Los Angeles Complex Property Division Attorneys
The general belief with respect to divorce proceedings in the Golden State could be that a couple’s property is split fifty-fifty, but family law in California is not quite so simple. Who ends up with what during marriage dissolution or legal separation could hinge on a multitude of factors, such as:
- At what stage the property was acquired,
- How the title is held,
- What income source was used to purchase it,
- Whether the spouses ever moved in and out of state, or
- Whether any written agreements exist with regard to the property.
The Presumption Regarding Community Property
California family law presumes that all of the property acquired during the marriage by either spouse – while residing in the state – is community property. This can include real estate and personal property, and, in a few cases, trusts. Whether the real estate is situated outside of California, or other movable property is transported outside the state, has little relevance, as long as the spouses hold on to a domicile in the state.
Under specific circumstances, any pecuniary award in a personal injury lawsuit might also be considered community property by California family courts. A judge may assign liabilities, such as credit card debt, as community property, also. Nevertheless, even if the ownership of some property was acquired jointly during the marriage, the deed or some other legal ownership document may specify that the property is separate.
In this context, the presumption is rebuttable, which says that an attempt may be made in court to refute categorization of a particular valuable, for instance pension funds, as community property. However, acceptable evidence must be brought forth to convince the judge that an exception might be applicable: California case law necessitates at least a preponderance of evidence. That said, different requirements (as to level of proof – or as to the conditions of validity of property transfer) can apply to different details in every case, and the complexity can quickly escalate because of the fiduciary nature of the relationship that exists between married couples or domestic partners.
The California community property presumption is critical for a number of reasons: for instance, community property may not be sold or given away without the knowledge or the blessing of the other spouse. As soon as the divorce proceedings commence, restrictions are automatically put in place to severely limit any type of property transactions, such as sale, gift, or borrowing against marital property in general.
Division of Property: The Basics
The court’s decision on what counts as marital community property determines the division of property during divorce, legal separation, or nullity proceedings. As a general rule, the judge will split up community property between the spouses equally.
However, the domestic partners or spouses might be able to avoid such property allocation if they either
- present a valid written agreement, like a prenuptial agreement; or
- submit (to) a divergent division in open court.
Keeping Separate Property
In general, a married person can control their separate property independently of their spouse. Some exceptions exist: for example, if one spouse files for an annulment, a divorce, or a legal separation, then temporary restrictions are placed on the sale of any separately owned real estate.
Separate property includes:
- All property the person had in their possession before the marriage, including any profit from such property;
- Any property the individual may have inherited, or received individually as a gift after getting married – again, this includes any revenue from such property;
- Any earnings and wealth that was acquired after the legal separation of the spouses (or domestic partners);
- Income that was earned while living apart and separately. This might include income of minor children who live with the spouse.
Transmutation: Turning Separate Property Into Community Property
California Family Code § 850 allows spouses to transform the property from separate property to community property, or from community property to separate property if the two of you consent – for example, by recording a title change: this is called transmutation.
Moreover, the separate property of one spouse can be transmuted into separate property of the other: if, for example, a wife opts to give her husband a sailboat that she purchased as a single woman, the separate property of the wife will then become the separate property of the husband. In other circumstances, when property was acquired by one of the spouses before the marriage, but the couple chooses to change title after the marriage to include both spouses as joint owners, the courts will then assume such property is community property.
For transmutation to be effective, it needs to be in writing. Additionally, if it affects the rights of third parties, such as creditors, they must be appropriately notified of any ownership change. All that said, small items, like a gift of small, inexpensive jewelry between spouses, generally are not required to be validated in a three-page agreement, so some exceptions do exist.