California defines community property as any property that either spouse acquires during the course of the marriage, excluding gifts that an individual spouse receives and any property an individual spouse acquires through bequest in a will or intestate succession. Under California law, spouses must divide community property equally following a divorce, unless they agree to a different allocation through a prenuptial agreement or divorce settlement.
At first blush this seems like an elegantly simple system. But many issues can arise during community property division that make it difficult to determine what constitutes half of the marital estate. Among these, two issues are most prominent and, in many cases, most contentious. What property is community property? And how should the court assign value to community property? These two issues can quickly turn this seemingly simple system into one rife with complexity and conflict.
Determining what constitutes community property can become difficult when dealing with assets acquired over a period. If a spouse starts a business prior to marriage but continues to operate it during the marriage, what percentage of the business is community property? The same applies to investments acquired before the marriage or pension plans that may have vested prior to the marriage. Such assets sit in a gray area between community and personal property.
Even once the court has identified community property, similar issues can make valuation difficult. Assigning a value to bank accounts, investments, and even real estate is fairly straightforward. But educational degrees, professional licenses, or closely held businesses are also assets subject to distribution. California divorce attorneys must often seek advice from economic experts and professional appraisers to assign value to these assets.