California Family Code § 2601: Awarding Community Property to One Spouse

Plain-Language Summary

California Family Code § 2601 allows a divorce court to give a particular community property asset entirely to one spouse, instead of splitting the asset in half, when there are sound economic reasons to do so. In such cases, the judge must make sure the overall division of property is still fair and equal by giving the other spouse something of equivalent value (for example, requiring an equalization payment or awarding additional assets). This rule gives courts flexibility to handle assets that can’t be physically divided without losing value or causing harm. In plain terms, if dividing a community asset “50/50” would be impractical or would reduce its value, the court can award that whole asset to one spouse as long as the other spouse is compensated so that each ends up with the same total value in the end.

Real-World Examples

  • Family Home with Children: During a divorce, suppose the couple’s primary asset is the family house. Rather than ordering the home to be sold and the proceeds split, a court might award the entire house to one spouse (often the custodial parent if children are involved) under § 2601. The judge would then give the other spouse assets or a payment equal to their half of the home’s value. This way, the children can continue living in the house and the spouse keeping the home “buys out” the other’s share, ensuring both spouses still receive equal value overall.
  • Small Business or Professional Practice: Imagine the spouses jointly own a small business (or one spouse’s medical/legal practice). It isn’t feasible to cut a business in half, and forcing a sale could destroy its value. Using § 2601, a court could award the entire business to the spouse who manages or relies on it for their livelihood, and give the other spouse a collection of other community assets or an IOU (equalization payment) to make the division fair. This lets the business continue operating smoothly with one owner, while the other spouse gets compensated for their share in its value.
  • Unique or Indivisible Asset: If the couple owns a unique asset like a rare piece of art or a special vehicle, the court might decide it’s best for one spouse to keep that item intact. For example, if one spouse has a strong personal attachment to a painting that can’t be split, the court can award the entire painting to that spouse. The other spouse would then receive other property or cash equal to the painting’s half-value. This approach avoids selling the artwork (which neither spouse may want) and respects the sentimental value, while still giving the other spouse something of equal worth.

Published Case Law on § 2601

  • In re Marriage of Clark (1978) 80 Cal.App.3d 417. In this case, a divorcing couple owned shares in a **closely held business** (a forging company). The husband worked at the company, and the other co-owner testified he would dissolve the business if the wife became a shareholder. The trial court, citing the predecessor to § 2601, awarded all of the community stock to the husband to preserve the company as a going concern. To keep the division equal, the wife received other assets to offset her half of the stock’s value. The Court of Appeal upheld this decision, explaining that “economic circumstances” justified giving the entire asset to one spouse because dividing the stock between them would have impaired or destroyed the business.
  • In re Marriage of Brigden (1978) 80 Cal.App.3d 380. Here, a couple owned about 66,000 shares of stock in a public company (Logicon, Inc.). The trial court gave all the stock to the husband with certain conditions, rather than splitting it, but the wife appealed. The Court of Appeal reversed that part of the judgment, finding there were **no special economic circumstances** requiring one spouse to get all the stock. Unlike a small family business, these shares were easily divisible without loss of value. The appellate court emphasized that the exception in § 2601 is meant for situations where an asset “cannot be divided without impairment,” and that if an asset (like publicly traded stock) can be split equally without harm, each spouse should receive their 50% share. In short, because both spouses could own their portion of the stock without undermining its value, the law did not warrant giving it all to one party.
  • In re Marriage of Fink (1979) 25 Cal.3d 877. This California Supreme Court case approved an “asset distribution” approach very similar to what § 2601 allows. The divorcing spouses had multiple assets, including the family home, the husband’s law practice, and various personal items. The trial court **awarded specific assets entirely to one spouse or the other** (rather than splitting each item). For example, the wife was awarded the family residence (to which she was emotionally attached) and a painting she loved, while the husband was awarded his law practice, his club membership, and a painting he cherished, with a cash payment to equalize the division. The Supreme Court held that this was permissible under the law: a strictly in-kind 50/50 division of each asset was not required, so long as the overall community estate was divided equally in value. Fink confirmed that trial courts have broad discretion to allocate whole assets to one party when an equal overall result is achieved.
  • In re Marriage of Connolly (1979) 23 Cal.3d 590. In this Supreme Court case, the couple’s community property included **10,000 shares of stock in Amdahl Corporation**, a tech company where the husband was an outside director. The husband asked the court to award him all 10,000 shares so he could maintain influence as a director. The trial court did so, giving the husband the stock and ordering him to give the wife an unsecured promissory note for half of its value (about $37,500) to keep the division equal. The wife later challenged the judgment (claiming the husband should have disclosed inside information about the stock’s impending public offering, which greatly increased its value). The Supreme Court ultimately found no misconduct by the husband regarding disclosure. Importantly, the court reaffirmed that awarding an asset to one spouse with an equalization payment to the other is a valid way to achieve an equal division. Connolly illustrates how § 2601 can be applied to stock or investment assets: one spouse can receive the entire stock holding (especially if that spouse’s role in the company makes their full ownership advantageous), provided the other spouse is compensated fairly for their share.
  • In re Marriage of Tammen (1976) 63 Cal.App.3d 927. This case highlights the need for **fair conditions** when one spouse is awarded an asset under what is now § 2601. The trial court had given the wife roughly 79% of the community property (including the family home), and to offset this, ordered her to pay the husband $19,820 in installments over 10 years. The Court of Appeal found that this long-term promissory note did not truly make the division equal. Due to factors like the delayed payment, lack of interest or security, and inflation, the husband’s half would be worth much less in present value. The appellate court reversed that portion of the judgment, ruling that if a deferred payment is used to equalize a division, its terms must ensure the receiving spouse gets the full value of their share. In other words, when a court awards one party an asset and a note is given to the other, the note should be properly valued (with interest or other terms) so that both spouses genuinely end up with substantially equal assets.

Full Text of California Family Code § 2601

California Family Code § 2601. “Where economic circumstances warrant, the court may award an asset of the community estate to one party on such conditions as the court deems proper to effect a substantially equal division of the community estate.”

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