separation. The amount and duration of spousal support is set by the court guided by a list of factors set out in California Family Code Section 4320. The multiple factors a court may consider includes:
- The earning capacity of each spouse and whether it is sufficient to maintain the standard of living established during their marriage, taking into account their job skills and/or the education or training needed to develop marketable job skills
- Whether one spouse supported the other to allow time for domestic duties (being a full time spouse/parent)
- Whether one spouse contributed to the education, training, or licensing of the other spouse
- The ability of the supporting spouse to pay support, taking into account their earning capacity, income, assets, and standard of living
- The needs of each spouse based on the standard of living established during the marriage
- The obligations and assets including separate property of each spouse
- The length of the marriage
- The ability to work without negatively affecting dependent children in either spouse’s custody
- The age and health of each spouse
- The goal that each spouse become self-supporting within a reasonable period of time
- The balance of hardships to each party
- The immediate and specific tax consequences to each party
- The goal that each supported party become self-supporting within a reasonable period of time
- Any documented history of domestic violence
- The criminal conviction of an abusive spouse
- Any other factors the court determines are just and equitable (fair)
2. You and/or your spouse are allowed to waive your future right to spousal support if you get divorced by including this agreement as part of a prenuptial agreement. Certain conditions must be met; for example, each spouse must be represented by an attorney for the prenuptial agreement. A court could later order spousal support even if it was waived if the court believes it would be “unconscionable” not to order it. Parties can also choose to waive or limit their spousal support as part of their overall marital settlement agreement.
3. Spousal support is taxable to the support recipient and deductible for the support payor. When parties calculate the amount of spousal support, they should take into consideration the net affect of the support payments after taxes. A collaborative financial specialist can help with these calculations.
1. Each parent is presumed to be entitled to custody of his or her children. When parents legally separate, the court determines the custody arrangements for the children based on the childrens’ best interests.
2. Child support is calculated according to a standard guideline formula in California. Numerous factors may affect this guideline, including income of each parent and the amount of time each parent spends with the children. Parties may agree to a child support amount different from the guideline, but they must show the court in their agreement they were advised what the guideline amounts would have been. Further, child support may never be permanently waived.
3. Even if you and your spouse include a pre-determined custody arrangement in a prenuptial agreement, it has no impact on the court’s ultimate authority to determine custody arrangements for your children.
1. The formal legal ownership recorded with your county for property such as a family home can affect what happens to the ownership after the death of a spouse.
2. For example, property held in joint tenancy (both you and your spouse have equal ownership) automatically becomes the property of the surviving spouse.
3. Community property is distributed according to the will or trust of the decedent. As long as there is a legally valid will or trust, it is completely under your control.
4. What if there is no will and no trust and someone who owns property dies? The state’s laws will prevail, regardless of the wishes of the individual even if they are “known” after his or her death.
5. When there is separate property, there are different legal provisions.
6. To insure your wishes regarding property are carried out, it is critical to work with a trusts and estates attorney to put your wishes into legally binding agreements.