If California is a "community property state," what is separate property?
Separate property could be any of the following:
- An asset or debt acquired before marriage or after separation
- Property received through inheritance or as a gift at any point
- Earnings derived from a separate property source during the marriage
How do you determine whether property is community or separate?
Timing is the key issue in determining whether a property is community or separate. Property characterization is crucial for determining the division of assets and debts. For the most part, anything acquired by one spouse up to the day before marriage is considered separate property. Anything acquired after the spouses separate is also considered separate.
Decide on your date of separation
The date of separation can be contentious. It is not necessarily the date one party left the marital residence. Rather, it is the date that one party decided to end the marriage (and coupled with that decision with a positive action). A "positive action" could be something like opening a separate bank account or filing for divorce. It could even be the act of announcing separation.
If the parties cannot agree on a date of separation, the court must decide. Courts usually err on the side of a later date to include more community property in the division. You can see how this could be a thorny issue, particularly if a spouse received a huge bonus, closed a big deal, or received some other asset shortly before separation.
Difficult determinations: separate or community?
Sometimes, it can be difficult to determine whether the property is separate or not. For example, if you purchased the marital residence with money from the sale of a separate residence, there is some separate property interest in that property. On the other hand, if you paid off the mortgage with community income (income earned during the marriage), the community has interest in the property. In other times, separate property assets can become "commingled." They mix up with community assets. Determining the exact nature of property can be tricky, particularly in larger estates. For this reason, a competent lawyer licensed in your jurisdiction can provide invaluable benefits.
What is considered community property in California?
The State of California presumes any property acquired during the marriage to be community property. Therefore, if you receive a gift or inheritance during the marriage, you should keep copies of any documentation showing its true nature. With probate papers and court filings, it's usually easy to demonstrate inheritance. But gifts are usually less documented. If you receive a particularly valuable gift, you may wish to document its nature at the time of receipt. You might even ask the giver to declare the gift as such Sometimes, the card that accompanied a gift can prove the evidence of its character. The counsel of a lawyer may prove helpful in a matter like this.
What if you have a prenuptial or postnuptial agreement?
Separate property can be protected and even changed through the parties' written agreement. One way to do this is to enter into either a pre or postnuptial agreement. These are contracts that predetermine the nature of property during the marriage as well as how it would be divided in case of a divorce. These documents can be complex, so a lawyer should be used to draft them and to fully advise you of your rights.
What if you have a transmutation agreement?
Additionally, individual assets can be re-characterized (community can become separate and vice versa) in transmutation agreements. Each party must do this in writing with an unambiguous statement of their intentions. Simply changing the title to reflect ownership would not be enough to change the nature of the property.
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