Expert Indian Wells | Palm Desert | Cathedral City | Community Property
What is California "Community Property"?
California is a "community property" state. All property and
assets acquired and
debt incurred before
physical separation is
presumed under the law to be subject to an equal division as between spouses or
domestic partners if either decides to end the relationship. Essentially,
community property is based on the idea that the time, skill, and efforts
of married people belongs equally to each of them until they have physically
separated. Legal separation is a different concept. It is the fruit of
these efforts that takes the form of assets, and why the law presumes
you own them jointly, no matter in whose name they are held. The community
property presumption - which is based upon time of acquisition - can be
rebutted, and is subject to many nuances and twists and turns.
There are significant exceptions and qualifications to this rule. For instance,
property owned prior to marriage, or acquired by gift or inheritance during
marriage, is usually the separate property of the recipient.
Combining Community and Separate Property Creates Unforeseen Complications
However, separate property rarely maintains it original form, particularly
in longer marriages. For instance, if the money you earn to pay the mortgage
on the home you bought before marriage is a product of your marital time,
skill, and efforts, the community gains some rights in your separate property
home that need to be determined.
It is not uncommon for people to commingle (mix up) their
separate property with that of the community or vice versa, or to inadvertently
transmute (change the character of, typically by a change of record title) property from separate into community - typically where what was acquired separately
now becomes joint by operation of law or the execution of some title transfer
document. This commonly occurs with home refinances, where a one party
is added to the deed often only because a lender required it or perhaps
a party with poor credit is asked to sign off. Even when property is commingled
important reimbursement rights under Family Code section 2640 remain available.
Where parties commingle monies, which may be used to acquire and improve
existing or new assets, or build up equity with mortgage payments,
complicated "tracings" must take place to separate community
from separate property, particularly when one party wishes to assert their separate interest,
or to be reimbursed for a separate property contribution to the acquisition
of a community asset. If a spouse or partner is unable to provide these
tracings because necessary documents cannot be found, he or she may lose
valuable property rights since the burden of producing evidence usually
lies with the "separatizer".
Community property usually, but not always, is divided equally between
spouses although obviously some assets are not divisible (i.e., land).
California law requires that the net value of assets received by each
spouse be substantially equal as long as their has been no breach of fiduciary
duty, fraud, or misappropriation by either party. Courts have wide discretion
over how to accomplish this, and can award different assets to different
parties so long as the marital balance sheet reflects and even overall
division. The law also requires that separate property be confirmed to
the appropriate party.
People rarely consider the possibility of divorce or legal separation
when they marry. They don't seek legal advice about how the character
of their separate property might be affected by actions taken during the
marriage, and they don't have accurate understandings of the divorce
related legal consequences of most financial transactions. This creates
costly problems - and a one reason why a knowledgeable lawyer is later
if the marriage fails, since forensic accountants must often be employed to
undertake complicated accountings and the legal issues are labor intensive
Over 50% of first marriages and 65% of second marriages do end by way of
divorce. If you are not yet married or a registered domestic partner but
intend to be, we urge you consider a
prenuptial agreement. This allows you to have some conscious control over your interests and
property rights in the event the marriage or domestic partnership unravels.
As a practical matter, premarital agreements are usually the only example
of intentional as opposed to accidental decisions made with regard to
characterization of property that divorce attorneys encounter.
If you or your partner are resistant to such an agreement, at a minimum
a thorough and paid legal consultation with
an experienced attorney will provide pointers that how to jointly undertake
Want to learn more about the basic rules governing community property in
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Unwinding the financial marriage can hugely impact the emotional divorce.
You need a family lawyer who really does what they are doing. Divorce
is manageable, and you will survive!
Contact Palm Springs marital property specialists Thurman W. Arnold and Michael C. Peterson for a consult regarding property
issues that may affect your financial security!
We serve divorce and family law clients with significant community and
separate property issues particularly within the desert cities of Palm
Springs, Indian Wells, La Quinta, Rancho Mirage, Joshua Tree, Blythe,
Hemet, Twenty-Nine Palms, Cathedral City, Indio, Desert Hot Springs, Yucca
Valley, and Riverside!