California law recognizes that both spouses make valuable contributions to a marriage. Most property will be labeled either community property or separate property.
All property that you and your spouse acquired through labor or skill during the marriage is, at least in part, community property. You and your spouse may have more community property than you realize. For example, you may have an interest in pension and profit-sharing benefits, stock options, other retirement benefits or a business owned by one or both of you. Each spouse owns half of the community property. This is true even if only one spouse worked outside of the home during the marriage-and even if the property is in only one spouse’s name.
With few exceptions, debts incurred during the marriage are community debts as well. This includes credit card bills, even if the card is in your name only. Student loans are an exception and are considered separate property debts.
Community property possessions and debts are divided equally unless you and your spouse agree to an unequal division, or unless there are more debts than assets. Keep in mind that if your spouse agrees to pay a community debt and fails to do so (or files for bankruptcy and discharges the debt), you may have to pay the creditor.
Division of assets, possessions and bills can feel complicated or overwhelming. Often, one spouse pressures the other spouse to divvy up some of the assets and debts, in a piecemeal fashion. We generally do not recommend this, as the piecemeal approach usually leads to a result that feels “unfair” or “unequal”. How could that happen? If the case goes to trial, a judge will make the decision for you. He or she may not split everything in half; instead, the judge might give each of you items of equal value. For example, if your spouse gets the furniture and appliances, you might get the family car.
Separate property is property acquired before your marriage, including rents or profits received from these items; property received after the date of your separation with your separate earnings; inheritances that were received either before or during the marriage; and gifts to you alone, not you and your spouse. Separate property is not divided during dissolution or legal separation. Problems with identifying separate property occur when separate property has been mixed with community property. (The community may acquire an interest in separate property over time.) However, you may be entitled to receive your separate property back even if it has been mixed. There are complex tracing requirements where property has been mixed. Debts incurred before your marriage or after your separation are considered your separate property debts as well.