California is a community property state, meaning the Equitable Division rule divides marital property equally between spouses, however, exceptions exist. Spouses owe a duty of financial care and loyalty to each other and can’t cheat or misuse marriage income or assets, they must deal honestly and fairly with one another.
These rules can apply to frivolous debts incurred during the marriage: “Notwithstanding… all separate debts, including those debts incurred by a spouse during marriage… not incurred for the benefit of the community, shall be confirmed without offset to the spouse who incurred the debt.” Family Code § 2625. Thus, an undisclosed bad investment can be assigned to one spouse as a separate debt.
In the event one spouse is injured from a major accident or work-related event, the proceeds from a settlement are not automatically equally divided. Except for the reimbursement of community property used to treat or sustain the injured party, awards from settlement or jury verdict are assigned to the spouse who suffered the injury.
Student loans can also be designated as a separate debt and are often assigned to the spouse who “benefitted” from the loan. However, if both spouses “benefitted” for long enough from the loans or they received similar student loans while married, they are treated like other community debt.
Dishonest actions during divorce proceedings can also result in unequal property division. If a spouse fails to disclose assets, abuses the legal discovery process or engages in other financial misappropriations, the Court could penalize the offending spouse.
Finally, in the rare and unfortunate event where one spouse attempts to kill the other, there are penalties beyond the criminal law. Family Code 782.5 explains: “In addition to any other remedy…when a spouse is convicted of attempting to murder the other spouse…the injured spouse shall be entitled to an award…of 100 percent of the community property interest in the retirement and pension benefits of the injured spouse.”
There are many exceptions to California’s Equal Division rule and the Courts have broad discretion to determine fair distribution. Having an experienced Family Law Attorney by your side can assist you in navigating the many exceptions while protecting your rights and interests.