California is a “no fault” divorce state. This means that one party can end a marriage even over the objections of the other party and even without proving fault. When divorce happens, property must be divided between the spouses. That is when California community property law kicks in.
California is one of only nine community property divorce states that include:
In a community property state, all assets gained by either party during the marriage are lumped together as part of the “marital estate” and each party is presumptively entitled to half (certain exceptions exist, however). The same general rule applies to marital debts.
The separation date is critical to the determination of which debts are considered “marital debts.” A debt incurred by a spouse is generally that spouse’s separate debt if it is incurred after the date that the parties “separated” (rather than the date that the divorce was finalized). California courts use two tests to determine the exact date of separation:
The objective test: One spouse moving out of the couple’s home, for example.
The subjective test: The intentions of the spouse in question. The relocation of a spouse with the intent of returning later, for example, would satisfy the objective test but not the subjective test.
Ambiguous situations can rise. For example, one spouse might be living apart from the other spouse for employment reasons and only later decide to end the marriage. Or a spouse who is desiring a divorce but unable to afford to move out may begin sleeping on the living room sofa.
Community Debts vs. Separate Debts
The general rule is that all debts incurred by either spouse alone are the debts of that spouse if they were acquired before the date of marriage or after the date of separation. Debts incurred during the marriage are generally the debts of both spouses, even if they are in another spouse’s name.
Mortgage division can get complicated, especially if the home equity includes both community and separate property. Courts sometimes impose flexible solutions – one spouse buys the other spouse’s equity, for example, and is thereafter solely responsible for the mortgage. Epstein credits are available to a spouse who pays the mortgage after separation but before the divorce.
Spouses can often come up with a negotiated debt division agreement, as part of a larger property division agreement, that is flexible and satisfactory (“You can have the car if you pay the credit card bills”, for example). California law allows spouses to do this, although the agreement must still be approved by a California family court. Unfortunately, enmity sometimes rules out a negotiated solution.
The Clock Is Ticking...
At CKB Vienna LLP, our family lawyers handle a wide range of matters including divorce, annulment, property division, child custody, alimony, child support, and conservatorship issues. We serve clients from throughout Ontario, Claremont, Riverside, Fontana, Upland, Rancho Cucamonga, including Alta Loma and Etiwanda. Call us at 909-980-1040 or fill out our online contact form to learn how we can best assist you.