WHAT IS COMMUNITY PROPERTY?
August 16, 2018
By Rachel Smith
Perhaps the main reason why community property has become so well-known is because of Hollywood. How many times have you read an article or heard of a news story of a famous celebrity who is getting divorced in California, where it’s a no-fault divorce, and there’s a discussion of the non-celebrity spouse getting his or her share of community property?
California is one of the few community property states in the country. There are 9 states in the US that are community property states. Because community property is not the norm, it’s important that you don’t let what little you know through the media be the end all be all.
1. What is Property?
Perhaps the most important issue to address first is to understand property. The general misconception of property is that it equates to physical property (ie: land). When it comes to family law and divorces, the definition of property means that it is anything of value. Property means assets AND debts. Property includes things like bank accounts, retirement accounts, credit cards, debts, cars, stocks, businesses, furniture, and other things of such nature. Essentially, when it comes to family law, property means anything that has value (even emotional and personal value).
2. Date of Marriage
In order to understand how community property is calculated, keep the date of marriage as a focus. The date of marriage is the start button that triggers what property is considered community property. Another reason why this is important is because there are many people who call their significant others as their spouses, despite the fact that they are not legally married. While there is nothing wrong with this practice, it is important to remember that the law does not recognize a long term significant other as a spouse. There are no legal rights to being a significant other. In order to get a divorce and in order to determine and calculate the division of property, the court must have a date of marriage.
3. Date of Separation
In California, a date of separation is also important. Why? This is the date that determines when property is no longer considered community property and is instead considered separate property. The date of separation is usually the date that the two spouses agree that their marriage/relationship is over. It sounds black and white, but there are shades of grey. Is it possible for a couple to disagree on the date of separation? Definitely. If that’s the case, you should consult with a family law attorney for advice.
4. Separate Property
Anything that you have owned before the date of marriage and after the date of separation is generally considered separate property of a particular spouse. There are also certain types of property that will almost always be deemed as separate property, regardless of marriage. For example, a student loan is usually the debt of the borrower spouse. An inheritance and a gift to a specific spouse is almost always the separate property of the spouse, as well. Separate property remains separate property of the spouse so long as it was kept separately and there was no comingling. In order to help determine whether separate property remains separate property is to look at the source of the money used to purchase the property.
5. Community Property
In California, community property means that each spouse owns 50% of the property (whether it is an asset or a debt). This is true regardless of who uses it, who has control of it, or whose name is on the title. The two spouses become 1 legal community. Any property that was acquired during the marriage, whether it was an asset or a debt, is considered community property.
Even if an asset was purchased or a debt was incurred by one spouse (and the other spouse’s name is not on the asset or debt; or the other spouse does not have knowledge of the purchase or the debt), it can still be considered community property. In other words, so long as an asset was accumulated or a debt was incurred during marriage, it is considered community property.
6. Comingled Property
To put it simply, comingled property is when property is part separate property and part community property. For example, when a spouse purchased a house before marriage (when s/he was single) and then sold the house after marriage (when s/he is legally married). That house is then sold during marriage and the proceeds from that house are used to purchase the new house during marriage. This new house is comingled property. One of the important factors used to determine whether a property is comingled property is to look at the source of money used to purchase the property. In order to help you determine how comingled property should be divided in a divorce, you may need to consult with an attorney who specializes in family law and possibly a financial expert.
After reading this article, hopefully you realize that you may have more property rights (both assets and debts) than you originally thought. I apologize if you’re confused after reading this article. This article cannot address every possible situation, nor can it give you an answer to every piece of property. If you are confused, all the more reason to consult with and possibly hire a family law attorney.