Property Division (Community & Separate)

Property Division(Community & Separate): How to Divide Community Property in a California Divorce

Dividing Community Property: There are a few ways to divide community property. You can divide community property in-kind; one of you can buy a property from the other, or you each receive community property and whoever receives more pays the other the difference.  When you transfer or divide property as part of a divorce agreement, there are no taxes. This includes any money you transfer from one retirement account to the other.

When you divide in-kind, each person receives the exact same property. If you have 100 shares in a company of equal value, assuming the same tax or cost-basis, each spouse gets 50 shares in that company. If you have $5,000 in a savings account, you each get $2,500. For divide in-kind to work, you need to have more than one of the same assets of the exact same value.

For some property, like a car, it cannot be divided in-kind. You can divide those properties using a buy-out. One person takes the property, like the car, and pays the other the difference. The value of the property is today’s current price, not the value at the date you separated or the purchase price. If you do a buyout, you only owe your spouse one-half the value because you own the other half. 

If you have a lot of different properties, you total the value you each received. If there is a difference in the total values, the person who received more pays the other to make the division equal. This is called an equalization payment and it is non-taxable. 

If you litigate your case, the judge will divide your property using any one of these divisions. If you are negotiating an agreement, you have one more option. You can choose to hold property jointly after divorce. Depending on what you want to hold together, you may need to see a divorce professional to make sure you title the property correctly and understand any legal or tax issues for holding the property jointly after divorce. 

Dividing Separate Property: If you have separate property or separate debt incurred prior to marriage or after the date of separation, your property or debt is given 100% to you, and is not part of the equalization of community property.

At The Complete Divorce, we provide you what you need to successfully do your California divorce on your own. We provide all the required family law court forms in our automated forms program, all the video tutorials, and an automated customizable Marital Settlement Agreement (Divorce Agreement). If you need more help, you can get our package that includes time with a divorce mediator. 

Before you go, consider if we can help you. We have helped thousands of couples in California. Our guided DIY divorce is successful and cheap! Book a free consultation now. Our services are all 5-star!

Need more? Check out our full service divorce mediation services, Families First Mediation,

Leave a Reply

Your email address will not be published. Required fields are marked *