For some couples, property division is one of – if not
the – most important issue to iron out in their divorce settlement. However, when assessing your assets to see who gets what, will you be able to tell whether something is community property or separate property?
Was the property acquired during the marriage?
Most assets acquired by a married couple are considered to be
community property. This includes real estate, personal property, and income “wherever situated.” For example, if a married couple living in California buys a vacation home in Hawaii, the home probably will be part of the community property estate if the couple divorce.
Separate property is any asset the party acquired:
before the marriage,
during the marriage, if a gift or inheritance; and
after the parties legally separate.
Sometimes an asset brought into the marriage may become community property, depending on how the asset is treated during the marriage.
Was the property inherited?
An inheritance received by one spouse is that spouse’s separate property. However, separate property may become community property if the inheritance is commingled with community property or transmuted by the spouse who received the inheritance.
For example, Claudia G. inherits $50,000 from her grandmother. The $50,000 should be Claudia’s separate property. However, she deposits the money in a joint bank account and clearly intends that her husband use it. The inheritance might be considered community property.
Did the property increase in value during the marriage?
Sometimes separate property brought into the marriage by one spouse increases in value. If the other spouse helped with the increase, a portion of the property might be considered community property.
Will the asset potentially have future earnings?
Some property may earn royalties or other payments during the marriage. Determining the current value of the asset may be hard enough. Predicting how much income the property may generate in the future is even more difficult.
The way the earnings are split may depend, in part, on whether the asset is community property or separate property. If separate property, the next question may be whether the non-owning spouse contributed to the property’s success.
For example, an author starts drafting a book while single. The book is published after the author gets married. The author’s spouse assisted with research, editing, and marketing the book. If the couple divorce later, is the book community property or separate property? The author brought at least the first draft into the marriage, but the new spouse contributed to the book’s success. As with all divorce issues, however, the court will decide how to treat the property if the couple cannot reach an agreement.
Assets and Debts May Be Community Property or Separate Property
Disagreements about property division can complicate your divorce and hold up your final divorce settlement. Talk to an experienced California divorce attorney today. Please call us at (415) 293-8314 to schedule a confidential appointment with one of our attorneys.
Ms. Burger is a California Certified Family Law Specialist and founder of the Law Offices of Judy L. Burger. We assist clients in California’s Northern to Central Coast, including San Francisco, Beverly Hills, Gold River, Santa Barbara, Ventura/Oxnard, and surrounding communities.
