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Community Interest & Your Property Division Agreement


The below story is an example and is not based on an actual client.

Patricia has a problem. Patricia had been married to Terry for 25 years before they sought a divorce, and she’s realizing that she hasn’t contributed any quantifiable income to their marriage. See, Terry always had a high-paying job, so Patricia chose to be a stay-at-home mom.

During their marriage, Terry made enough money to buy a house, two cars, and even bought a condo to rent out. Now that they’re divorcing, Patricia is worried that she won’t have a right to any of that property in the divorce. After all, it was Terry’s salary that bought all those things—she took care of the kids, but how does that get her a share of the property her husband bought?

The good news is that Patricia absolutely has a right to a portion of the property bought with her husband’s salary, as well as any pension or retirement benefits he accrued during their marriage. California divorce law stipulates that “community interest” entitles a spouse to the benefits, property, and income afforded by another spouse as long as they were earned or bought while married—regardless of who specifically earned it.

Other earnings to which the non-earning spouse has 50% interest:

  • Stocks and incentive stock options
  • Vacation pay and severance package benefits (“golden parachutes”)
  • Deferred payment that takes the place of a pension (e.g. “gifts” from the employer)
  • Employer contributions to profit-sharing plan
  • Any fringe benefits and rights to future benefits granted during marriage

The same principle applies to spouses married to entrepreneurs—community interest in a business that was started or grown during marriage entitles spouses to half of the profits.

Assuming Spousal Contribution During Marriage

The key to community interest is the assumption that revenue growth or earnings were made possible by the efforts of both spouses, so both spouses have equal claim to it. For example, Terry may not have been able to put in the hours to secure such a high salary if he had to contribute to child-rearing. More to the point, Patricia sacrificed potential income in order to stay home—in a sense, her parental contribution is quantifiable.

If you’re considering a divorce, but you’re unsure of how you could support yourself without your spouse’s salary, property, or benefits, the law has given you a voice. It is your right to argue for your share of your spouse’s earnings and any property afforded by those earnings.

If you have more questions about your divorce, don’t hesitate to contact us with our simple online form, or get a full case evaluation by calling (626) 340-0955 today.

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