What is Community Property and How is it Divided?

In California, “community property” is defined as the marital interest in an asset or debt that was obtained or incurred between the date of marriage/registration of a domestic partnership and the date of separation. When I initially sit down with a client who’s going through a divorce or dissolution of domestic partnership, I start by drawing two lines on a piece of paper: (1) DOM/DOR – date of marriage/registration and (2) DOS – date of separation. Then we begin itemizing each asset the client and/or their spouse/partner has an interest in (and his or her debt obligations) and determine where each item falls on the timeline — if the asset/obligation is
entirely before the DOM/DOR or entirely after the DOS, the presumption will be that the asset/obligation is the “separate property” of the person whose name is on the asset/obligation. Everything else will be presumed to be, at least in part, “community property.”

A common misconception among clients is that community property is limited to any asset or debt that is jointly held. But according to California law, everything obtained or incurred in a marriage or domestic partnership between DOM/DOR and DOS is presumed community property. Each party has a 50% interest in that property and/or a 50% obligation, where debts are
involved.

Evaluating community property assets

Many assets have both a separate property and a community property component. During the course of the divorce or dissolution of domestic partnership, attorneys for both parties help evaluate assets in those terms and determine what each side is entitled to.

For example, let’s say Bob has $5,000 in a bank account on the day he marries Kathy. During their marriage, Bob deposits and withdraws funds from this account, which is kept in his name. The paychecks he deposits into that account during their marriage are community assets. On the date of separation, his bank account totals $15,000. Bob continues depositing funds (e.g. his paychecks) into that account, those post-separation funds being separate property. And, by the time of the actual divorce, the account has grown to $20,000.

How does this asset get divided between Bob and Kathy?

Here’s the calculation: Bob had $5,000 in the account prior to marriage and $5,000 of additional deposits after the separation. That’s $10,000 of Bob’s separate property. This leaves another $10,000 from deposit activity that took place during the marriage. This last figure is community property, to which Kathy is entitled to half. Therefore, Bob gets $10,000 in separate property and
$5,000 in community property, and Kathy has a claim toward the remaining $5,000 as her interest in the community property portion of this asset.

Start documenting now!

My advice is, when you decide to initiate your divorce or dissolution of domestic partnership, try to obtain documentation about the value of any assets you had on DOM/DOR (and the balance of any debt obligation), as well as any other documentation as to how those assets or debts have been treated throughout the marriage or partnership. When two people embark on a marriage or domestic partnership, it’s difficult to think about what might happen to their property in the event of a dissolution. The longer you go in a marriage/partnership, the more difficult it becomes to retrieve that documentation. Such information can be crucially important in asserting your entitlements in the characterization and division of your assets and debts.

Are you in need of legal counseling or have any questions about the above topic? The Law Offices of Ian S. Topf offer free consultation in a variety of issues, ranging from bankruptcy, family law, estate planning to traffic violations, and landlord/tenant disputes.

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