Dividing assets and debts in a divorce depends on whether a state follows community property or equitable distribution rules. California is one of a few states that use community property laws, while most states follow equitable distribution, also known as marital property rules. Understanding these differences is crucial when navigating divorce.
What Is Community Property?
In community property states, most assets and debts acquired during the marriage are considered jointly owned by both spouses, regardless of who earned the money or whose name is on the title. Upon divorce, these assets and debts are divided equally (50/50) between the spouses.
Nine states follow strict community property laws: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Additionally, Alaska allows couples to opt into a community property system by agreement.
Under California’s Family Code § 760, all earnings, income, and assets acquired during the marriage are presumed to be community property. Debts incurred during the marriage are also shared equally, even if only one spouse signed for them. Prenuptial or postnuptial agreements can override these rules. Courts do not consider fairness or financial contribution—property is simply split 50/50 unless spouses agree otherwise.
What Is Marital (Equitable Distribution) Property?
In equitable distribution states, marital assets are divided fairly, but not necessarily equally. Instead of an automatic 50/50 split, courts consider:
- Each spouse’s financial contribution to the marriage
- The length of the marriage
- The economic circumstances of each spouse after divorce
- Any prenuptial or postnuptial agreements
Forty-one states follow equitable distribution: Alabama, Alaska (default rule), Arkansas, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Illinois, Indiana, Iowa, Kansas, Kentucky, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, New Hampshire, New Jersey, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, Vermont, Virginia, West Virginia, Wyoming.
Unlike California’s strict 50/50 split, equitable distribution allows courts to divide assets based on fairness. A spouse who was the primary breadwinner may be awarded a larger share, while a stay-at-home parent may receive additional support to balance financial disparities.
Key Differences Between Community Property and Equitable Distribution
Factor | Community Property (CA & 8 Other States) | Equitable Distribution (41 States) |
---|---|---|
Division of Assets | 50/50 Split | Fair but not necessarily equal |
Debts | Shared equally | Assigned based on fairness |
Consideration of Contribution | Not considered | Considered (who earned what, non-financial contributions) |
Judicial Discretion | Limited | High (courts decide what is fair) |
Prenuptial Agreements | Can override rules | Can override rules |
Why This Matters in a Divorce
How your state handles property division affects important financial aspects of your divorce. In California, everything acquired during the marriage is split equally, while in equitable distribution states, assets are divided based on fairness. Debt responsibility also differs, and spousal support may be impacted by property division rules.
If you are divorcing in California, understanding community property laws is essential for protecting your financial interests. The attorneys at David Knecht Law have extensive experience in California divorce cases and can guide you through the process to ensure a fair settlement. Contact us today at (707) 451-4502 to discuss your case.