Community Property And Debt
Community property consists of the assets and debts acquired by a married couple between the date of marriage and the date of separation. Some couples choose to â€œopt outâ€ of California community property law by entering into a premarital (prenuptial) agreement.Â For most people the biggest asset to be divided is their respective retirement plans, real estate and a business run a close second and third.
Separate Property And Debt
Separate property is the property of a party to divorce that is acquired prior to marriage, after the date of separation, by inheritance, or through a gift. The separate debt of a party is the debt acquired prior to marriage or after the date of separation.
Separate Property Contribution to the Community
When a party contributes their separate property to the community estate, reimbursement is possible in divorce. The extent of the reimbursement is governed by California Family Code Section 2640.
The contributions include down payments, payments for improvements, and payments that reduce the principal of a loan used to finance the purchase or improvement of the property but do not include payments of interest on the loan or payments made for maintenance, insurance, or taxation of the property. Also, the contribution must be traced to a separate property source.
A party can also be reimbursed for their separate property contributions to the other partyâ€™s separate property.