In California, the distinction between community property and separate property is crucial, as it determines how property is divided in a divorce or legal separation. California follows community property law, meaning that, in general, property acquired during the marriage belongs to both spouses and is divided equally upon divorce. However, property acquired before the marriage or through certain means is considered separate property. Here’s a breakdown of each:
1. Community Property
Community property includes all property acquired by either spouse during the marriage, except for property that is specifically classified as separate property. This applies regardless of which spouse’s name is on the title or who earned the income.
Key Features of Community Property:
- Acquired During the Marriage: Any property (real estate, income, investments, etc.) obtained during the marriage is presumed to be community property.
- Equal Ownership: Both spouses have equal ownership and control over community property, meaning it’s typically divided 50/50 in a divorce.
- Income and Benefits: Income earned by either spouse during the marriage is considered community property. This includes wages, bonuses, commissions, and retirement benefits accrued during the marriage.
- Debts: Debts incurred during the marriage are also considered community debts, and both spouses are responsible for them.
Examples of Community Property:
- Salary or wages earned by either spouse during the marriage.
- Real estate purchased during the marriage with community funds.
- Retirement benefits or pensions that accumulate during the marriage.
- Bank accounts or investments that were created using income earned during the marriage.
- Debts incurred by either spouse during the marriage, such as credit card debt or mortgages.
2. Separate Property
Separate property refers to property that belongs to only one spouse. Separate property includes property acquired before the marriage, as well as certain property acquired during the marriage, such as gifts, inheritances, and specific assets designated as separate in legal agreements.
Key Features of Separate Property:
- Acquired Before the Marriage: Property owned by either spouse before the marriage is considered separate property.
- Inheritance or Gifts: Property acquired during the marriage through inheritance or gifts (from someone other than the spouse) is considered separate property, as long as it’s kept separate from community property.
- Transmutation: See an attorney regarding this topic.
- No Equal Division: Separate property remains with the spouse who owns it in the event of a divorce, unless it has been commingled with community property.
Examples of Separate Property:
- Real estate or assets owned by one spouse before marriage.
- Gifts given to one spouse by someone outside the marriage.
- Inheritances received by one spouse during the marriage.
- Property obtained by one spouse during the marriage if it is kept separate (e.g., bank accounts in one spouse’s name and not funded with community money).
- Personal property acquired before the marriage, such as heirlooms or a car owned before the marriage.
3. Commingling of Property
In some cases, property that was originally separate can become community property if it is commingled (mixed) with community property.
Example of Commingling:
- A spouse inherits a sum of money (separate property) but deposits it into a joint bank account, which is used for family expenses. The inheritance may now be considered partly or fully community property, depending on how the funds were used.
4. Property Division in Divorce
When a couple divorces, California law requires that community property be divided equally (50/50) between the spouses. Each spouse keeps their separate property, but if separate property has been commingled with community property, the court may divide that property or determine how much belongs to each party.
How Community Property Is Divided:
- Equal division: Most community property, such as homes, cars, income, and debts, is divided equally.
- Separate property: Remains with the spouse who owns it, but if there has been commingling or transmutation, the court will assess how to divide it.
Conclusion Understanding the distinction between community property and separate property is essential in California divorce proceedings. Community property is typically divided equally, while separate property remains with the spouse who owns it. However, commingling or transmutation can complicate these distinctions, and the court may need to decide how to fairly allocate property in these cases.
