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What Is Community Property vs. Separate Property in California?
The concept of community property (also known as marital property) versus separate property is an important legal concept in California that can have significant repercussions when a couple decides to divorce. To understand how to protect assets, knowing what will happen without planning is vital, which can be done even before the marriage occurs.
- Community or marital property. California is a community property state, which means that any asset (or debt) acquired during the marriage is owned jointly by the couple. If they divorce, the court will try to divide the property as evenly as possible. It has nothing to do with whether one spouse contributed most of the assets (for example, if one spouse stayed home to raise children while the other was the sole income earner for several years). By California law, both spouses are entitled to as close to half of the property as can possibly be arranged.
- Separate property. This applies to property owned by one spouse prior to the marriage, any profits or rent earned from property owned before the marriage, or gifts or inheritances received by one spouse. However, there’s a caveat: If any of those assets are used jointly by the couple, they become community property. For example, if one spouse receives an inheritance that includes a house and cash, and the couple moves into the house and uses the cash to renovate it and pay other joint bills, it’s now community property.
What Do I Need to Know About Protecting My Assets in a Divorce in Orange County?
There are several steps you can take to protect assets. However, many of them should be taken before the marriage or as early in the marriage as possible. If you’re unsure of the status of some of your property, contact an experienced divorce and asset division attorney who can provide insight and advice.
Prenuptial or Postnuptial Agreements
Crafting a legally enforceable prenuptial or postnuptial agreement can do much to protect assets if the marriage ends. While many are familiar with prenuptial agreements (a contract drawn up to determine various things, including the division of debts and assets if the marriage ends), a postnuptial may be less well known. It’s similar to a prenuptial but is drawn up after the marriage takes place. For a prenuptial or postnuptial to be legally binding at the time of divorce, it’s highly advisable to work with an experienced attorney.
Avoid Mixing Assets
Suppose you’ve recently married and are just thinking about protecting assets. In that case, if you haven’t already moved your assets into joint usage or ownership, you may want to step back and consider keeping them as separate as possible. Anything that the court suspects to be community property will likely end up handled as such. If you receive any inheritances or gifts while married, consider putting them into a newly created separate account in your name only, and don’t use the funds for anything that benefits both spouses.
Proof of Gifts or Inheritances
If you receive gifts or inheritances and want to keep them as separate property, besides putting them into a separate account and not using them for both spouses, try to collect evidence that the gift or inheritance was directed to you and not your spouse. This could be any accompanying paperwork, letters, or copies of the estate plan.
Don’t Try to Hide Assets (or Debts)
This can be tempting, but in California, it’s illegal. It can lead to being found in contempt of court, possibly perjury charges, and the complete loss–not half, but entire–of the assets that were hidden, which would go to the ex. There may also be penalties and fines, and you may be required to pay your ex’s legal fees. Engaging in illegal behavior will not gain you sympathy from the court.
Consider Establishing a Trust
Trusts established prior to the marriage and that haven’t changed ownership are usually considered separate property. However, depending on the assets and the type of trust, other trusts may be created after the marriage to protect the assets from the divorce division. Each type of trust has pros and cons, so it is highly recommended that you work with an experienced attorney.
Do I Lose Rights to Assets if I Was the One to Move Out?
Not necessarily. Community property acquired during the marriage is still community property regardless of where either spouse lives. Legally, you have the right to return to the marital home and claim some items. If you haven’t already, drawing up a list of joint assets and prioritizing them is a good first step–as is being prepared to negotiate and compromise.
In fact, drawing up lists of assets is a good idea even when the marriage appears strong. Having that list available can be useful in numerous situations.
What Should I Do if I Want to Start Divorce Proceedings and Need Guidance on Asset Division?
Call the Bledsoe Firm, LLC, as soon as possible at 949-889-1227 to request a consultation. I understand how stressful divorce can be, especially when it comes to the division of assets. I know how important it is for you to protect your assets as part of your future. Once I have examined the details of the case, including all existing assets and debts, I can provide guidance as to what might be the right approach to achieve the best possible outcomes for you.
