Yours, Mine, and Ours
By Henry F. Lewis on July 26, 2017
In California, property comes in two flavors: Community property, and separate property. Generally, community property is any asset, income, debt or other item which is earned or acquired during the marriage, unless it was obtained as a gift or inheritance. Separate property as most easily defined as anything that is not Community Property, but generally refers to anything earned prior to marriage, or after the parties separate. As most people know, community property is usually split 50-50, while separate property is usually awarded to the party it belongs to.
With very few exceptions, community property assets will continue to be community property, and separate property assets will continue to be separate. This includes not only the assets themselves but any income generated by those assets.
In divorce, problems arise when community property assets are mixed (co-mingled) with separate property assets. This can occur when, for example, the parties use the same bank account to keep community property funds and separate property funds. Another example may be when a party owns a piece of property prior to marriage, in that property is improved or maintained during the marriage.
Attorneys refer to this as a “tracing” problem. The general rule is that if you want to make a separate property claim, you have the burden of tracing that claim and proving to the court its validity. How you go about it, depends very much on the asset. The general approaches are the same, however, in that they seek to proportionally allocate an asset depending on how much separate property exists and how much community property exists.
Generally, the best approach is to make sure that separate property and community property are not commingled. In reality, however, it’s not always easy to do this. The second best approach, then, is to make sure that very detailed records are kept regarding all transactions.
Too often, clients can lose out on a valid separate property claim simply because they did not know they needed to keep detailed records.
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