California is a community property state, which means that assets and debts considered to fit the definition of community property are divided equally between spouses in divorce. So that leads to the question, what is community property? How is it defined in California?
The answer seems simple at first glance, but it can be a surprisingly complex question when put into practice. In this post, we’ll explore how courts have classified property in different California divorce situations.
The Basic Definition
To understand community property, you also need to consider its opposite, separate property. All property owned by a married couple is either jointly-owned community property or separate property belonging solely to one spouse. Since the separate property is kept by one spouse while community property is divided, the process of classifying property into categories is vitally important in a California divorce.
The general rule is the property and debts acquired by either party while they were married is community property. This is true even of wages and benefits earned by one spouse or an asset purchased by one spouse that only has one name on the title. The timing of the acquisition is the deciding factor. This can get complicated when you consider the date of the end of the marriage, because in California it is based on the date of separation rather than the date a spouse filed for divorce or a divorce became final.
Separate Property Exceptions
Generally, separate property consists of property one spouse owned before the marriage, but there are also instances where property acquired during the marriage can be treated as one spouse’s separate property.
If one spouse received an inheritance or gift that was given to them personally, not as a joint gift or bequest, then that property is initially considered that spouse’s separate property. A gift from a spouse, however, is marital community property.
Factors That Blur the Lines Between Separate and Community Property
It is often far from clear whether property should be considered separate property or community property for several reasons. This can lead to assets being treated as a hybrid, where part of the value is divided and part of the value is kept solely by one spouse.
One factor that complicates the determination about community property is the date of acquisition. Spouses may have different memories about an asset, so it may be necessary to dig back decades to look for evidence to show that a spouse owned a particular asset before the marriage. For property and debts taken on near the end of the marriage, it can raise disagreements about the date of separation. Generally, that is considered to be the date one spouse let the other spouse know, either through words or actions, that they wanted to end the marriage, assuming that their actions after that were consistent with seeking a divorce.
If both spouses remember a conversation, or one spouse definitively moved out, the date of separation may be simple to determine. But spouses might disagree about the interpretation of a conversation. Or a spouse who moved out might come back so frequently that it can be difficult to determine whether a true separation has taken place. It is important to gather as much evidence as possible and ensure that your attorney is prepared to make the best arguments in your favor to show why certain property was or was not acquired during the marriage.
Another issue that can cause ambiguity is the intent behind a gift or inheritance. For instance, a check may only have one spouse’s name on it because that is easier to write and to cash. But the giver may have intended it as a joint gift.
The biggest area of contention when it comes to classifying assets as community or separate property probably involves separate property that transforms wholly or partially into community property.
Transmutation and Commingling
Property can start out as one spouse’s separate individual property and turn into community property in a couple of different ways in California. In the process of transmutation, both spouses agree that separate property will become community property, and the spouse who held the property as separate must agree to the change in writing.
What happens more often is that separate assets are commingled with marital assets and lose their separate character. For example, a spouse can use money they earned while single or funds received through an inheritance as the downpayment on a house. If the couple lives in the house and makes mortgage payments with marital funds, then the separate property and marital property have been mixed together. The spouse who contributed separate property may be able to claim their share of the equity as separate property if they present the right evidence, but it often requires considerable effort.
Holstrom, Block & Parke, APLC Protects Your Property Rights in Divorce
When you are divorcing, you need to work with an attorney who understands how to locate and present the right evidence to obtain an advantageous property settlement. At Holstrom, Block & Parke, APLC, we have over 300 years of combined experience in protecting property rights, and we are ready to put our knowledge and skills to work for you. Contact us today to learn more about how we can safeguard your interests in divorce.
