Community property vs separate property in Orange County divorce cases

The following frequently asked questions about the topic of community property vs separate property are designed to provide you with general information. Please understand that nothing stated herein is intended to be legal advice and your specific factual situation may cause the information provided below to become inapplicable.  You should consult with the Law Office of Angela Schmidt before making any decision on your divorce case on any of the following issues, or any other divorce question or concern you have about your Orange County divorce case.

community property vs separate property – definitions

Separate property is each and every kind of property owned before the marriage or acquired by gift, inheritance, through a will and other forms during the marriage.

Separate property can also be obtained after separation (when the parties generally physically separate from one another with no intent to resume the marital relationship) but this depends in part on whether the property acquired after separation was acquired with separate property funds or assets or community funds or assets.

What is or is not separate property generally turns on the intent of the parties at the time of acquisition, the subsequent use of the property, how title is held to the property, the commingling of the property and numerous other factors.

Separate property, with some exceptions, belongs 100% to the spouse who acquired it

Community property is all property acquired during the marriage while domiciled in California.  The location of the property does not matter.  There are many exceptions to this general rule so do not assume that just because the property is acquired during the marriage, it is automatically community property. Community property, with some exceptions, is generally divided equally between the spouses.

community property vs separate property – family residence

Do judges in Orange County give exclusive possession and use of the family residence to me or my souse while the divorce is pending?

Yes, but in Orange County, this generally only happens if there has been domestic violence or related abuse issues between you and yours spouse, or either of you have acted in a manner that has endangered the children.  Orange County has a specific rule as it relates to domestic violence residency exclusion orders that are sought on a temporary basis.  The rule states the following

A temporary restraining order enjoining a party from the use of the family home will not be granted unless the request is supported by a declaration or declarations by a “percipient witness” setting forth a factual basis showing immediate and serious harm. Said declaration or declarations shall state, in detail and in competent evidentiary form, the time and place of the act or acts and the exact injuries suffered by the moving party. The moving party has the burden of convincing the Court an ex parte order is an appropriate alternative to an order shortening time.

community property vs separate property- effect of the title

Does my name being on the title (the deed) to the property matter?

Yes.  However, it is not the be-all, end-all of whether or not the property is community or separate.  The rules regarding title and both spouses being on or not on title, or even being removed from the title are very complicated and need the assistance of a divorce lawyer.

Community property vs separate property – tracing

I owned a property before marriage, sold it and put the money into the home we now own? Can I get that money back?

Yes, and we have to trace the money to the new home.  This is generally done by getting the records related to the sale of the prior home, tracing the money from that sale to a bank account (unless it was placed directly from one escrow to the new home purchase), and then tracing that money from the bank account to the new home purchase.

Community property vs separate property – post-separation earnings 

I have been paying the mortgage payment on the family residence from my post-separation earnings while my spouse has been living in the residence. Do I get a reimbursement?

Under most circumstances, yes.

A typical scenario occurs after separation where one spouse is making payments on a community property home in which the other spouse is given the right of exclusive possession pending sale and a division of the proceeds.

The court to balance out this inequity generally awards the paying spouse credits for his or her post-separation (and separate property) payments on the house and assesses charges for the market rental value of the property during this time of exclusion possession.  The purpose of these credits and charges is to balance out the inequity that may result from one spouse being able to live at the family residence after separation while the other spouse is paying for the mortgage on that residence.

 

Community Property Presumption

In California, it is presumed that any property acquired during the marriage is community property. This means both spouses equally own it. However, this presumption can be challenged if there is evidence showing the property was acquired with separate property funds or from a separate source. The spouse claiming the property as separate must provide this proof.

Commingling of Assets

Commingling occurs when separate and community property are mixed, making it hard to distinguish between the two. For instance, if one spouse deposits inheritance money (separate property) into a joint account (community property), the funds may become commingled. To claim the separate property, the spouse must present clear evidence tracing the separate funds.

Transmutation Agreements

Spouses can change the nature of their property through transmutation, a process involving a written agreement where both parties agree to convert separate property into community property or vice versa. Such agreements must be explicit and meet specific legal requirements to be enforceable.

Reimbursement Rights

Under California Family Code Section 2640, a spouse may be entitled to reimbursement for separate property contributions used to acquire, improve, or pay down the mortgage on community property. This requires adequate documentation tracing the separate property contribution.

Debt Division

Just as assets are divided, debts incurred during the marriage are generally considered community debts and are split equally. However, debts incurred before marriage or after separation are usually separate debts. The court examines the purpose of the debt and the intent behind it to classify it properly.

Business Interests

Business ownership can complicate property division. If a business started before the marriage grows in value during the marriage, it may involve both community and separate property interests. Courts may use various methods to value the business and determine each spouse’s share, considering contributions and any increase in value during the marriage.

Retirement Accounts and Benefits

Retirement accounts and benefits earned during the marriage are typically considered community property. This includes pensions, 401(k) plans, and other retirement savings. Dividing these assets can be complex and often requires a Qualified Domestic Relations Order (QDRO) to comply with federal law and the retirement plan terms.

Inheritance and Gifts

Property acquired by inheritance or gift during the marriage is generally separate property. However, if these funds or properties are commingled with community property, they may lose their separate status unless there is clear evidence of their origin.

 

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