Is California a Community Property State?

Is California a community property state? Yes, California is one of nine community property states in the U.S. In general, this means if a married couple divorces in California, community property state law says they must equally split assets acquired during their marriage, unless an exception applies. these laws also apply when dividing assets upon the death of a married person.

If you're considering marriage or divorce in this state, it's important to understand California community property laws and how they could impact the division of your marital property. 

We'll explore this law in depth and discuss the differences between community property, separate property, and quasi-community property in this state.

What is community property in California?

According to California's community property laws, community property is all assets and debts acquired during the course of a marriage. Therefore, both parties have equal ownership of the accumulated marital property, regardless of whether one spouse contributed more or less to it.

Community property refers to anything you earned or bought during the marriage, including income, bank accounts (including bank accounts in the name of only one spouse), retirement accounts, pension plans, and stocks, along with real estate, vehicles, furniture, valuables, and even businesses formed during the marriage. Debt accumulated during the marriage, like a student loan, is also considered community property, even if the debt is in your partner's name.

If you and your spouse divorce, community property law says you must split those marital assets 50/50. The same community property rules apply if one of you dies, which means that each spouse can decide what happens to their 50% share when they pass away by documenting their wishes in a will or a trust. If they don't have a will or trust, then the default rules of the state (called instestacy laws will apply and the community property laws will dictate who becomes the rightful heir to the assets. Typically the surviving spouse is the heir to the deceased spouse's half of the community property.

Now, there are some exceptions to community property in California. One of the main exceptions is inheritance and gifts received during the marriage do not get divided equally. For instance, if your late mother left money to you in her will or if your sister gave you a diamond bracelet for your birthday last year, your spouse wouldn't be entitled to either because inheritances and gifts are considered separate property.

What is separate property in California?

Everything you own is not necessarily equally divided between you and your spouse. Some of your assets may be sole and separate property.

A spouse's separate property refers to the assets and debts they acquired before their marriage or after their legal separation. As previously mentioned, separate property also includes gifts and inheritance, regardless of when you received them.

During a divorce, separate property generally does not get divided equally between spouses. For instance, if you took out a car loan before you met your spouse, that debt would remain with you. The same goes for the stock that you purchased before you entered your marriage---you would not have to divide up that money.

Now, if you or your spouse dies, separate property remains separate even after death. This means that each spouse can decide what happens to 100% of their separate property when they pass away by documenting their wishes in a will or trust.  If they don’t have a will or a trust, then the default intestacy rules of the state will apply, and the separate property laws will dictate who becomes the rightful heir to the assets.  This varies by state and depends on whether there are surviving children, but the surviving spouse is not automatically the heir of all the separate property

Quasi-community property in California

With a better understanding of community property vs. separate property, let's discuss quasi-community property. Quasi-community property refers to assets or debts you and your spouse acquired during your marriage while living in another state before relocating to California. For example, maybe you purchased a car together while living in Virginia.

Under California law, that property, known as quasi-community property, is usually treated as community property, even though it's property acquired out of state. Therefore, it is usually divided equally between the couple during a California divorce, meaning the car you purchased in Virginia would be evenly split under California's community property laws.

How a prenuptial agreement can help

While no one wants to think about divorce before they've even gotten married, it's important to consider the implications of California community property laws and how they could impact your assets if you and your partner split up. If you're concerned about what it might mean for your own property, you may want to get a prenuptial or postnuptial agreement.

These agreements let you override community property laws and predetermine how you and your spouse want to divide your assets and debts in the case of death or divorce. However, your agreement must be valid and compliant with California laws to ensure that it's enforceable.

With our prenuptial services, you can work with an attorney who will guide you through the process and help you draft a legally sound contract. Enjoy peace of mind knowing your assets are protected no matter what happens in your marriage.

FAQs

Follow along to find out more about community property rules.

Do you have to follow community property law in California?

No, you and your spouse do not need to follow California community property laws if you can both agree on how to divide the property acquired during the marriage. You can settle outside of court and create your own separation agreement.

You can also bypass community property rules if you and your spouse create a valid prenuptial or postnuptial agreement. Having one of these agreements lets you override community property laws and divide your community assets however you decided in the contract.

That said, if you and your spouse can't agree on how to divide your property and do not have a prenuptial or postnuptial agreement in place, then community property rules apply.

Does community property automatically transfer to a spouse after death?

Each spouse can decide what happens to their 50% share of the community property when they pass away by documenting their wishes in a will or trust.  If they don’t have a will or a trust, then the default rules of the state (called intestacy laws) will apply and the community property laws will dictate who becomes the rightful heir to the assets. Typically, the surviving spouse is the heir to the deceased spouse’s half of the community property.

Separate property is a little different.  Each spouse can decide what happens to 100% of their separate property when they pass away by documenting their wishes in a will or trust.  If they don’t have a will or a trust, then the default intestacy rules of the state will apply and the separate property laws will dictate who becomes the rightful heir to the assets.  This varies by state and depends on whether there are surviving children, but the surviving spouse is not automatically the heir to 100% of the separate property. Each spouse can decide what happens to their 50% share of the community property when they pass away.

Do unmarried partners have community property rights in CA?

It depends. While some states recognize common law marriage and extend community property laws rules to unmarried cohabitating partners, California is not one of them. That said, unmarried couples can make contracts deciding how to divide the property acquired during their relationship and file a civil lawsuit, called a Marvin claim, to uphold those agreements in court.

What is a community property state?

A community property state is a state that has laws governing how marital assets are split during a divorce. These laws differentiate between separate and community property and determine how they are divided.

So, is California a community property state? Yes, California is a community property state. Other community property states include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin.

What is the main difference between separate and community property?

Separate property refers to any property or debts incurred before your marriage or after your legal separation. It also includes assets received by gift or inheritance during your marriage. You and your spouse's separate property does not get split up during the divorce. In contrast, community property is marital property acquired during the marriage. Under the California community property law, these shared marital assets must be divided evenly in the divorce.

How is community property divided?

According to California's community property law, community property is split 50/50 between the two parties in a divorce, unless the couple established a pre- or postnuptial contract or separation agreement.