One of the most contested issues in a divorce involves the division of property and assets. Although you may have heard that your spouse gets “half of everything” in a divorce, the truth is more complicated than that. The property that your spouse receives in a divorce depends on many factors, including where your divorce is filed, when the couple obtained the property in question, and the type of property or asset that the parties are claiming.

The Community Property System

Family law matters are primarily governed by state law, including issues that arise in a divorce case. Throughout the country, state laws follow either principles of “equitable distribution” or the “community property” system when it comes to dividing assets in a divorce.

California is one of the eleven jurisdictions that adhere to the community property system. According to the rules of the community property system, a married couple has joint ownership interests in all property that is considered part of the marital community estate.

So what is considered to be part of the marital community estate? Under California law, all property acquired during marriage, and that doesn’t qualify as a spouse’s separate property is considered to be part of the marital community estate. Conversely, all property that a party receives before marriage or after the date considered to be the beginning of the former couple’s period of permanent separation is considered to be their separate property. Additionally, property a party received during marriage through gift, bequest, or devise in their sole name is considered to be the party’s separate property.

In the California system of community property, each spouse has an equal undivided interest in the marital community estate. However, courts may consider arguments supported by proof for dividing assets in a way other than a fifty-fifty split.

Property and Assets Subject to Division as Community Property

Items of the marital community estate are not restricted to conventional notions of property, such as real estate and tangible personal property. For example, the marital community has an interest in financial assets such as bank accounts, retirement plans, and intellectual property rights, so long as they are characterized as community property.

There is no question that money received during marriage is considered to be part of the marital community and therefore subject to division upon divorce. As a result, damages from lawsuits that a married couple receives during marriage can be later divided upon divorce. In particular, damages that are received as compensation for personal injuries that a spouse sustains due to the tortious conduct of a third party may be divided upon divorce.

Division of Community Estate Personal Injury Damages

California Family Code § 2603 deals with the division of personal injury damages attributable to the community estate. Under this section, “community estate personal injury damages shall be assigned to the party who suffered the injuries unless the court…determines that the interests of justice require another disposition. “

“Community estate personal injury damages” are defines under Family Code § 2603 as “all money or other property received or to be received by a person in satisfaction of a judgment for damages for the person’s personal injury or pursuant to an agreement for the settlement or compromise of a claim for the damages, if the cause of action arose during the marriage but is not separate property.”

Therefore, California law presumes that the party whose injuries are to be compensated by a personal injury verdict or settlement is the party entitled to receive the entirety of the award. However, a court can determine that the spouse who did not suffer injury may have a right to some of those damages in “the interests of justice.”

Courts review the following factors when determining a different outcome for community estate personal injury damages under Family Code 2603, including:

  • The financial and economic needs of the parties
  • The amount of time that passed between the date of injury and the recovery of damages
  • The amount of time elapsed between the date the plaintiff discovered the injury and the recovery of damages

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