California is a community property state when it comes to divorces. The idea of community property is not difficult to understand in the abstract — colloquially, you might have heard it as the rule that in a divorce, you get (or lose) of the stuff. See California Family Code section 2550. Property is basically put in to one of three categories: (1) stuff owned by spouse #1 from before the marriage, (2) stuff owned by spouse #2 from before the marriage, and (3) stuff that the two spouses acquired while they were married. The property in category (3) is divided in half — again see California Family Code section 2550 — while the property in (1) and (2) goes to each spouse respectively.
Applying the idea of community property in the real world is not so simple. First, the spouses will argue about which category (1, 2, or 3) a particular piece of property falls in to. Second, if each spouse acquires property after they separate, determining when that property was acquired relative to the separation date can also be argued about, sometimes extensively. Third, it can often be confusing, such as when property was purchased prior to the marriage and financed or paid for partly during the marriage. Houses often fall in to this category. If you’re dealing with a California divorce where a house was purchased by one spouse before the marriage, but the mortgage was paid for during the marriage, you may be interested in something called a Moore-Marsden computation.
Community property in divorces is the exception rather than the rule in the United States. The vast majority of US states — roughly 41 of the 50 — do not use community property. The 9 or so states that do use community property tend to be clustered on the West Coast or Southeastern United States. As always, look up your particular state if you want to know for certain.
Like California, New York’s system for dividing property in a divorce also distinguishes between property acquired before the marriage and property that was acquired during the marriage. The former is called Separate Property and is defined under New York Domestic Relations Law section 236(B)(1)(d) as property that was:
- property acquired before marriage or property acquired by bequest, devise, or descent, or gift from a party other than the spouse;
- compensation for personal injuries;
- property acquired in exchange for or the increase in value of separate property, except to the extent that such appreciation is due in part to the contributions or efforts of the other spouse;
- property described as separate property by written agreement of the parties pursuant to subdivision three of this part.
As in California, New York defines Marital Property as property that does not meet the definition of Separate Property and was acquired by either spouse during the marriage. See New York Domestic Relations Law section 236(B)(1)(c) and California Family Code section 770.
The difference between California and New York is how the community property (under California law) or marital property (under New York law) is divided. California’s system is fairly straightforward: community property is divided in half with each spouse getting 50%. New York does not have a simple mathematical formula like this and instead uses a system called Equitable Distribution in which marital property is divided in a way that is fair given the facts of that particular case.
You might be concerned that simple fairness is too vague a criteria and that decisions could be wildly inconsistent. Worry not, however, because the Domestic Relations Law of New York — specifically section 236(B)(5)(d) — lists out 14 different criteria that the court shall consider in determining what division of marital property is fair. Depending on the facts of each case, arguments can hopefully be made one way or the other why each of the factors below (1) doesn’t apply at all, (2) applies and favors spouse #1, (3) applies and favors spouse #2, or (4) favors both spouses equally so is a neutral.
- the income and property of each party at the time of marriage, and at the time of the commencement of the action;
- the duration of the marriage and the age and health of both parties;
- the need of a custodial parent to occupy or own the marital residence and to use or own its household effects;
- the loss of inheritance and pension rights upon dissolution of the marriage as of the date of dissolution;
- the loss of health insurance benefits upon dissolution of the marriage;
- any award of maintenance under subdivision six of this part;
- any equitable claim to, interest in, or direct or indirect contribution made to the acquisition of such marital property by the party not having title, including joint efforts or expenditures and contributions and services as a spouse, parent, wage earner and homemaker, and to the career or career potential of the other party. The court shall not consider as marital property subject to distribution the value of a spouse’s enhanced earning capacity arising from a license, degree, celebrity goodwill, or career enhancement. However, in arriving at an equitable division of marital property, the court shall consider the direct or indirect contributions to the development during the marriage of the enhanced earning capacity of the other spouse;
- the liquid or non-liquid character of all marital property;
- the probable future financial circumstances of each party;
- the impossibility or difficulty of evaluating any component asset or any interest in a business, corporation or profession, and the economic desirability of retaining such asset or interest intact and free from any claim or interference by the other party;
- the tax consequences to each party;
- the wasteful dissipation of assets by either spouse;
- any transfer or encumbrance made in contemplation of a matrimonial action without fair consideration;
- any other factor which the court shall expressly find to be just and proper.
This could be just me, but when I read these Equitable Distribution criteria, they bear a very strong resemblance to the criteria for determining permanent spousal support in California under California Family Code section 4320.
As always, I hope this post was helpful. Thanks for reading. If you’re in New York state, please remember that I don’t maintain an office in New York which means that, per New York law, I don’t accept clients in New York either.
Andy Chen
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