In California, the law states that community property is any income earned or asset acquired by married people living together. Anything acquired by the spouse prior to marriage or during the marriage by gift, devise or bequest is considered separate property. The law says that, unless there is a written agreement to the contrary, the community property will be divided equally in a divorce. It is not at all uncommon for one spouse to receive the home where the other may receive the family business or investment real estate since the total net value of the property is what is considered as long as each spouse receives equal assets. Pension and employment benefits are also considered community as long as it was acquired during marriage. There are two ways this can be satisfied.

Reservation or Jurisdiction: This is the most common way retirement is handled. Upon retirement, the percentage is calculated by the years husband and wife lived together by the total number of years participating in the pension plan. For example, if a spouse is part of the pension plan for 20 years and is married 10 of those years, the community for the spouse would be 25%. A marriage of 20 years with 20 years worked would require a 50% split. Even if the employee continues to work, the other spouse is entitled to the share awarded at that time. Of course, the spouse is not entitled to cost of living or raises if this option is opted for.

Cash-Out: Involves obtaining an actuarial evaluation of the pension plan. This is done by an expert who deals in statistical and financial evaluations of pension plans. By reviewing the plan description and the accumulations on the account of the employed spouse, the expert can determine present value of the retirement. For example. if the plan provides $1000.00 per month at age 65 and employee is presently 45, the expert estimates how much money would be deposited into an interest bearing account now to yield income of 20 years of $1000.00 per month. This includes an estimate of long range interest rates that would be in effect over that period of time.