Your house is more than just a roof over your head… Not only does this structure act as the sacred keeper of your family’s memories, but it’s also often the most significant investment a married couple will make.
Hence, if you find yourself worried, wondering: Who gets the house? in your divorce, don’t fret. You aren’t alone.
Here’s what you need to know about who gets the house in a California divorce, and how the Maples Family Law team can help you navigate these important issues.
Who Gets the House: It Starts with Community Property
In California, a house is considered property. Hence, just like your car, bank accounts, debt, and that heirloom silverware your grandmother left you, this structure is subject to the same rules of community property, if you ever get divorced.
Community property is one of two systems that US courts use to divide marital property, which focuses on ensuring each partner gets an equal share of marital assets. Here, the timing of when you got married (as well as when you acquired the property) will be important to determining how much of your joint assets you’ll ultimately walk away with.
To make these decisions, California courts will follow these four steps:
Identify all of the couple’s property.
Classify all property as either separate or marital.
Value all marital property.
Divide all marital property between spouses.
Here’s a closer look at each of these steps, and how they specifically apply to our question: Who gets the family house?
Step 1: Identify
First thing’s first: identify all of your property.
This ‘role call’ might sound silly (after all, how hard is it to identify a house?); however, it’s not just the house you’ll need to identify. During this step, you’ll need to produce documentation on everything you own, including all assets, real property, retirement accounts, debt, loans, credit cards, and investments.
While these assets might not directly relate to your house, knowing exactly what you have will be important during the valuing and division phases. (After all, the court can’t divide a home’s value fairly, without knowing what else the couple owns.)
Identifying property also acts as an important accounting step, to ensure that neither spouse is trying to hide assets from divorce court.
Step 2: Classify
Once property has been identified, the court will need to classify everything as either separate property (a.k.a. “individually owned” property), or marital property (a.k.a. “it belongs to both of you” property).
In a community property jurisdiction, anything acquired before or after marriage is considered the separate property of whoever brought it into the marriage. In addition, gifts, inheritances, and awards of personal injury are also considered separate—regardless of when they were received.
On the other hand, anything acquired while married—be it a paycheck, loan, credit card, or winning lottery ticket—belongs to both, equally, regardless of whose name it’s in. (Which, of course, is why your date of separation is so important, and why it’s a good idea to formalize it with a legal separation.)
Hence, in an extremely general, very sanitized scenario, a house purchased prior to marriage would possibly be considered separate property, and one purchased during marriage, marital property.
However, life is never that simple, and there’s a really good chance that at least some of the home’s value belongs to the marriage—even if it was purchased prior to tying the knot. (More on that to come…)
Step 3: Value
Next, the court will assign a price tag to all of your marital property, including debt, investments, retirement accounts, and even bitcoin, too.
Pricing everything out is important to our house question, because a physical structure can’t be cut in half (sorry, Solomon!). Hence, only one spouse will be able to actually keep the house. The other will need to be compensated with a greater share of marital property, to make up the difference in value.
Step 4: Divide
Finally, it will be time to divide the house and your marital property. To this end, couples can either:
Sell the house and split the value.
Spouse A keeps the house, and refinances the mortgage to remove Spouse B from the loan.
Spouse A and Spouse B agree to temporarily keep the house together.
Typically, the simplest option is to simply sell and split the value. In California, courts can’t force lenders to remove someone from a valid contract. Hence, sometimes complications can arise with refinancing.
Then again, if kids are involved, it might be better for the custodial parent to keep the house for their emotional stability.
In the end, there are pros and cons to each option, and it will be up to the couple and the court to determine which is best for their situation.
Who Gets the House: Complications
So far, we’ve made the house dividing process sound very neat and clean, but the truth is, it’s usually anything but.
For example, let’s say Spouse B purchased a house before getting married. This structure might have started out as separate property, however, once married, it was almost certainly paid for, maintained, or upgraded using marital funds at some point. Hence, there’s a good chance Spouse A shares at least some of the value in Spouse B’s home.
On the other hand, consider the possibility that Spouse A used separate money (like… say… funds from an inheritance) to finance a major upgrade on a house purchased after marriage. In this scenario, it’s possible Spouse A owns a share of the home’s value as separate property, even if it was purchased while married.
Bottom line? Short of a valid prenuptial agreement, the question of who gets the house is not an easy one to answer. That’s why it’s so important to have an experienced attorney looking out for your interests during this process.
Divorce Attorneys in California
Your house might just be the biggest investment you made as a couple, so it’s pretty important to make sure its division is done right. That’s why we hope you’ll trust our experienced team to lend a hand in your divorce.
If you have more questions about who gets the house in a California divorce, and how these rules might affect your situation, we want to hear from you. Call Maples Family Law at (209) 989-4425, or get in touch online, and let us help fight for your best interests.
Those who are impacted by mental illness—whether personally, or indirectly, through a loved one—know that these unique issues don’t respect boundaries. The effects of mental illnesses (such as anxiety, depression, OCD, and addiction) stretch across every aspect of life, affecting everything from the everyday, to the atypical, includingdivorce.
Which is why it’s so important to address how mental health and divorce interact. Not just in terms of how these issues might impact your split, but in how divorce, itself, might affect you.
In this article we’ll introduce some of the biggest questions that often arise when mental health and divorce collide, and outline how the right attorney can help you navigate these complex matters during your California divorce.
Mental Illness and Filing for Divorce
Many clients wonder whether the mere existence of a mental illness—either in themselves, or their partner—will prevent them from securing a divorce.
The answer is a firm no.
While “insanity” is a legitimate defense to criminal charges, it will not prevent you from getting a divorce from a mentally ill spouse. This is because family law (including divorce) falls under civil court jurisdiction, not criminal court. Hence, the same defenses don’t apply.
California courts will never force you to stay married, just because your spouse suffers from a mental illness.
Mental Illness and Marriage Annulment
Mental capacity is a key element to negotiating any valid contract, and this includes a marriage contract. This essentially means that both parties know what they’re doing (getting married), and that they are both old enough to make that decision (in California, eighteen).
Without this mental capacity—say, if you’re too drunk, too high, or underage to know what you’re doing—it’s possible to get a marriage annulled. And it’s definitely possible to see how a mental health crisis might prevent someone from having adequate mental capacity for marriage.
However, in order for an annulment to stick, you can’t have gotten better after the marriage. Hence, if the individual had a mental illness, but then recovered and lived freely in a marital relationship afterwards, then a judge will not annul the marriage.
Mental Illness and Grounds for Divorce
Mental health issues often come up when couples cite their grounds for divorce.
In legal speak, your “grounds” tell the judge why you want to get divorced. Grounds are a required part of your divorce complaint, and in some jurisdictions, can be used to assign blame to one spouse for breaching the marriage contract.
Grounds that request some kind of guilt be placed on one party or the other are called “fault” grounds. Grounds that do not attempt to assign blame are called “no-fault” grounds.
California is a solidly, no-fault divorce state, meaning judges will not consider fault when dividing marital assets or alimony. Instead, couples filing for divorce must choose between one of two no-fault divorce options:
Irreconcilable differences
Incurable insanity
1. Irreconcilable Differences
Irreconcilable differences essentially mean that you are no longer able to reconcile with one another, and want out. When filing this way, neither party needs to back up this claim with proof, and no one is held liable for the breakup.
Because it’s so quick and painless, this is by far the most common grounds cited for divorce in California.
2. Incurable Insanity
Incurable insanity, on the other hand, is rarely cited as grounds for divorce, since the burden of proof is so high. In order to file under these grounds, you must show that your spouse lacks legal capacity.
Legal incapacity occurs when someone doesn’t have the mental wherewithal to make decisions, and may manifest as:
An inability to stay alert and attentive;
An inability to process information (such as memory or communication);
A detachment from reality (such as the existence of delusions or hallucinations); or,
An inability to control mood and affect.
Not only must you provide proof from multiple physicians that these elements exist, but these experts must also testify that your spouse is unlikely to ever recover. Which—considering the unpredictable nature of mental illness—is a very difficult diagnosis to procure.
Furthermore, when mental illness really is that severe, your judge will need to assign your spouse a guardian, who will look out for their interests during divorce process.
Because of all these complexities, most couples choose to simply file for irreconcilable differences, instead.
Mental Illness and Child Custody
Mental illness does not directly influence decisions about child custody. However, depending on the condition—as well as the severity of the symptoms—it’s possible that mental health could still indirectly influence custody.
This is because in California, custody decisions are made according to the best interest of the child. Here, everything from primary residence, visitation, and child support are determined based on which outcome will serve a child’s long-term health and happiness the best. This is done by weight a number of individualized factors, including:
The child’s age and preference (if old enough);
The child’s health and need for stability;
The child’s relationship with each parent;
Each parent’s ability to care for their child; as well as,
Any history of domestic violence, abuse, or neglect.
As you can see, while mental illness isn’t a direct consideration, it can still significantly contribute to many of these factors. Especially when it comes to violence and neglect, or if the mental illness prevents the parent from providing a stable home for their child (such is often the case with drug and alcohol abuse).
Regardless of the circumstances, the court will put the child’s needs above all else, while maintaining parental rights as best as possible within that scope.
Mental Illness and Property Division
Since California is a no-fault divorce state, it’s unlikely that mental illness will have any impact on the division of marital property.
California is a community property state, which means that anything acquired after marriage belongs to both spouses equally—regardless of whose name is on the paycheck, deed, loan, or card. Hence, without fault to influence this decision, all of this shared property will be divided equally, upon divorce.
Mental Illness and Alimony
In some cases, mental illness affects a spouse’s ability to hold down a job, post-divorce. These individuals may struggle to make ends meet, and to maintain their marital standard of living, once divorced.
In these situations, the court may require the stable spouse to make spousal support payments to help out. Though, the court is highly unlikely to require this when the mental illness is related to alcohol or drug abuse.
Mental Health During Divorce
When it comes to divorce, it’s not just about how preexisting conditions can affect your breakup. It’s also about the way the breakup affects your mental health.
Divorce is an extremely stressful and emotional process—even for people who don’t have mental health problems. That’s why it’s so important to make sure you’re mindful of your own equilibrium throughout the entire divorce process.
For some people, maintaining good nutrition, getting enough sleep, and exercising are adequate. Others might benefit from therapy. Parents, especially, shouldn’t neglect themselves in this regard, since it’s difficult to support a child’s emotional needs when you aren’t taking care of yourself.
If you need additional resources, your attorney can assist you in finding qualified therapists and programs that can help your family through this transition.
Divorce Attorneys in California
Whether you are dealing with your own demons, or the mental illness of a loved one, mental health struggles are never easy. That’s why it’s important to have an attorney understands your needs, and can address your unique needs.
If you have more questions about mental health and divorce, we want to hear from you. Call Maples Family Law at (209) 989-4425, or get in touch online, and let us help you navigate these matters with the sensitivity and gravitas you deserve.
With so many different types of plans and variables at play, dividing retirement assets in a divorce can be complicated. Especially if they existed both before and during a marriage, dashing any hopes of a clear property classification. However, considering their sizable worth, retirement accounts are one aspect of property division you don’t want to get wrong.
Fortunately, a good Stockton divorce attorney can help you get the job done without too much hassle.
Identifying Retirement Assets in a Divorce: Community or Separate Property?
When splitting a retirement plan, the first step is to identify what kind of property the account is. Like all other assets acquired by a couple during marriage, retirement funds are subject to property classification and division under California’s community property laws. Under these rules, assets are categorized as either “community” (property that belongs to both spouses equally), or “separate” (property that belong to one spouse, individually).
To classify the contents of a retirement account, timing is key. If either spouse contributed to the account while married, it is most likely community property (unless specifically addressed in a valid prenuptial agreement.) On the other hand, if the account was created before marriage—and was not added to during that time—it’s most likely separate property, and belongs solely to the participant spouse (the party who earned the benefit).
Most of the time, however, property isn’t as clear cut as “before” and “after” marriage. And when the ‘what’s mine is yours’ mentality results in blending separate and community property together, retirement division can get a little more complicated.
Dividing Retirement Assets in a Divorce
If the retirement account is classified as community property, a judge will split ownership based on the length of time the couple was married, and how this occurs will vary by circumstance. In some cases, both spouses agree to keep their own pensions and retirement accounts without taking any part of the other spouse’s. However, when one spouse doesn’t have a retirement account – or when one has a much smaller retirement asset than the other does – a judge will order the couple to split these funds another way. There are two common ways this can be accomplished.
The first, is to suspend all retirement payouts until the participating spouse actually retires. Once retirement finally rolls around, each spouse will get their share of the retirement payout for the time married. The second method, is to allow the participating spouse to keep all benefits of the retirement plan, and to offset this inequality by awarding the non-participating spouse a greater portion of community assets.
Obviously, each method of distribution comes with its own pros, cons, and risks. When assessing how to make this split, couples are always free to reach their own agreement, rather than fighting in court. One way to do this, is through mediation.
Divorce Mediation
Mediation is a non-binding negotiation process, where couples meet with a neutral third party, and try to come to an agreement on their own. This method of dispute resolution is far simpler and more cost-effective than litigation. It also gives individuals greater flexibility in determining the outcome of their own divorce terms, including the division of any retirement plans. For these reasons, a good attorney will always suggest that you try mediation before going to court.
Retirement Payout After Divorce
Once an agreement has been reached—either through mediation, or by litigation—the actual payout process will depend on what type of retirement plan you have.
For example, when dealing with a military retirement account, the length of your marriage will determine whether the participant pays out the alternate payee, or if the money will come directly from the Defense Finance and Accounting Service.
In other cases, individuals must file a qualified domestic relations order, or QDRO. A QDRO is a special court order authorizing a non-participant individual to receive a payout from a retirement account. Once a QDRO is filed, payout usually takes between 60 and 90 days, depending on how long it takes the plan’s administrator to process the documents.
These types of details—such as how payout works and how long it takes to receive—will vary for each type of retirement account. Once your Stockton divorce attorney has all the facts of your case, they will be able to give you more specific guidance on what to expect from your retirement payout process.
Retirement Plans Covered by a Prenup
Now days, it’s common for divorcing couples in California to have prenuptial agreements. These pre-marital contracts can cover all kinds of things about property division during divorce. In your prenup, you and your spouse may have agreed to several things, including the rights and obligations you each have when it comes to property (even if it was acquired during your marriage).
If a retirement account was included in your prenuptial agreement, it’s a good idea to talk to your attorney about it. The prenup can’t be grossly unfair, and if it is, your Stockton divorce attorney can help argue that all or part of the agreement is invalid.
Divorce Attorneys in California
If you have questions about dividing retirement assets in a divorce, we’re here to help. Call us at 209-546-6870 to schedule a consultation with an experienced divorce and pension attorney. Together, we’ll answer your questions, and begin building a strategy that will get you the best possible outcome in your retirement plan division.
If you’re like many people, you know California is a community property state – but what does that mean when you’re getting a divorce? Here’s what you need to know.
Community Property FAQ: Answers to Common Community Property Questions
Here you’ll find answers to our most common questions about community property questions, which might help you with your case. If you have more questions, or if you don’t see the answer you need here, feel free to call us at 209-395-1605.
What is an Example of Community Property?
Any property that you and your soon-to-be ex-spouse acquired during your marriage is considered community property in California. Some of the most common examples of community property include:
What is the Difference Between Community Property and Joint Tenancy?
Joint tenancy is a type of co-ownership that allows a property owner to keep property in the event that the other property owner dies. Joint tenancy is different from community property – but most married couples hold property as joint tenants with the right of survivorship. The biggest thing to be concerned about? Tax consequences. There might be capital gains issues that you need to know about, so talk to a tax consultant if this applies to your situation.
It’s not uncommon for separate property to become partly community property (such as when one person has a house before the marriage but continues paying on it during the marriage). This is called transmutation. If it went the other way, it would also be called transmutation. The only way community property could become separate property is if there was a mistake in classifying the property to begin with. Separate property includes only the property one spouse obtained before a marriage, after separating, and property received as a gift or inheritance during the marriage.
When you acquire assets or debts during your marriage, they’re community property. That means you and your soon-to-be ex-spouse own them equally. Even if only one spouse signed up for the debt, it belongs to both of you. You’re both legally responsible for the debt, but you can negotiate with your spouse over debts during the divorce. If you have marital debt, talk to your Stockton divorce attorney about what to do next.
If you brought a vehicle into your marriage and it was paid for before the wedding, it’s your car – your husband can’t take it. However, if you bought the vehicle (or even continued paying on it) during your marriage, your husband has the same right to the car that you do. Likewise, if he gave you the car as a gift, it’s separate property. You may be able to negotiate with your husband, or you might be able to get the court to issue an order that says you’re entitled to continue using the car during (and possibly after) the divorce. You should talk to your attorney if you’re concerned that your husband will take your car when it’s in your name.
In California, which is a community property state, both parties to a divorce are entitled to a fair and equitable distribution of their marital assets. One spouse might also be entitled to spousal maintenance (commonly called alimony), depending on that spouse’s ability to provide for him- or herself. All marital assets – and marital debts – are divisible in divorce. However, if you came into the marriage with property you owned, that remains separate and your wife is not entitled to it in the divorce.
Wages are considered community property in a divorce in California, provided that you earned them during your marriage. However, the wages you earned the week – or even the day – before you physically got married are separate property and your spouse isn’t entitled to a fair and equitable distribution of them. It’s worth noting, too, that community income isn’t only about money. It can include real estate, payments you receive for services, or payments you receive in rents, as well as other forms of income.
In real estate, community property is typically a home or piece of property that a couple purchased during a marriage. This real estate is divisible in a divorce. Sometimes a house or piece of property is separate (meaning that it belongs to just one spouse), such as when that spouse bought and paid for it prior to the marriage. However, everything the couple purchased or acquired during the marriage is community property – including real estate.
Is Cash Considered Community Property?
Cash holdings, such as paper money, savings accounts, checking accounts and investment accounts, are considered community property if the money was acquired during the marriage. For example, if you opened a checking account (even if it was just in your name) during your marriage and put in money that you acquired during the marriage, that money is community property. As community property, it’s divisible during divorce.
How Are Assets Divided in a Community Property State?
In a community property state, assets are divided fairly and equitably. That doesn’t necessarily mean 50-50, though. When it comes to how assets are divided in a community property state like California, each spouse is entitled to a fair share of everything. That means you’re free to negotiate if you’d like. You might trade two antique vehicles for an empty piece of property in the country, for example, or you might agree that your spouse will pay off your joint marital debt while you get to keep the paid-off house. As long as your agreement is fair to both of you, the judge assigned to your case is likely to sign off on it.
Is an Inheritance Considered Community Property in a Divorce?
In California, an inheritance is not considered community property in a divorce unless it was left to you and your spouse. If it was left to only one of you, it belongs solely to that person – it’s separate property.
Do You Need to Talk to a Lawyer About Community Property?
If you still have questions about community property in California, or if you need to talk to an attorney about dividing your property in a divorce, we’re here to help. Call us at 209-395-1605 to let us know what’s going on – we’ll be happy to schedule a consultation where you can talk to an attorney and get the answers you need.
Is California a community property state? Here’s what you need to know if you’re getting divorced in San Joaquin County or elsewhere.
Is California a Community Property State?
California is considered a community property state – but to many people, that doesn’t mean exactly what it sounds like. Under California law, the property a couple acquires during a marriage is community. That means it belongs equally to both parties, and when the couple divorces, they must divide it fairly.
What Counts as Property Under California Law?
Property is anything you can buy or sell, like:
Houses
Vehicles
Furniture
Clothing
Household goods (like dishes, pots and pans, televisions and other items you use around your home)
It’s also anything that has value, even if it’s not something you’d buy or sell, such as:
Bank accounts
Cash
Pension plans
401(k) plans
Stocks
Life insurance that has cash value
Businesses
Patents
When you divorce your spouse, you’re free to come up with an agreement that gives you both your fair share of the property. However, even if you agree, the judge in your case will still have to sign off on it. If the settlement you and your spouse work out is unfair to one of you, the judge can tell you to come back with a different plan.
If you and your spouse can’t agree, you’ll either have to go to mediation or ask the judge to rule. If you ask the judge to rule, you’ll have to provide an accurate valuation of all the property you own – and that can be tricky for assets like businesses. (In that case, you’ll most likely have to hire a professional to value the business.)
Is California a Community Property State When it Comes to Debt?
California law treats debt just like it treats assets. If you accrued the debt while you were married, it most likely belongs to both of you. (There are some rare exceptions, though. For example, if one spouse racked up a bunch of credit card debt because he or she was spending money on a paramour, you can let the judge know – that kind of debt may only belong to the party who created it.)
As a general rule, the assets and debts you brought into your marriage belong to you alone. The same is true for your spouse.
For example, if your spouse had a paid-off car, furniture and money in a bank account before you married, those assets will most likely still belong to your spouse when you divorce.
Sometimes these things get tricky, though. If your spouse had partially paid off a car when you married and continued to make payments on it after your marriage, it’s neither community property nor separate property. Likewise, if your spouse has a pension or retirement benefit that he or she paid into before and after your marriage, the same is true. In these cases, the property is commingled.
In California, the property you divide has to be equal. But that doesn’t mean you need to chop your toaster oven in half or sell the house and split the proceeds (although you absolutely can do that if you wish). Instead, the total net value of the assets each spouse receives has to be pretty close to equal. That means it’s okay for one spouse to get the house and the other to get the family business. As long as the assets end up being equivalent in value, you have a fair agreement.
Do You Need to Talk to a Lawyer About Community Property?
In the end, what’s most important is that you know California is a community property state and that means you and your spouse have to divide your assets (and debts) equally. You may find that talking to a Stockton divorce attorney can help you sort through the situation you’re in.
Hiding assets during divorce is a major problem – and if you’re caught doing so (or if your ex is caught doing so), you’ll face big problems in court. Here’s what you need to know.
Hiding Assets During Divorce
When your marriage is ending, your spouse may decide to hide some of his or her assets so you can’t get them. That’s because property in California falls under specific categories – it can be community property or separate property (and in some cases, it’s a hybrid of both).
If you weren’t active in your family’s finances, or if you aren’t up-to-speed on your spouse’s income, it may be fairly easy for him or her to hide assets during your divorce. Some spouses do this so they don’t have to share – but doing so is more than unethical. It’s illegal.
During a divorce, you must both file forms with the court that truthfully disclose all your assets. That includes bank account balances, real estate and other types of income, such as pay and support from previous relationships. If you fail to do so, or if you lie on the forms, you could be held in contempt of court or be charged with perjury.
Devaluing Assets
Sometimes the value of an asset isn’t obvious without an appraisal, and in cases like those, it’s sometimes easier for a spouse to “devalue” them. That happens when one spouse says something is worth less than it really is in an attempt to share less of its worth with the other spouse. The courts don’t allow this, and in many cases, judges require professional appraisals on things that could be intentionally devalued (like houses, jewelry, businesses and other high-dollar assets). Nobody is allowed to deliberately devalue an asset for the purpose of defrauding the court.
Usually, people hide assets during divorce to prevent their spouses from getting a fair share. Unfortunately, it’s not always easy to tell if your spouse is hiding assets. Usually, if you suspect that he or she is doing so, it’s your job to track them down so you get your fair share of the community property.
What Happens if You Hide Assets?
The judge in your case can hold you in contempt of court if you hide assets – or, even worse, charge you with perjury. Perjury is a crime, and it involves deliberately giving false information while under oath. You’re subject to prosecution for perjury if you’re testifying in court or being deposed, or if you signed an affidavit or declaration that contains information you know is false. Perjury is a felony, and it’s punishable by up to 4 years in California State Prison. It’s safe to say that perjury is something you should steer clear of, particularly when it comes to disclosing your assets during divorce. It’s just not worth the risk.
Where to Look for Hidden Assets During Divorce
If you suspect that your spouse is hiding assets, you can do a little detective work of your own. You should start by taking an inventory of your property – especially if you notice that things are disappearing from your home, like jewelry and other high-dollar items. Check for safety deposit box registrations, look in your home safe and see if you can find evidence that your spouse is investing money without your knowledge. Other than that, though, it can be difficult to tell if your spouse is squirrelling away things that belong to you – and you may need to work with a Stockton divorce attorney who has the resources necessary to help discover hidden assets.
Do You Need to Talk to a Lawyer Because Your Spouse May Be Hiding Assets During Divorce?
If you suspect your spouse is – or will in the future – hide assets, it’s important that you get legal guidance. We may be able to help you, so call us today at (209) 546-6870 or get in touch with a Stockton divorce attorney online to schedule a consultation.
As you are likely aware, property can take on two distinct characterizations once a couple becomes married: separate or community. The distinction between the types of property has a critical bearing on the distribution of assets upon divorce. In a perfect world, the characterization of the property remains the same throughout the marriage and divvying that property up on dissolution is a straightforward matter. However, things are rarely perfect, and the nature of property changes through something referred to as “transmutation.” When “transmutation” occurs, dividing assets becomes increasingly difficult, as both parties are seeking to characterize property differently (e.g., the person who wants to keep an asset will seek to have it characterized as their separate property, while the person who wants a share of that asset will seek to have it characterized as community property).
This article will briefly address: (1) How property is initially characterized; (2) What separate property is, and how it works; (3) How separate property is “transmuted” into community property; and (4) How to rebut an argument that “transmutation” has occurred through the use of the tracing method.
How Is Property Initially Characterized at the Time of Marriage?
For purposes of community property law, or divvying up assets at divorce, “characterization of property” means the process of classifying property as separate or community. In Re Marriage of Rossin (2009) 172 Cal. App. 4th 725. The Court considers all relevant information in determining the nature of property. In Re Marriage of Foley (2d Dist. 2010) 189 Cal. App. 4th 521.
“Community property” means any “real or personal property, except as otherwise provided by statute, wherever situated, which is acquired by a married person during the marriage while domiciled in [California].”California Family Code §760. While it is beyond the scope of this article, this definition applies throughout the marriage which ends upon separation (to put it simply, the end of the marriage occurs when there is a parting of ways with no intent to resume marital relations). As a practical matter, nearly all property acquired during the marriage will constitute community property. U.S. v. Berger (9th Cir. 2009) 574 F.3d 1202 (applying California law). If the property does not qualify as community property, it will likely qualify as separate property.
A married person’s “separate property” is comprised of: (1) All property owned by that person prior to marriage; (2) all property acquired by that person after marriage, provided it was acquired by gift, bequest, devise, or descent; and (3) the rents, issues, and profits of all separate property. California Family Code §770, subd (a).
In a nutshell, the entire concept of community property law is that marriage is a partnership, where each spouse utilizes their specific talents, resources, and energy for the benefit of the marital community; as such, it is necessary that all the fruits of those efforts be susceptible to transfer, survival, and common ownership. Franklin v. Franklin(2d Dist. 1945) 67 Cal. App. 2d 717; In re Marriage of Dekker(4th Dist. 1993) 17 Cal. App. 4th 842.
What is Separate Property, and How Does it Work?
Aside from custody, the characterization of property is the most highly contested issue during divorce; this makes sense, because the party who owns the separate property keeps that property after divorce. An individual is only entitled to a share of the community property. Naturally, people will seek to classify as much property as possible as their separate property. As a general matter, characterizing property as “separate” depends on four factors:
When the property was acquired; In Re Marriage of Foley (2d Dist. 2010) 189 Cal. App. 4th 521
What presumptions are in effect in relation to that property; Id.
Whether the property has been “transmuted”; In Re Marriage of Rossin (2009) 172 Cal. App. 4th 725 and
Assuming formal transmutation has not occurred, whether the actions of the parties have altered the character of the property nonetheless. Id.
Where the nature of a particular piece of property cannot be easily labeled, there are certain legal presumptions that come into play; chief among these is that family expenses are first paid from available community funds. Id. As a general rule, separate property is considered separate property from the start of the marriage through the end of it, unless something occurs to change the nature of that property; this is typical accomplished by an agreement between spouses, or by judicial decree. In re Marriage of Moore & Ferrie (1st Dist. 1993) 14 Cal. App. 4th 1472;In Re Marriage of Rossin (2009) 172 Cal. App. 4th 725.Thus, separate property does not become community property by virtue of the marriage itself, or its use in the marriage. In re Marriage of Weaver (2d Dist. 1990) 224 Cal. App. 3d 478. Property can be “transmuted” through an agreement between the spouses, but the more common dispute centers around whether or not property was “transmuted” through the conduct of one, or both, of the spouses.
How is Separate Property “Transmuted” into Community Property?
As noted above, the general rule is that the characterization of property as separate or community is determined by the date and method of its acquisition. Absent a gift or agreement, the nature of property can be changed by showing that either: (1) the nature of a transaction, suggests the property has changed character; or (2) the surrounding circumstances suggest that the character of the property has changed. Isom v. Slaughter (2d Dist. 1962) 200 Cal. App. 2d 700; In re Estate of Froling (2d Dist. 1951) 108 Cal. App. 2d 198.
Example: Harry and Wendy are disputing whether or not a vehicle that Harry purchased is separate property. Harry purchased the vehicle during the marriage, so Wendy argues that the car is community property. Harry argues that because he had no source of income other than his separate property, his purchase of the vehicle must have been through the use of separate property, qualifying the vehicle as separate property as well.
Here, proof that Harry had no money aside from his separate property would justify the Court in concluding that the vehicle must be separate property. In re Barnes’ Estate (3d Dist. 1932) 128 Cal. App. 489. Further, recalling the presumption that the couple’s living expenses are paid out of community funds rather than separate funds, showing that community income is less than community expenses would justify a conclusion that any purchases were necessarily made with community property; this is referred to the “exhaustion method” of tracing.
How Do I Rebut the Presumption That a “Transmutation” Has Occurred Through Tracing?
As mentioned in the beginning of this article, distributing assets on divorce would be simple in a perfect world; neither party did anything to complicate the situation. The reality is that things are rarely perfect and commingling separate assets with community assets is one of the chief culprits. To be sure, it makes sense – nobody goes into a marriage expecting it to fail, why would they protect the identity of their assets in the first place?
The simple act of commingling separate and community funds is not, by itself, what complicates the dissolution process. Theoretically, it is possible to track the contribution of both types of property in relation to an acquisition during the marriage; however, if you cannot track (or “trace”) those funds, the presumption is that the funds and purchases are community property. In re Marriage of Braud (1st Dist. 1996) 45 Cal. App. 4th 797. There are two primary methods of tracing assets in a commingled account: “direct tracing” and “recapitulation tracing”, but they are not the only methods of tracing. SeeIn Re Marriage of Ciprari (February 6, 2019).
Utilizing the “direct tracing” method, the parties identify the disputed asset (e.g., the asset the one party is arguing is separate, and the other is arguing is community), and trace the purchase price to separate funds within the commingled account. In order to accomplish this, the person arguing that the asset is separate property will need to provide extensive documentation showing every community property deposit into the account, as well as every separate property deposit into that account. Further, the proponent of characterizing the asset as separate must show that all the community funds were exhausted by showing withdrawals for community expenses (this is above and beyond the basic living expenses); if it can be shown that only separate property was available to make the purchase, then the proponent has likely met his burden.
Utilizing the “recapitulation tracing” method, also known as the “family living expenses” method, the proponent of the separate property characterization must simply show that the community’s income was less than the community’s expenses; this would lead to the inference that the only funds remaining were necessarily separate property.
Tracing can be an incredibly complicated process, but it can be made easier with the assistance of an attorney who has experience in the process. The attorney’s at Maple’s Family Law have litigated numerous cases where the character of a specific piece of property is at issue and can assist you in obtaining every penny you are entitled to in a dissolution. If you or a loved one are contemplating divorce, contact us today.
The division of debt can be one of the most contentious issues of divorce, so it’s imperative that you work with a Stockton divorce lawyer who understands how to negotiate and who’s willing to fight hard for your rights.
But how is debt divided in a divorce in California, and what can you do to make the negotiation process easier?
Debt and Divorce in California
California is a community property state, which means there are two main types of property in – joint and separate. There’s another type of property classified as quasi-community property, as well, but it is less common than joint and separate property.
Debt is treated like property in a divorce in California.
Joint Debt
Joint debt, which is typically handled a lot like joint property is, is debt that you and your spouse accrued together during the course of your marriage.
Separate Debt
Separate debt, which is also handled like separate property is, is debt that you and your spouse brought into your marriage from the time you were single.
Quasi-Community Debt
Quasi-community debt refers to debts accrued by either spouse while they’re living outside the state of California that would ordinarily be considered community debt if it was accrued while the spouse was living in California.
Special Types of Debt
The courts apply special rules to some types of debt in a California divorce, including:
Student loans
Support payments from previous relationships
Criminal fines and restitution
Business debts
Student Loans
Family Code Section 2641 says that student loans are generally assigned to the spouse who obtained the education. However, if both partners substantially benefited from the education before they separated, sometimes the court assigns the debt to the spouse who did not obtain the education, or orders the two parties to split the debt in some way.
In some cases, the court orders the person who received the education to reimburse his or her spouse for contributions that the spouse made; that typically only happens when the other party didn’t substantially benefit from the education.
Support Payments From Previous Relationships
In a divorce, support payments from previous relationships – spousal support and child support – are assigned to the original person who owes them. If your spouse owes child support from a previous relationship, for example, you won’t have to pay any of it after your divorce, even if he or she is in arrears.
Criminal Fines and Restitution
If your spouse owes money for criminal fines or restitution, whether or not those debts were accrued during or before the marriage, are assigned to the spouse who incurred the debt.
Business Debt
If a business is partly community and partly separate property, division of the debt can be incredibly tricky. There are several methods used to value property and involved in dividing business debts, but in most cases, it’s best to work with a skilled, knowledgeable Stockton divorce lawyer who understands what professionals can help most.
Do You Need to Talk to an Attorney About Dividing Debts in Your Divorce?
If you’re divorcing and need to divide your debts, we can help you.
It’s our mission to help you reach a fair and just settlement, so please call us at 209-910-9865 or contact us online to schedule an appointment with an attorney.
