Community Property Standards
In community property states like California, mediators may want to think in terms of a five step process in working with parties toward agreement on property and debt division:
1. Disclose The Property
Each party must provide a preliminary and a final declaration of disclosure setting forth all assets and all liabilities regardless of the characterization as separate or community. The final declaration of disclosure must be completed and exchanged before or at the time of entering a settlement agreement.
2. Characterize The Property
In order to divide the property, it must be identified as "separate' or "community."
Except as provided below, all property acquired during the marriage is community property.
Separate property includes the following:
(1) All property owned before marriage;
(2) All property obtained by gift or inheritance during the marriage;
(3) All rents and profits of separate property; and
(4) Earnings and accumulations after separation.
Except as provided below, all debts incurred during marriage are community.
(1) Debts incurred prior to marriage are separate;
(2) Debts incurred after separation are separate;
(3) Debts incurred during marriage but not for benefit of the community are separate;
and (4) Educational loans are separate regardless of when incurred.
3. Value The Property
Assets and liabilities must be valued as near as possible to date of trial unless court determines that date of separation is more equitable.
4. Determine the Reimbursements
A party shall be reimbursed for contribution of separate property to a community asset to the extent the contribution is traced.
5. Divide the Property
In community states like California, unless the parties agree in writing to a different division (now in a mediated agreement or previously in a prenuptial agreement), the court must divide the community property, both assets and debts, equally. This means the court may award all of one asset or debt to one party in order to equalize the division (or any readily divisible part of that asset or debt). The court may also deduct part of one party's share in order to equalize the division if assets have been misappropriated.