In a community property state, what is separate property?

Separate property is any asset or debt that was acquired before the marriage or after separation, or any property that was received through a gift or inheritance at any point, or any earnings deriving from a separate property source during the marriage. Timing is the key issue in determining whether property is community or separate. Property characterization is crucial for determining the division of assets and debts in a divorce. For the most part, anything acquired by one spouse up to the day before marriage is considered separate property, and anything acquired after the spouses separate from each other is also considered separate.

The date of separate can be contentious, as it is not necessarily the same date one party leaves the marital residence. Rather, it is the date that one party decides to end the marriage, coupled with a positive action to be separate. This action can be something like opening a separate bank account, filing for divorce, or even something as simple as announcing separation to the other. If the parties cannot agree on a date of separation, the court must decide. Courts will usually err on the side of a later date as opposed to earlier, in order to include more community property in the division. You can see how this could be a thorny issue, particularly if a spouse has received a huge bonus, closed a big deal, or earned some other asset shortly before separation.

Sign up for a free subscription to read on about how state law determines whether property is separate or not and how to protect your assets.