Community Property

California is a Community Property State.  Community Property is defined as Property that was acquired by the parties when they were married and living together.  That would include the earnings of both parties, stocks, bonds, real estate, personal property, etc.  Each party owns a 1/2 interest in all property that was aquired during the marriage. Thus, upon dissolution, the community property is divided equally between both spouses. This is known as the equal division rule.

California courts are not required to divide the community property equally in kind. For instance, the courts have the authority to award one asset entirly to one spouse, and a different asset to the other.  As long as each spouse winds up with 50% of the community estate, the requirement of the equal division rule is met.

There are exceptions to the equal division rule. For example if one of the parties gambles excessively and causes the marital estate to lose money, courts may award more than 50% of the community property to the innocent spouse in the final judgement of dissolution. Another example is when one spouse makes a ‘gift’ of community property without the consent of the other spouse. When that happens, the aggrieved spouse may go into court and have the gift transaction set aside.  The party may also move the court for an unequal division of community property upon dissolution.

Separate property is property that the parties acquired before marriage, or after the parties are separated and living apart. Please note, that  in order for earnings and acquistions to be characterized as separate property, it is not necessary that the parties be divorced. All that is required is that they are separated and living apart.

In that reqard, the date of separation becomes very important, and is often litigated. The earner spouse will want to move that date back as far as possible, because s/he wants his or her earnings and other acquisitions to be characterized as separate property. In contrast, the non earner spouse will want to move that date up as far as possible, because s/he wants the earners of the other spouse to continue to be classified as community property for as along as possible.

Accordingly, it is a good idea to have proof of the date of separation. An example would be if one spouse moves out of the family residence and signs a lease in an apartment building. The date that the lease is signed is strong evidence of the date of separation.

When determing if the parties are separated, California courts look for a permanent rupture in the marriage. Put differently, that the parties have separated and that there is no chance for reconciliation. Accordingly, if the parties separate for a few weeks or months, and then get back together, that does not count.

Separate property also includes gifts, bequests, devices and inheritance, regardless of when recieved. Thus if one spouse recieves an inheritance, for example, from a deceased parent, who dies when the parties are married and living together, that inheritance is still that spouses separate property even though s/he recieves it when the parties are married.

Parties may alter the rules of community property and spousal support, by entering into an enforecable prenuptial agreement.  There are articles on this blog which set forth the requirments for a valid prenuptial agreement.

For a discussion on how property and assets are divided upon dissolution, please see the page entitled “Asset Division.”