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Community vs separate property in a California divorce

On Behalf of | Oct 10, 2017 | Blog |

Divorcing can be a stressful and difficult experience in many ways. The issue of property division often ranks high among them, especially for Californians with high incomes or assets.

Understanding the basics of how California law handles property in a divorce can help you deal with your finances effectively. Of course, every situation has its own complexities, so speaking with an attorney can yield a strategy tailored to your circumstances.

Community property

California is a community property state. Broadly, this means courts assume any kind of property acquired during the marriage belongs to the community and should be split evenly between the divorcing spouses. The endpoint of the marriage typically happens when at least one of the spouses makes it clear he or she intends to irrevocably leave the relationship.

Separate property

Separate property consists of assets either spouse acquired before or after the marriage, as well as gifts or inheritances intended specifically for one of the spouses.

Property can change categories

Separate property can transmute into community, and vice-versa. Complex factual situations often make it difficult to determine whether transmutation has occurred in a given case.

Tracing separate property

In the case of property acquired before marriage, questions could arise when it comes to identifying that property. When a spouse did not keep the property separate, the court may deem it or part of it community property. For example, one spouse owned a piece of land before the marriage. At some point during, he or she sold it and put the proceeds in a joint bank account or bought a different asset for use by both spouses. In such a case, tracing the separate property could present a problem that may need the services of a forensic accountant to resolve.

Title changes

An opposite type of problem can occur when one spouse’s name is removed from the title to a joint asset. On one hand, this can indicate the spouses intend to make this asset into one spouse’s separate property. On the other hand, the spouses may also choose to perform this action for a variety of practical reasons while continuing to treat the asset as joint.