If you are planning on divorcing your spouse, you might understandably not like the idea of giving them any of the income, wealth, and assets you have accrued throughout the years, especially if your divorce is looking contentious or is considered a high net worth divorce. However, if you live in California, you’ll be legally required to split your wealth with your spouse because the state uses a 50-50 distribution rule for community property. In other words, wealth is distributed as evenly as possible during a California divorce, down to the nearest penny if that’s reasonable.
Each Spouse Has a 50% Interest in Community Property
Under the letter of the law, spouses in California each have a 50% interest in community property, and community property is any property or asset that is “earned” while married. Earning property means buying it, receiving it as a gift, finding it, increasing its value, and so on. Essentially, any property you or your spouse obtained while you were legally married is community property, and you each have an equal right to claim it when you get divorced. This equal division of rights to community property is meant to simplify the process, but it can be the direct cause of disagreements and conflicts that eventually escalate to a property division case going to court.
Community Property Division is Based on Value
The property division expectation when you are divorcing in California is that property, assets, and wealth will be divided as evenly as possible. This process considers the value or perceived value of each piece of property, totals those values, and then divides that total in half to determine what property should be given to each spouse, more or less.
For example, imagine that you and your spouse share these pieces of community property when you file for divorce:
- Small business: Worth $500,000 (based on business valuation)
- Home: Worth $300,000
- Savings accounts: Worth $100,000
- Vehicles, heirlooms, and other valuable property: Worth $100,000
In this example, the court might find that it is fair to award you sole ownership of your family business while your spouse gets the home, savings account, and various pieces of valuable property. Even though it might seem like your spouse is getting much more than you, the total value of the divided properties would be equal, so the state’s 50-50 community property rule would be intact.
Of course, this situation is just a simplified version of what might happen. In reality, the process will be more complicated, especially when it comes to deciding which spouse is most deserving of continued business ownership and whether business ownership should remain split after the divorce. To take the complications out of your divorce, you should always consider working with a divorce lawyer from the beginning.
Orange County’s Trusted Divorce Team
Gill Law Group, PC is proud to be the first law many locals in Orange County call when they need help with divorce and family law proceedings. We focus on complex and high net worth divorces, so you know you can trust us if you’re worried about how your wealth and assets will be distributed when you divorce. Our attorneys can look for creative ways to split community property to allow you to keep the assets most important to you while also protecting your separate property that belongs only to you.
Call (949) 681-9952 to arrange a complimentary consultation with Gill Law Group, PC in Orange County, California.