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Some pensions not community property in California

When it comes to divorce, there are many questions to answer, including the details of child custody, child support and how to divide the property. Many separating couples may assume the most difficult part of the process is coming to an agreement as to how to answer these hard questions. Yet, sometimes, the hardest part of divorce can be interpreting the law that applies to a particular situation.

Specifically, determining how to divide property or assets acquired before or during marriage can be an elusive task. The state of California is a community property state, which means that most assets acquired during marriage are deemed marital property and thus split equally between the separating couple in the event of divorce. Nonetheless, property acquired before marriage is typically termed non-marital property and returned to the owner spouse in full. However, this is not always the case.

Property acquired pre-marriage that increases in value during the marriage can sometimes be considered community property if the other spouse substantially contributed to the growth of those assets. An often debated-over asset is a military pension. A recent California Supreme Court ruling may have cast some light on this murky area of divorce law.

The California Supreme Court recently determined that the increase in value of a spouse's pension was not marital property for the purposes of property division during divorce. Specifically, the ex-husband purchased some military pension credits using the parties' joint money during the marriage. Those credits were used to increase the value of the ex-husband's future pension. The wife then claimed in the divorce that she was entitled to some of that increased value.

However, the court ruled that while the wife was entitled to her half of the original contribution used to purchase the credits, she was not entitled to obtain half of the growth in value that the pension had accumulated, because that was a benefit solely granted to the husband via his military service performed prior to the marriage.

These questions of property division are often difficult to address because they involve subtleties and grey areas of the law.

Source: The Fresno Bee, "California Supreme Court rules on divorce pension issue," June 25, 2013

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