By: Neharika Salhotra and Minh Luong

One of the most common and serious matters of contention, other than perhaps child custody, is division of property and debts. It is crucial to consult a lawyer during the process of a divorce. However, having a basic understanding of California’s property division laws before starting a trial or speaking with a lawyer is recommended for anyone looking to protect themselves when splitting assets with a former spouse.

Section 2550 of the California Family Code requires the community estate to be evenly divided upon separation, if there is no mutual agreement stating otherwise. 

 

TYPES OF PROPERTY

 

California law defines all property owned by a couple in one of two main categories:

1. Community Property: A couple’s collective ownership or dues after marriage
   • This generally applies to all assets accrued by either partner during the marriage.  
   • “Community” is anything earned during the marriage, anything purchased with either spouse’s income in this duration, and any debt taken on during marriage.
     • For example: Home mortgage taken on during marriage, cars purchased etc.
     • Notable exceptions: Any gifts or inheritance that you have not necessarily earned while.
     • Quasi-Community Property: This includes any type of property acquired while living outside of the state of California during the marriage. California property laws would still apply to this case and this property would be subject to 50-50 division as well.
2. Separate Property: Individually owned assets or dues prior to marriage
   • Separate property includes any income earned prior to marriage and after separation.  It also includes the gifts and inheritance, even if they were received during the marriage.
   • Examples of separate property would include any cars you purchased before you were married, any expenditures or debt incurred after separation etc.

 

COMMINGLING

 

Commingling occurs when separate and community property become mixed up. This could be selling a prior home for a down payment on a family home, or investments made in mutual funds or pension accounts started before the marriage but continued during. . It is important to work closely with an attorney and an accountant to make sure all commingling property is properly handled.

 

TRANSMUTATION

 

Transmutation is  the process of changing the character of a property from separate to community or vice versa. It is often used to contest the applicability of community property laws to certain assets. They need to be explicitly stated in writing to be valid. If an individual feels that they have been disadvantaged with the division of assets, they can contest the property in question and the spouse must produce evidence of transmutation that was freely and voluntarily agreed upon by both parties. If you feel you were under duress to agree to certain matter or under undue influence, your attorney can help you contest the transmutation by providing evidence of this.

 

WHY DOES DATE OF SEPARATION MATTER?

 

Date of separation plays a crucial role in determining what is included in the community property. For example, if one party claims the date of separation is September 2020 but the other says December 2020,assets acquired between September and December can be considered community property. Therefore, it is crucial the date of separation is clearly documented, Typical methods of communication are  email or text messaging among others. Written communication is essential for establishing proof of date of separation during negotiations and potentially during the trial proceedings.

 

CONCLUSION

 

Property division in a divorce can be an exhausting and tedious matter that seems endless. This guide covers the top points of discussion in California property division lawsuits and divorce trials,  and provides a general overview of how California law affects divorce proceedings. For questions regarding community property or case specific inquires, please contact your trusted Chugh, LLP attorney.