California is a community property state. In California all property acquired during marriage is presumed community unless it can be traced to a separate property source. Upon dissolution or legal separation, community property is divided evenly between the spouses. That means 50 percent of the community property is awarded to each party.
Separate property is property acquired by a spouse before marriage or after the date of separation or acquired during the marriage by devise, inheritance or gift. Separate property remains as such and cannot be divided 50-50 like community property. There are exceptions having to do with how the property was handled during the marriage.
How separate property can become community property
Typical use of separate property is to use one’s earnings before marriage to buy a house during the marriage and put the house in the names of both parties. The house is presumed community property but the separate property down payment may be reimbursable if it can be “traced”. That means showing a clear route of the source of the money, ideally in a separately held bank account.
However, even a separately held bank account with assets earned before marriage or inherited can be commingled with community assets. Example: depositing one’s paychecks during marriage (presumed community property) into the account. The separate and community funds are “commingled”. That means that the separate property has lost its status as separate property. In the above example, tracing the separate property funds used to buy the house can be very difficult, especially if the monies in the account were used during the marriage to pay for community expenses. Forensic accountants may be necessary to analyze the account over the course of the marriage.
For more information on community and separate property rights please contact Los Altos divorce attorney and mediator Vivian Carlson for further information.