California is a community property [c/p] state. In general terms, that means that anything of value generated by the parties' efforts during a marriage will be divided equally between them on divorce or legal separation. Debts are generally viewed simply as negative assets. Exact equality has been the rule since it became a no-fault state in 1970.
That may sound easy, and in concept it is. Litigation between spouses generally revolves valuing the asset, determining whether it is community or separate, and determining what reimbursements, if any, should be granted for the use of non-community property or efforts to buy, pay for, or improve the asset.
There are many misconceptions about c/p that should be discussed with a certified specialist in family law. Among these misconceptions are the following:
a. If you get married, you are not automatically entitled to one-half of your spouse's assets.
b. If you own something when you get married, your spouse may claim part of it if c/p was used to make the payments, improve it, or put it in joint names. The same may happen to a business if you continued to work in it after you got married.
c. Your business can have value, even if it couldn't operate without you. The value can include such things as the physical assets, accounts receivable, and goodwill [the expectation of continued business].
d. A business may be valued for divorce purposes for more than you could sell it for - judges frequently place the value at what is worth to the spouse who operates it.
e. Just because you want everything sold, doesn't mean the judge will do so. Often, s spouse may want everything sold as a way of denying the other the continued use, such as a home. The judge's primary responsibility is to place a value on the assets and divide them.
f. Just because you didn't know about the spouse's credit card debt doesn't mean you don't have to pay half of it. On the other hand, if the judge thinks you used funds or credit in contemplation of divorce, you may get stuck. Judges may have the power to divide debts unequally in unique circumstances, such as gambling or drug debts, or attorneys fees for a criminal defense - the theory is that the expense isn't for the benefit of the community, and it is unfair to make the other pay. In rare cases, where there are more debts than assets, a judge may divide them unequally: Called Eastis cases.
g. It doesn't matter that you were the only one who worked, or that it's "your" business - your spouse gets his or her one-half. And it doesn't matter if your spouse sat home all day watching soap operas or football games, while you did all the work.
h. "Fair" is where they sell pigs. Don't expect fairness from a court. And remember, the judge is paid to make a decision, but not to make the right decision. [I could attribute this quote to any of several judges I know personally, each of whom has made the comment - I suppose it's an old-judge-saying they teach at judges' school.]
i. Just because you now the truth doesn't mean the judge will believe your version - it isn't that easy to tell [see "h", above].
j. And, you need more than your word against that of your spouse - do you have documents to support your positions, or neutral and reliable witnesses?
