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What is the difference between community and separate property?

On Behalf of | Feb 27, 2020 | Firm News |

Finances are often one of the most divisive topics between married couples, so it is no surprise that figuring out who gets what during a divorce is often confusing and stressful. It is important for Californians facing separation to know that, if they cannot come to a mutual agreement about how to divide their estates, the court will decide it for them based on the state’s community property laws.

In addition to actual real estate, property subject to division upon divorce may include personal items, bank accounts, pension plans and even debt. Knowing how the law classifies divisible property (community property) and separate property is essential for divorcing couples—especially when a separation involves significant assets.

What constitutes community property?

California is one of nine U.S. states that follows the premise of “community property” when it comes to dividing assets during the dissolution of a marriage. When partners marry, any property and any debt that either spouse acquires between the marriage date and the date of petitioning for divorce becomes communal and is subject to a 50/50 division upon separation. Potentially divisible property encompasses a wide range of items, including houses, cars and furniture as well as accumulated income and savings. Similarly, debts such as mortgages or credit card balances that either or both spouses accumulate during the marriage may be subject to equal distribution when a marriage ends.

What constitutes separate property?

Separate property that is not subject to division after divorce includes assets that either partner acquired before marriage, after separation or else received singly as a gift or inheritance—but only so long as they were never commingled with communal property. People sometimes assume that keeping separate bank accounts is a smart way to protect assets in case of divorce. However, if money in that account came from income earned during the marriage, state law considers the funds to be communal property.