While most people know that California is a community property state–where any asset or income acquired during the marriage is deemed to be a part of the marital estate and separate property is anything that was acquired by either spouse either before the marriage or during the marriage as a gift–many still have questions about the grey areas in between, such as where a spouse’s 401(k) falls on that spectrum, for example.

Below, we try to provide some clarification. Such clarifications may, in turn, also affect certain choices made before marriage, such as the decision to work out a specific prenuptial agreement, or even avoid combining checking and savings accounts.

Benefits

While federal law dictates that your spouse receives the balance of your 401(k) in the event of your death, a couple can adjust this by having the other spouse sign a waiver, allowing the spouse with the 401(k) to, instead, name a beneficiary if they would like.

Note, however, that in a community property state like California, your spouse may end up getting half of your 401(k) in the event of divorce, as divorcing spouses must split equally any property obtained during the marriage, regardless of the form it was acquired in.

Strengthen Separate Property Status

There are steps you can take during marriage to protect assets from being classified as part of the marital estate, such as keeping a savings account in your own name; an account which contains inheritance or gifted funds, as well as working with an experienced divorce attorney to draft a pre- or postnuptial agreement which lists out your separate assets and your desire to keep them separate.

In addition, you will want to take steps to avoid commingling these assets and protect against the other spouse financially contributing to their improvement (for example, if you owned or inherited property before the marriage and you rent that property out). Remember, a prenuptial agreement can overwrite equal property and asset division laws in the state of California.

Community Property Applies To Debt As Well

It is important to keep in mind that the same rules which apply to assets also apply to debts: debt acquired during the marriage is also divided equally between the parties. In addition, it is also important to note that, under some circumstances, debt accumulated after the date of separation can also sometimes be assigned to the spouse who did not incur the debt if it was used for the necessaries of life of either spouse or the children )based on the respective needs of the parties and the ability to pay at the time they are incurred).

California Divorce Attorneys on Your Side

The divorce attorneys at R & S Law Group are skilled family law attorneys who can help protect your assets from division and help you work towards a fair divorce agreement. We serve Orange County and surrounding areas. Contact us today for assistance.