Throughout the divorce process, any property the parties acquired during their marriage will be divided equally upon the dissolution of their union. This property is referred to as “community property” according to California law.
On the other hand, there is property that is not subject to division as community property when going through a divorce. This type of property is known as “separate” property and often becomes a topic of intense debate during divorce proceedings involving the division of community property.
California Family Code § 770 provides that “separate property” includes:
According to California Family Code § 771, any earnings acquired by a spouse and their children, whom they have child custody over, after the date of separation, are considered separate property. The phrase “gift, bequest, devise, or descent” refers to property received through inheritance. Therefore, if you receive an inheritance while still married, it qualifies as a nondivisible separate property.
However, if, for instance, you purchase property that one of your siblings inherited while you are married, it likely does not qualify as separate property. In such cases, the courts will examine the documents associated with the inheritance, such as a Last Will and Testament, as well as any trust documents in an estate plan. This examination aims to determine when your interest in the inherited property began, thus invoking the concept of “inception of title.”
In essence, separate property refers to assets that are solely owned by one spouse. On the other hand, community property encompasses assets that are jointly owned by both spouses, typically acquired during the marriage.
It’s important to note that the analysis becomes more intricate (and perplexing) in various scenarios. Let’s consider an example: if you have a mortgage on your separate property and make payments during the marriage using community property funds, or if you and your spouse enhance the property’s value during the marriage, or if you commingle your separate property with community property in a bank account or stock portfolio, the situation becomes more intricate and requires careful consideration.
In the context of marriage, separate assets can become community assets through two primary mechanisms: commingling and transmutation. The key distinguishing factor lies in the intent behind these processes.
Dividing property during a divorce is rarely as straightforward as it may seem. A significant part of the process involves meticulously dissecting how separate and community property have become intertwined throughout the marriage.
One common scenario is when one spouse owned a home before getting married and then sold it to contribute towards a down payment on a new home with their partner. While the down payment is considered separate property, if mortgage payments were subsequently made using income earned during the marriage, the equity in the house becomes a combination of separate and community property.
Complications can also arise when one spouse adds the other’s name to a bank or investment account that was initially acquired before marriage, or when community earnings are deposited into the account or used to pay off community debts.
In such cases, it often becomes necessary to enlist the services of a forensic accountant to meticulously trace the flow of money and review the transaction history throughout the marriage. This allows for a fair division of the remaining funds into separate and community property.
When both spouses agree, separate assets can be intentionally converted into community property. However, it’s important to note that once this transmutation occurs, the assets cannot be claimed as separate during divorce proceedings. To ensure the legality of the asset transmutation, spouses must declare their intent in writing and follow these steps:
By considering this information, the court determines the validity of the transmutation.
Community property refers to all the assets acquired by a married couple from the date of marriage until the date of separation. During a divorce, both spouses have equal rights to these community assets, which are divided equally between them. This includes any debts and assets accumulated during the marriage, as well as assets acquired using community assets. However, it’s important to note that gifts and inheritances received by one spouse are not considered community property.
A house is considered community property if:
If any of these conditions are met, the property is deemed community property, requiring the court to determine an equal division between spouses. However, if one spouse acquired a home before the marriage, it will be regarded as separate property, unless the other spouse can provide evidence to the contrary.
Transmutation is the process by which separate property can transform into community property. It occurs when both spouses mutually agree to convert an asset into community property. The spouse who initially owned the property must provide written acknowledgment of their comprehension regarding the impact this has on their interest in the property. It is important for spouses to thoroughly consider the implications before proceeding with property transmutation.
In California, the duration of a couple’s marriage does not determine the division of community assets. Regardless of the length of the marriage, property is divided equally between spouses. However, it is important to note that shorter marriages may result in fewer community assets. Both spouses maintain ownership of their respective separate assets acquired before marriage and after separation, unless there has been commingling or transmutation of separate assets.
Divorce can be a complex and challenging process, encompassing various aspects such as spousal support, child custody, child support, and property division. Ensuring accurate property division often necessitates the involvement of legal and financial experts.
Whether you and your spouse can negotiate your divorce with the assistance of a mediation attorney or if litigation becomes necessary, the experienced attorneys at Sullivan Law & Associates are here to support you. Feel free to reach out to our team to discover how we can advocate for your interests during this difficult time.
