Spouses considering a divorce may want to do some research on how assets are usually divided during the process. The more assets that a married couple has, the more difficult it usually is to divide them. There are also differences between property that is considered either separate or marital. Separate property usually includes gifts that were received individually by either spouse, inheritances received by either spouse, personal injury compensation received by either spouse and property owned by either spouse before they were married. However, state laws do vary, so California residents should check their local divorce laws.
Separate may not be considered separate if it is commingled with marital assets. If a spouse uses their personal injury compensation to purchase a home that is listed in both spouse’s names then the funds will no longer be considered separate property. Apart from separate property, all property that is acquired during the marriage becomes marital property, regardless of whose name the property is in. There may also be some complications when considering the active appreciation and passive appreciation of assets.
Active appreciation is appreciation that occurs through the efforts and energy of the either spouse. Passive appreciation occurs entirely without the interference of either spouse. California is a Community Property state, which means that both spouses are considered to own half of all marital assets. There are only 9 Community Property states. The other 41 states are Equitable Distribution states, in which more factors are taken into account.
The community property law of California only applies to marital property, not personal property. California residents considering divorce may choose to consult with a divorce attorney if they need help in determining what property is considered marital and what property is considered personal.
Source: Huffington Post, “Understanding How Assets Get Divided In Divorce“, Jeff Landers , June 14, 2013