Getting married in CA? Wait! Check these 5 community property laws
Updated: • 4 min read
Excited to ring the wedding bells in California this summer? Are you all set to participate in the house-hunting game in California? Great! Congrats! But before you get hitched, there’s one question I need to ask you and that is:
“Are you mentally ready to mix love and money together?”
If your answer is ‘yes’, then California is perhaps the best place to exchange your wedding vows. But if your answer is ‘no’, then just check out these 5 laws before exchanging a wedding kiss with your spouse in CA.
1. Your spouse’s debt will be yours
Your spouse will be truly yours along with his/her debts. This means if your spouse applies for a credit card after marriage and doesn’t pay a penny, then his/her creditor has the right to garnish your wages. But, this will only happen after obtaining a judgment order against your spouse. So, are you willing to take the responsibility of your spouse’s debt? Answer this question first.
2. Assets will be distributed equally after a divorce
Assets will be divided between you and your spouse equally. As per the California’s Domestic Partner Act, each spouse is entitled to claim 50% of the community property after a divorce. This means, the total value of the assets divided between the two of you should be equal. So, your spouse may get the entire family business in his name and you may inherit the family residence after divorce as long as both of you’re getting assets of equal value.
Read more: Property and debts – How do these get divided in case of divorce?
3. Your spouse will have a share on your pension benefits
Whatever interest you’ll earn through your pension plan after marriage, is subject to division after divorce. This division is usually carried out in 2 ways in California:
- Reservation jurisdiction - Your spouse will get a fraction of your pension check after you finally retire from job. Under this system, the fraction will be determined by dividing the total number of years you guys were married by the number of years you’re contributing to the pension plan. The net result of this division will be the community property percentage of your pension plan.
- Cash out - This is also known as actuarial evaluation wherein an actuary reviews your pensions, insurance plans and annuities. After analyzing your plan and calculating the amount you’ve earned, the actuary will declare the ‘current value’ of the community share of the pension plan.
You’ll get the full share of your pension plan and your spouse will get other community property assets of same value.
4. The primary custodial parent will live in the house
If you’re the primary custodial parent of the kids, then you can live in the house with children for a certain time period. You’ll have to make mortgage payments, pay homeowner insurance premiums, property tax, etc. However, if your spouse earns more than you, then he/ she may have to make those payments in California.
5. You can’t sell community property if your spouse disagrees
No matter how good a deal is, you won’t be able to sell a community property without your spouse’s permission in California. Both of you have to jointly agree to sell or lease the community property. Unless you make a will, your spouse will inherit the community property automatically.
What’s the alternative solution for you?
If you don’t want to be a part of the community property scheme in California, then there’s one thing you can do. And that is, you can sign a prenuptial agreement and declare not to have a community property or you can list certain properties that will be part of community property.
Wait a minute. This article is not yet over. Before finishing off this article, I would like to show you a chart that will help you understand 3 classes of community properties more clearly:
| Your separate property | Your spouse's separate property | Both of your community property |
|---|---|---|
| Property you inherit | Properties earned after wedding | Property he/she inherits |
| Properties that both of you decide to keep separate | Properties that both of you decide will be community property | Property that both of you decide to keep separate |
| Property you had before marriage | Property he/she had before marriage |
Just remember, community property is subject to the claims of both you and your spouse’s creditors. But, separate property is subject to claims of your or your spouse's creditors. This means you’ll be responsible for your separate property in California. You’ll be liable for it and your creditor can make a claim on your separate property.
