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Property Division in California

Dividing property during California divorce

One of the most important distinctions in California divorce cases is that it uses a community property model when determining how to divide spouses' property. This differs from the equitable distribution or common law model used in most other states. This distinction can have a significant impact on how a couple's property is ultimately divided at divorce or upon separation. Having a clear understanding of California's property division laws helps individuals make informed decisions during the divorce process.

Review how these rules interact with our California divorce roadmap and, for larger estates, the high net worth divorce guide.

Classification of Property

In California, there are generally two types of property: separate property and community property. Generally, a court in California will only divide the community property, although separate property may influence related issues such as support or reimbursement claims.

Property can include assets such as:

  • Real property (homes, land)
  • Vehicles
  • Furniture and personal belongings
  • Clothing and jewelry
  • Financial accounts
  • Cash
  • Retirement accounts, pensions, and 401(k)s
  • Stocks, bonds, and stock options
  • Businesses and business interests
  • Intellectual property (e.g., patents, royalties)

Each item of property may be classified as separate property, community property, or a combination of both.

Separate Property

Under California Family Code §770, separate property includes:

  • Property owned by a spouse before the marriage
  • Rents, issues, and profits derived from separate property
  • Property acquired during the marriage by gift, bequest, devise, or descent (inheritance)

A person in California is free to gift or bequeath their own separate property without the other spouse's consent.

Spouses may also agree to change the character of property—known as a transmutation—through a valid written agreement (such as a prenuptial or postnuptial agreement).

However, when separate and community property are commingled (for example, using community funds to pay the mortgage on a separate property), complex tracing and reimbursement rules apply to determine the community's share.

Community Property

Under California Family Code §760, community property includes all property acquired by a married person during the marriage while domiciled in California, except as otherwise provided by statute. This includes wages and earnings of each spouse, even if only one spouse works outside the home.

There is a presumption that property acquired during marriage is community property. A spouse claiming that property is separate must prove it by tracing the source of funds or acquisition.

Under California Family Code §2550, courts generally divide community property and community debts equally (50/50) unless the parties agree in writing to a different division.

In some cases, an asset may have both community and separate components. For example, if one spouse bought a home before marriage but the mortgage was paid using community income during the marriage, a community property interest may have developed (known as a Moore/Marsden calculation).

Quasi‑Community Property

California also recognizes quasi‑community property under Family Code §125. This is property acquired by either spouse while domiciled in another state that would have been community property if acquired while domiciled in California.

If a couple divorces or legally separates in California, quasi‑community property is treated like community property for purposes of division, even though it was acquired in a non‑community property state.

Property During Separation

Under Family Code §771, after the date of separation, the earnings and accumulations of each spouse are that spouse's separate property. The "date of separation" occurs when both of the following are true:

  1. A spouse expresses the intent to end the marriage, and
  2. The spouses are living separate and apart, typically in separate residences.

Determining the date of separation is critical because it defines when community property stops accruing.

Couples evaluating this timeline should also review our legal separation and modification resources to keep court orders aligned with their living arrangements.

Marital Debts

Debts are generally divided during the divorce in the same manner as assets. Debts incurred during the marriage are typically community debts, while debts incurred before marriage or after separation are separate debts.

The court must divide the community estate (assets and debts) equally under Family Code §2550, unless the parties agree otherwise. While California is not an "equitable distribution" state, courts may consider fairness in assigning specific debts or reimbursements—for example, assigning more debt to a spouse who retains a particular asset or one who incurred the debt for non‑community purposes.

Generally, the spouse who keeps an asset also assumes any related debt (e.g., a car loan). Courts may order refinancing to remove one spouse's name from a joint loan.

Transmutation and Commingling

California law allows spouses to change the character of property through transmutation (Fam. Code §850‑853). This must be done in writing and with clear intent. Without proper documentation, property generally retains its original classification.

When community and separate funds are mixed—known as commingling—a spouse must provide clear tracing evidence to establish what portion remains separate. Otherwise, the property is presumed community.

How Assets and Debts Are Divided

Spouses can divide their assets and debts in several ways:

  1. Written Agreement (Marital Settlement Agreement) – The spouses agree on property and debt division, and the court incorporates this agreement into the Judgment of Dissolution or Legal Separation.
  2. Mediation – A neutral mediator helps the parties negotiate and resolve property division outside of court.
  3. Litigation – If no agreement is reached, the court determines how assets and debts are divided after hearing evidence and testimony.

When dividing assets, spouses should consider the total value each receives rather than splitting each item. For example, one spouse may keep the home while the other keeps investment accounts of similar value. The overall result should be an equal division in value of the community estate.

Property outcomes often influence spousal support and other financial orders, so coordinate settlement terms across both issues.

If the couple cannot agree on valuation, professionals such as appraisers, accountants, or business valuators may assist. The court may also determine value if the matter is disputed.

Additional Considerations

  • Reimbursement Rights (Fam. Code §2640): A spouse who contributes separate funds to acquire community property (e.g., a down payment from inheritance) may have a right to reimbursement.
  • Hidden Assets: Failure to disclose property or debts can lead to penalties and reopening of the judgment (Fam. Code §1101).
  • Retirement Accounts: Division may require a Qualified Domestic Relations Order (QDRO) to properly divide pensions or 401(k)s.
  • Business Valuation: Community interest in a business depends on contributions and growth during the marriage, often determined using the Pereira or Van Camp accounting methods.

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Property Division FAQs

Community property includes all assets and income either spouse acquires during the marriage while domiciled in California—such as wages, real estate, retirement accounts, and other earnings. By default, community property is divided equally (50/50) during divorce or legal separation.

Separate property belongs solely to one spouse. It covers assets owned before marriage, gifts or inheritances received during marriage, and the rents or profits produced by such property. Separate property is not divided in divorce unless it has been commingled with community funds.

Debts incurred during the marriage are generally community debts and are split equally. Debts incurred before marriage or after the date of separation remain separate. Courts often assign the debt associated with an asset to the spouse receiving that asset (for example, a car loan with the vehicle).

Quasi-community property consists of assets acquired while living in another state that would have been community property if acquired in California. When a couple divorces in California, the court treats these assets as community property for division purposes.

The date of separation marks when spouses stop accumulating community property. It requires evidence that at least one spouse intended to end the marriage and the parties lived separate and apart, often in different residences. Earnings and assets acquired after that date are generally separate property.

Yes. Spouses can enter a Marital Settlement Agreement (MSA) that outlines how assets and debts will be divided. The court reviews and, if appropriate, incorporates the agreement into the final judgment. Mediation is also a valuable tool for reaching a settlement without trial.

If no agreement is reached, the judge decides how to divide assets and debts after reviewing evidence, testimony, and expert valuations. The court must follow California’s community property rules, typically resulting in an equal division.

Transmutation is the process of changing property from separate to community (or vice versa). It must be accomplished in writing with clear consent from both spouses. Without proper documentation, property retains its original classification.

This is known as commingling. When funds are mixed, the spouse claiming a separate interest must trace the source of the contributions. If tracing is not possible, courts generally presume the asset is community property.

Retirement plans, including pensions and 401(k)s, are divided using a Qualified Domestic Relations Order (QDRO) or similar order. The QDRO allocates the community share to each spouse while avoiding early withdrawal penalties and unnecessary tax consequences.

No. California law mandates full financial disclosure. Hiding assets can result in severe penalties, including monetary sanctions or awarding the entire hidden asset to the other spouse.

Under Family Code Section 2640, a spouse who contributes separate funds—such as an inheritance—to acquire community property may be entitled to reimbursement of that contribution.

Businesses formed or operated during the marriage often have a community property component. Courts use accounting methods like Pereira or Van Camp to determine how much of the business value belongs to the community versus the separate estate.

Not necessarily. One spouse may buy out the other’s interest by refinancing or offsetting with other assets of equal value. The objective is an overall equal division of the community estate, not forced sale of every asset.

A California family law attorney can assist with identifying and classifying property, arranging valuations, negotiating settlements, preparing necessary agreements, and litigating disputes when needed.