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How does the community property law affect asset division?

Most states in the U.S. are equitable division states, which determines the classification of property for division during a divorce. California, however, is a community property state, which makes it a little different when it comes to dividing assets. This often has the harshest effects if you have a higher income and own more assets.

According to the Judicial Branch of California, the concept of community property means that everything you acquire or earn during the marriage becomes equal property of you and your spouse. This means even if you are the only spouse working and buying assets, everything you earn or buy still becomes partial property of your spouse. Titling an asset in your name only or buying it with funds from a private bank account does not change the ownership rights.

If you moved to California at some point during your marriage and want to divorce here, community property rules apply to all your property even that you acquired while living in another state. You cannot claim the rules of another state in your divorce to try to keep property separate.

It is possible to have separate property. Gifts from someone outside the marriage to one spouse or inheritances that you keep separate from household funds are separate property. In addition, anything you had before the marriage that you do not commingle with community property is separate property and not subject to division.  However, the best way to protect your assets is through a pre- or post-nuptial agreement, but do be aware these documents must adhere to the law or the court can find them invalid.