California is a community property divorce state. During a divorce case in Los Angeles County, the courts will divide property down the middle – a 50/50 split. This does not necessarily mean the split will be fair; as is the case in equitable distribution states
Division of property and assets is a huge concern in most divorces, and it doesn’t help that the pertinent laws can often be complicated and confusing. Before entering the separation process, it’s important to understand whether your property is considered “community” or “separate” property, and how each will be treated in the eyes of the law.
SEPARATE VS. COMMUNITY PROPERTY
Community and separate property are two distinct categories in a California divorce case. State law defines community property as any assets, money or debts acquired during a marriage or domestic partnership by one or both spouses. Separate property refers to assets acquired before the marriage. While a few exceptions to the rule exist, these definitions generally apply to all types of properties in a divorce case.
In a divorce, all property owned by you and your spouse will be labeled as either community or separate property (or in rare cases, a commingling of the two). This labeling process will determine how the property is divided when the divorce is finalized.
California is a community property state, meaning that a marriage or registration of domestic partnership makes two people one legal “community.” Any property or debt acquired by one person during the marriage or partnership is seen as belonging to the community, and not the individual that accrued it. In the words of California Family Code section 760, community property is defined as “all property, real or personal, wherever situated, acquired by a married person during the marriage while domiciled in the state.” At the end of a divorce, community property is generally split 50/50.
The state’s definition of community property is intended to be an umbrella classification covering many categories of property and possessions. The state relies on a host of additional statutes that delineate whether real property or personal property is community or not, depending on various interweaving factors and stipulations.
Property that one party owned before the marriage is not owned by the “community,” and thus is treated as separate, and not community property. Separate property also encompasses gifts and inheritance specifically given to one party, and property purchased or earned after the separation. This is the principal reason why date of separation is so important in so many divorces, and should be recorded and discussed with your attorney as soon as it occurs.
Any property that is bought with separate property is also separate property, even if it is bought during the marriage. For example, if you purchase a car after your marriage with money you made before the marriage, that car can still be seen as separate property. Rent or income earned from separate property continues to be separate as well — so money or rent earned from businesses or real estate owned before the marriage will exist as separate property, as long as it is isn’t mixed with community assets.
EXAMPLES OF SEPARATE PROPERTY
Community property can include all earnings, income, profits from investments, financial obligations, furniture, homes, vehicles, art, jewelry, pension plans, 401(k)s plans, life insurance, businesses, security deposits, cash, and other assets and debts one or both spouses acquired during the marriage or registered partnership. Assets that are not community property can include anything acquired by either spouse before the marriage or domestic partnership. There are many examples of separate property in California.
- Property you came into the marriage owning, which you did not commingle with your spouse’s property after marriage. This can include separate bank accounts, savings accounts, investments, properties and assets.
- Inheritances or gifts given to one spouse or domestic partner, either before or during the marriage or domestic partnership. Inheritances and gifts are always separate property, even if the other spouse uses the asset.
- Profits obtained from separate property. Profits from an investment, rent money or other income you earned from your separate property (such as real estate) also becomes a separate property, including property you purchase with funds from your separate property.
- Property you obtain or acquire during separation, even if you and your spouse are legally still married or in a domestic partnership. Separation can refer to the date you and your spouse stopped living under the same roof, as well as the date a judge signed off on a legal separation.
Once you commingle your assets, they become community property. If you wish to protect your separate property in case of divorce, therefore, you must keep it separate or sign a prenuptial agreement. Keeping assets separate may take maintaining separate bank accounts and not adding your spouse’s name to titles or deeds after marriage. You could also protect your assets by creating a prenuptial or postnuptial agreement with stipulations giving you ownership over the asset in question after a divorce. A prenuptial/postnuptial agreement will only stand up in court, however, if it is legally binding.
Complications can also occur if one spouse has a money in a bank or investment account pre-marriage, and then places the spouse’s name on the account, or deposits community earnings or uses the account to pay community debt. These cases often come down to employing a forensic accountant to follow the money and review the history of transactions during the marriage, and divide the leftover money into separate or community property.
We will be there when you call
Property division cases are very difficult and complex to understand. If you are in a battle for your fair property division, you need an experienced child custody attorney to guide you through the legal process. Contact our law firm today at 562-439-9001 if you or someone you know needs the help of an experienced family law attorney. We will be here for you when you call. Schedule a free consultation!
We are very central to all of Long Beach, Seal Beach, Lakewood, Palos Verdes, San Pedro, Newport Beach; and regularly serve all of Los Angeles.
This is intended as general advice and should not be interpreted as legal advice. Each situation is unique and requires specific analysis of relevant contracts, facts and legal obligations.