Is a 50-50 Division of Community Property Fair

When a California judge is required to divide a couple’s community property in a divorce, California law requires the judge to order a 50-50 division.  This is assuming the couple has a positive community property net worth.

Only California, Louisiana and New Mexico have this requirement of an equal division.  There are six other “community property” states.  The law in these other states requires an equal division unless it would be inequitable to do so.

All the other states are considered “equitable distribution” states.  In these states, a judge almost always starts with an assumption that the community property will be divided equally.  But the judge may depart from this if in their view it would be inequitable or unfair to do so.

California’s Family Code acknowledges that a 50-50 division might not be appropriate when community debts exceed community assets.  So for couples with a negative community net worth, the judge is not required to order a 50-50 division.  The judge in such a case will normally pay particular attention to which spouse is more able and likely to pay off the community debts.  And this spouse will usually end up with a larger share of the debt.

Some consider it odd that California judges aren’t required to order a 50-50 division for negative net worth couples but are always required to do so for positive net worth couples.

Your Own Division: 50-50?

Fortunately, you can come up with your own division, whether on your own or in divorce mediation.  It can be whatever the two of you can agree is appropriate.  Your community property division need not be 50-50.

When it is submitted to the court, the reviewing judge will almost always sign off.  Judges are very unlikely to question such settlements unless:

• a spouse is agreeing to take substantially less than 50%; and
• there isn’t clear language in the settlement agreement showing the spouse understands the right to a 50-50 division; and
• the spouse isn’t represented by an attorney.

I’ve worked with many couples who decided upon a non 50-50 division.  Here are some of the main reasons:

• one spouse has a larger separate property net worth than the other;
• a large inheritance is expected;
• one spouse has a much larger income;
• reluctance to divide retirement accounts;
• the marriage was short;
• one spouse has a greater need;
• reluctance to sell the marital home.