““Characterization of property,” for the purpose of community property law, refers to the process of classifying property as separate, community, or quasi-community. [In re Marriage of Rossin, 172 Cal. App. 4th 725, 91 Cal. Rptr. 3d 427 (6th Dist. 2009)] The attributes of these classes of property are vastly different, because classification of property as separate or community has critical consequences. The characterization of property as community or separate determines its division upon dissolution of the marriage; each spouse owns a one-half interest in all community property. In general, community property is divided equally in the aggregate when the marriage ends; however, separate property is not subject to a similar division, and belongs only to the owner spouse. [In re Marriage of Sonne, 164 Cal. App. 4th 1331, 80 Cal. Rptr. 3d 453 (6th Dist. 2008)] The respective rights of husband and wife to manage and control property during the marriage vary depending on whether the property is separate or community. Rules governing the division of property on divorce differ depending on the property’s classification as separate or community. The right of creditors to reach property in satisfaction of debts requires a determination of the property character as community or separate. Therefore, an understanding of the rules controlling the characterization of property is crucial.”
“At first blush characterization would appear to be a simple matter of applying the statutory definition of community property: Property owned before marriage or acquired after marriage by gift, bequest, devise, or descent is separate property. [Fam. Code, § 770] Property acquired during marriage while the parties are domiciled in California is community property. [Fam. Code, § 760] However, the statutory definition must be applied in light of the evolving decisional law and related statutes. Thus, the statutory definition encompasses “property” but not all interests that qualify as “property” in a traditional sense are subject to California community property laws. Intangible and non-vested interests have created troublesome issues for California courts. The statutory definition also includes a temporal element; the property must have been “acquired” during marriage. Conceptual difficulties arise as to property acquired over a period of time before marriage and following separation. Unlike some other community property states, California treats as separate a spouses property acquired during marriage but with assets owned by the spouse prior to the marriage. This “source rule” adds another level of complexity to California community property principles.”
“Generally, property characterization as separate or community depends on three or four factors: (1) the time of acquisition; (2) the operation of various presumptions, particularly those concerning the form of title; (3) the determination whether the spouses have transmuted the property in question, thereby changing its character, and, in some cases; (4) whether the parties’ actions short of formal transmutation have converted the property’s character, as by commingling to the extent that tracing is impossible. [In re Marriage of Rossin, 172 Cal. App. 4th 725, 91 Cal. Rptr. 3d 427 (6th Dist. 2009)]”
“Under the Family Code, all property interests held by a husband and wife must be characterized as separate, community, or quasi-community property for purposes of the division of property upon marital dissolution and the fundamental principle underlying the characterization of property held by spouses under California’s community property law is that property acquired during marriage in joint form, including joint tenancy or tenancy in common, is presumed to be community property unless it meets the statutory definition of separate property. [Kircher v. Kircher, 189 Cal. App. 4th 1105, 117 Cal. Rptr. 3d 254 (1st Dist. 2010)] The general rule is that property acquired during the marriage is community property unless it is: (1) traceable to a separate property source; (2) acquired by gift or bequest; or (3) earned or accumulated while the spouses are living separate and apart. [In re Marriage of Marshall, 23 Cal. App. 5th 477, 232 Cal. Rptr. 3d 819 (4th Dist. 2018)]”
[California Civil Practice Family Law Litigation [certain citations omitted]]
