Overview of Community Property in a California Divorce
If you're involved in a divorce in California or about to become involved in a divorce in California, one of the things you'll need to be familiar with is community property law. One of the things a divorce -- in general, not just in California -- is the division of property. In other words, stuff that the married couple acquired while they were married now needs to get divided into what belongs to Spouse 1 and what belongs to Spouse 2. Community property law is the group of rules that governs how California does that division. Most states -- roughly 40 or so -- in the US do not use community property law. California one of about 10 states that does. Community property law applies to assets as well as debts. A debt would simply be treated as a negative asset.
In a nutshell, the three major California community property rules generally are:
- whatever the couple acquires during their marriage is community property. In the event of a divorce, this is divided 50-50;
- whatever each spouse owned from before the marriage is their own separate property. In the event of divorce, this property is not divided;
- whatever each spouse acquires after the Date of Separation (described later on) is also separate property and is not divided in a divorce.
There are some exceptions and nuances to each of these rules, of course. For instance, items acquired during a marriage by inheritance are generally not community properrty. Another exception/nuance to these rules is a Hybrid Asset. This is an asset which, for instance, is purchased by one spouse before marriage, but financed over time (e.g. a car with a 5 year loan on it), but the marriage occurs while the payments are still being made. After the marriage, the loan payments might be made with community money which would make some percentage of the car community property while the remainder would be separate property. These exceptions and nuances can get quite advanced, but they all still -- at least in my opinion -- derive from the three main rules I mentioned above.
One important fact to find out when discussing community property in California is the Date of Separation. This date is important because that is when community property rights end. As you can perhaps guess, community property rights begin on the Date of Marriage. This is the date the marriage is made official (e.g. wedding license and other civil paper work are signed, filed, etc) which is not necessarily the same day as the wedding ceremony and/or reception. The date of marriage is usually not up for a lot of debate. The Date of Separation can, however, be subject to debate because there is no bright-line rule defining it.
In California, the Date of Separation is defined in Section 70 of the California Family Code. It states that the Date of Separation is the date that "a complete and final break" in the marriage has occurred as evidenced by the actions and statements of either of the spouses. A more bright-line definition (e.g. the Date of Separation is the date the divorce case is filed) might be more useful in the real-world.
The date of acquisition of a particular item is, as you can hopefully tell from above, very important in determining whether something is community property or the separate property of one of the spouses. It is, for better or worse, not always possible to definitely prove the date on which a particular item was acquired. Not every item has paperwork (e.g. receipts or title documents) showing when it was acquired. Assuming that there was such paperwork initially, that paperwork might have been lost or destroyed. Maybe replacements can be obtained or maybe not.
Another big problem that often occurs when you try to apply community property in the real world is commingling of assets. This most often occurs with fungible assets (e.g. money). For instance, spouses may put community property money and separate property money in to the same account (e.g. a savings account) to save for a rainy day, but then make numerous withdrawals from that mixed pool of money. Unmixing that pool back in to separate property and community property can be very difficult, if it is even possible at all.
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