Dividing Community Property The Hard Way

The Associated Press reported on October 10, 2008 that a couple in rural Cambodia terminated their 18 year marriage with a divorce settlement that entailed sawing in two the wooden house they once shared.  The husband took away with him all the bits and pieces of his half of the house.  I’ve never heard of a divorcing couple in California going to that extreme, but even when you don’t take a saw to the house, dividing community property can be more complicated than dividing by two.  California is a community property State and that means all property acquired during marriage is presumed to be community property.  Property acquired outside of the State of California during marriage is called quasi-community property, but is treated the same way.  However, there are exceptions to this rule and they can be quite complex, which requires an experienced family law attorney to recognize these issues.  One exception is that property acquired by gift or inheritance is normally a spouse’s separate property, but the character of that property can change, depending on the actions of the spouse after receiving the gift or inheritance.  For example, if one spouse uses his/her community efforts by day trading his/her inheritance to stock market riches, the community may gain an interest in the rising stock portfolio. But if the spouse is an investor and only trades on occasion, the community may gain no interest in a rising stock portfolio, and the entire inheritance will likely remain that spouse’s separate property.  Getting back to that Cambodian couple, apparently the wife got the better part of the deal because she got to keep the land the house was built on.