California family law requires an equal 50/50 division of all community property. The divorce court has wide discretion as to how to allocate the various assets between the parties so long as the result of the overall division is an equal division between the parties. The divorce court is not required to divide each individual asset equally between the parties. Such a division is not possible or practical in many situations. In other words, the court may allocate an asset of significant value to one party and other assets of significantly less value to the other party so long as the court also requires the party receiving assets of higher value to pay an equalization payment to the other party.
Separate property includes assets owned before the date of marriage or received during the marriage as a gift or inheritance. An asset earned after the date of separation is also separate property. Rents, issues, and profits generated from separate property are separate property. Separate property is not divided between the parties but rather is confirmed to the owning party. The community may have a right to reimbursement where community effort or community funds have been utilized to benefit the separate property of one party.
There is a rare exception to the equal division rule. The divorce court has the authority to divide the community property unequally if the net value of the estate is a negative value. In other words, if the estate has more debts than assets, a divorce court may award more debt to one party than to the other.
In the division of community assets, California family law prohibits divorce courts from taking into consideration tax consequences that relate to the division of community property assets unless they are immediate, specific, and arising out of the divorce itself. Likewise, in a divorce, commissions, and costs of sale related to real property are not deducted from the equity of the property being awarded to one party unless the property is being sold as a part of the divorce.
A divorce court has the authority to award a particular asset to one party if that party has an emotional relationship or connection to the asset. An award of such an asset to that party would result in a charge to the receiving party of the value of the asset in the overall division of community property.
Below are examples of how assets may be allocated and equalized:
$9,000 - $2,000 = $7,000 ÷ 2 = $3,500
Husband pays the wife the sum of $3,500
Each party receives $5,500
$1,000,000 - $250,000 = $750,000 ÷ 2 = $375,000
Husband pays wife the sum of $375,000
Each party receives $625,000
$410,000 - $300,000 = $110,000 ÷ 2 = $55,000
Husband pays wife $55,000
Each party receives $355,500
Alternate Methods of an Equal Division of Community Property