Equitable Distribution

Equitable distribution is a process for apportioning the spouses' property when a marriage ends. Before equitable distribution, California used the common law system, which meant that all property acquired during the marriage went to the person named as the owner on the property title.

In California, property acquired and income earned during a marriage is now subject to equitable distribution. This means that the court makes decisions regarding the distribution of property, considering the circumstances surrounding the case and both parties. The court determines what is considered separate property and what is considered marital property; separate property stays with the owner and marital property is distributed fairly between the two spouses.

Characteristics of separate property:

• Acquired before marriage
• Gift from a person other than the spouse
• Personal injury compensation
• Acquired in exchange for separate property
• Increase in value of separate property
• Considered separate according to a written agreement between the spouses

A spouse must show proof that the property is indeed separate: this applies to all real property as well as bank accounts, investment accounts, and any other valuable assets.

Characteristics of marital property:

• Acquired during the marriage
• Acquired before the execution of a separation agreement
• Acquired before the beginning of a matrimonial action

Businesses, Degrees, and Licenses

Businesses, degrees, and licenses are all property subject to equitable distribution. If one spouse forms a business during the marriage, it is considered marital property. If the business was created before marriage and continued while the spouses were married, the marriage has an interest in the increase in value of the business.

If a spouse obtained any type of degree or license (such as a law, medical, business, or financial planning license) during the marriage, the person's increased earnings as a result of the license are subject to equitable distribution.

Debt

Marital debt must also be distributed between the spouses in your separation agreement. If the debt was incurred during marriage, it is considered marital debt, no matter whose name it is in.