Community Property
Did you know the state of California is considered a community property state? This means that any assets, such as cash, property, business interests, stocks, etc., acquired during a marriage are considered to be owned by the community, or equally between husband and wife. This also applies to income, 401k and retirement contributions, and any other benefits (with cash value) received during the marriage.
Assets that are considered to be community property must be equally divided before a divorce can be finalized. This does not mean that each individual asset needs to be divided 50/50, but instead that an equal division of assets occurs at the end. For example, wife may be awarded the family residence, as well as both husband and wife's retirement accounts, and husband may be awarded the family pizza business, as long as the value of the assets are equal in the end. If an equal distribution of the assets cannot be constructed, then one party may be responsible for an equalization payment to the other.
Separate Property
In some cases, there may be separate property in addition to the community property. This would usually be property that was acquired prior to the marriage, after the separation, or through a gift or inheritance that was specifically designated as separate property. It is important that this separate property is not commingled with community property during the marriage.
It is possible to keep separate band accounts, a business only in one parties' name, or property held with only one parties' name, however great care should be exercised to insure that community property funds are never used to make mortgage payments, or pay for any of the expenses for these separate property assets. The moment that community assets are used, including community credit, there is community interest in the separate property asset.
Commingling separate and community assets can so easily be done accidentally that any time there is a division of assets involving both separate and community property, an experienced attorney, like those at Richard Ross Associates should be contacted. Additionally, the use of a forensic accountant may also be needed, but that is something your attorney can address and help you decide.