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What Is Community Property And What Is Separate Property?

As every divorce attorney will tell you, an essential step in achieving a property settlement is agreeing on what property belongs in the community estate (“community property”) and what property is separate (“separate property”).

Determining the character of your property is important because the community estate is divided equally between the spouses when they divorce, while each spouse keeps his or her own separate property.  (That is unless you and your spouse have made a different agreement in writing.)

Community Property: What Property Belongs in the Community Estate?

Community property includes everything you or your spouse earned, bought with those earnings, or otherwise obtained while you were married and before you separated, other than gifts or inheritances to one of you.  Your separate property is property you owned before you were married, property you acquired after separating, and property you received as a gift or inheritance no matter when you received it.

To determine the character of a specific asset you need to look at

  • When the asset was acquired and
  • Where the money came from to buy it.

Let’s apply these rules to one common situation–.

Assets Purchased With Earnings During the Marriage

Couples are often surprised to learn that the name in which the asset is held does not determine its character.

The theory is that after marriage, you and your spouse become an economic unit.  Assets earned during the marriage are considered to be produced by the economic unit, no matter which of you earns the paycheck that is used to purchase them. Assets earned by a married couple are community property no matter whose name they happen to be in or whether or not they have been kept separate.

For example, suppose you opened a savings account in your own name after you got married and deposited money into it every month from your paycheck.  Your spouse’s name is not on the account; he or she never makes a deposit into it or a withdrawal from it.  Is the account your separate property when you divorce?

Suppose you withdraw some money from the account and buy a car with it.  You title the car in your name alone and you are the principal driver.  Is the car your separate property?

The answer to both questions is no.  The savings account and the car are community property, both subject to division in divorce.  Your earnings and your spouse’s earnings during your marriage are community property, as is any property bought with those earnings.

To speak with a compassionate and accessible family attorney at Zonder Family Law, please call 818-309-7059.

We offer divorce options that will control costs, maintain privacy, and reduce frustration.

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Hello, I'm Lisa Zonder

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