Community PropertyProperty

How does the court divide community property in California?

Under California community property law, unless the parties have an agreement otherwise, the court must divide the community estate equally. Except for a few statutory exceptions, all community property and quasi-community property assets and liabilities are divided so that each party receives an equal net value of the community estate.

How does the court divide the community estate? The court has discretion in the methods used to achieve an equal division. The court may use more than one method in any particular case.

In-Kind Division: An in-kind division means the court will split the asset in half (or in some other proportion). This method works well for assets such as bank accounts. For example, if a community property bank account has a balance of $10,000, then each party is awarded $5,000 from the account.

Asset Distribution / Cash Out: With asset distribution, the court may award an entire particular asset to one party and another asset entirely to the other party. This is common for assets that cannot be divided in-kind and split down the middle, such as a house or a car. After all assets are distributed, one party may end up with a greater net value than the other party. To equalize the net values, the party with the higher net value will be ordered to pay the other party one-half the difference between the two net values. For example, the court distributes to each party the car he or she is driving. Let’s say Husband’s car has a net value of $10,000 and Wife’s car has a net value of $8,000. This means Husband’s net value received exceeds Wife’s by $2,000. Therefore, Husband will pay Wife $1,000, which represents one-half the difference in the net values, in order to equalize the division of the cars.

Sale and Division of Proceeds: In some instances, the court may use its discretion to order an asset be sold and the proceeds divided. For example, the parties own a motor home that has still has a loan due. The parties have already sold their house and both have moved to apartments, where there is no place to park the motor home and neither party can afford to pay the loan. The court may order the motor home be sold and the net sale proceeds be divided between the parties.

Continued Ownership as Tenants in Common: The court may award an asset to both parties and order that the asset be held by the parties as tenants in common (not joint tenancy), and the court reserves jurisdiction to divide the asset at a later time. This method of division is used when the parties wish to continue to use the former family home for some time after the divorce, whether together or one party uses it exclusively, and then divide the home at a later time. This is known as a deferred sale of home order and will be discussed in a later blog post.

Contact the Law Office of Christine Nguyen Thomas for assistance with property division in your divorce case. We serve the cities of Oxnard, Ventura, Camarillo, Ojai, Port Hueneme, Santa Paula, Fillmore, Moorpark, Simi Valley, Thousand Oaks, and surrounding areas in Ventura County.

 

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