Frequently Asked Property Questions

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What is the difference between community property and separate property?

California is a community property state. Community property is any property obtained during the marriage. If income was earned during the marriage, any proceeds from the income will be community property as well as any purchases made with the income. Upon dissolution, equity in a community property asset will be awarded equally to both parties.  

Separate property is any property obtained before or after the marriage and any property that was received during the marriage as a gift or an inheritance. In a divorce, separate property will be awarded to the party who owns the separate property in its entirety if it is easily identifiable.

Property can have aspects of community property and separate property.  Depending on the type of property and how it is characterized will determine how it will be divided in a divorce. 

In a Divorce in California, which Party Keeps Gifts Purchased with Community Property?

A spouse who gave a gift during a marriage may argue through a family law attorney that the gift should be considered his or her separate property during a divorce, because it is substantial in value, and there was no writing transferring the property to the separate property of the receiving spouse. The only time that a spouse who gave the gift may be able to keep it, is if the gift was substantial enough to require a writing and no writing exists to change the character of the property. 

Spouses often give gifts to each other for birthdays, anniversaries, and special occasions. In California, the family law code decides what happens in a divorce to the gifts the spouses gave to each other during the marriage. By analyzing the California Family Code, the court determines which spouse gets the gift--the one who gave it, the one who received it, or both. If a gift is awarded to the receiving spouse or the giving spouse, that spouse keeps it in its entirety as his or her separate property, and there is no offset to the other spouse for the value of the gift. If it is awarded to both parties, the value of the gift is awarded to each spouse equally. In most divorces, a gift is awarded to the spouse who received it.

To determine which spouse is awarded the gift, the court analyzes whether or not the gift is "substantial in value taking into account the circumstances of the marriage" ( California Family C ode Section 852(c) ).  The closer it resembles the parties' station in life, the more likely that the courts will award it to the spouse that received it. The court will also ask if the gift was used principally by the spouse that received the gift. If the was used by the receiving spouse, the court will be more likely to award it to the receiving spouse.

A Writing is Required to Transfer Property to Your Spouse in California

Sometimes during a marriage, spouses will transfer property from one spouse to the other. This occurs most frequently when the parties transfer property to one another in order to get a better interest rate on a family home. California Family Law Code §§850-852 , allows a couple, by written agreement, to transfer or “transmute” community property to the separate property of either spouse or from the separate property to the community property. In legal jargon, this is referred to as transmutation. A transmutation is fulfilled when spouses transfer property between themselves during the marriage changing the character of the property. There are three types of transmutations:

  • The transfer of community property to the separate property of one of the spouses;
  • The transfer of separate property of one of the spouses to the community property of the spouses; and
  • The transfer of separate property of one of the spouses to the other spouse’s separate property.

The significance of transmutations is realized during a divorce and sometimes during death when the parties begin to separate their interests. If a property has been properly transmuted, the original owner may not be able to retain his or her entire interest in the property depending on how the property changed.  If the property changed from separate property to community property, then each partner may be entitled to half of the value of the property.  If the property changed from one party's separate property to the other spouse's separate property, the spouse whose name is on title may be entitled to the entire asset.  If the property is changed from community property to one party's separate property, the spouse whose sole name is on the property may receive the entire value of the asset.

Is income separate property if it is earned before the date of separation, but paid after the parties separate?

Income earned during a marriage in Orange County is community property including income which is paid after the date of separation. In some situations payment is contingent upon an event occurring. This can happen when a sales person is waiting to close a sale and obtain commissions or an attorney is waiting for a case to settle to obtain contingent lawyers fees. The key question is whether the spouse earned the income before the date of separation which renders it community property and subject to equal division or if it was earned after the date of separation. If the distribution is not based upon work performed during marriage, then it will be the earning spouse's separate property.