Community Property

California is a community property state. All property that is purchased or acquired during marriage, or transmuted (converted) to community property during marriage is community property.

The husband and wife in a marriage, each own an undivided one half interest in all community property of the marriage.

Community property is not divided, unless divorce proceedings are initiated, or upon the death of either the husband or wife.

Community property can be either real property or personal property. Community property can also be businesses, pension plans, or any other type of tangible thing that is acquired during marriage.

Community property is ordinarily one of the major issues involved in divorce actions.

Quasi Community Property

Quasi community property is property that is acquired outside of the state of California during marriage. Although married couples may have purchased property in a state that is not a community property state like California, the property will basically be treated as though it were community property for purposes division in a divorce action in the state of California.

Businesses

Businesses that were started during a marriage are community property.
In some instances a person may have owned an existing business before they were married, and continue the business after marriage. In a divorce action, the courts will allocate a percentage of value to the business “after marriage” to determine which portion of the business is community property.

If you owned an existing business before marriage, it is extremely important for you to consult with an attorney in a divorce action as soon as possible.

Pensions

Any portion of Pensions, IRA’s, 401(k) s, Retirement plans, etc., that were contributed during marriage are community property.

Ordinarily the funds from pension plans are not obtainable until the pension plan vests and matures. Therefore special orders are necessary from the court so that each party is able to get their portion of any retirement plan after it matures and vests. These orders are ordinarily called qualified domestic relations orders or QDRO’s for short.

Obviously parties to a divorce have a vested interest in ensuring that they get their fair portion of any pension or retirement plans after a divorce.

Community Income, Bank Accounts, Stock, and Investments

All income earned during a marriage is considered community income. This is true even in one of the parties to a marriage earns money in a business that was theirs prior to marriage. Community income is the same as community property, in that each party owns a one half undivided interest in community income.

Each party to the marriage has a right to spend and use community income, even if they are not the one that earned the money. However, after legal separation or the initiation of divorce proceedings, parties may only use community property for the necessities of life and to pay their attorney.

Likewise, any bank accounts, stock, and/or investments that are acquired during the marriage are also community property. This is true even if the bank account, stock, and/or investment is only in the name of one of the parties.

Some parties try to secret money into separate bank accounts during marriage, and/or hide assets there were acquired during marriage from the other party.

If you are a party in a divorce action, you have what is called a fiduciary duty of disclosure. What this means is that you must disclose all assets, bank accounts, and other of the investments that were acquired during the marriage to the other party. If you fail to fully disclose your assets and/or income to the court and the other party, the court could severely punish you.

You may have read about the case where a wife won the lottery, and then initiated divorce proceedings against her husband. She failed to inform the court and her husband about the fact that she won the lottery. As punishment for her failure to disclose the fact that she won the lottery, the court gave her husband the entire amount of the lottery winnings.

Separate Property

Separate property is all property that was acquired before marriage; during marriage by devise, will, or inheritance; and after legal separation. The proceeds from a personal-injury judgment or settlement are also separate property, even if they were received during marriage.

Upon the court making a finding that property is separate property, the person owning said separate property will leave the marriage with their separate property.

Separate property can be transmuted (converted) to community property by intent, or by inadvertence. For instance, a party may have a separate bank account before marriage that would be considered separate property. If the party then takes income that was earned during marriage and deposits that money into their separate bank account, they may have by inadvertence converted that bank account to community property.

Obviously, parties in a divorce proceeding will most likely want to keep their own separate property after the divorce is over. It is very important for you to contact an attorney with regard to the issue of separate property to ensure that you get to keep her separate property after the divorce.

If you are contemplating filing for divorce or are presently involved in a divorce proceeding, you may call our law firm for a free consultation at 818-584-8831 ext. 1, or go to our family law website by clicking here now.

By Norman Gregory Fernandez, Esq., © 2006