Separate Property Or Community Property?

Posted January 27, 2023

Characterization and Family Law Presumptions

In most divorce cases, arguments regarding dividing property often begin with spouses making claims such as, “this is my bank account, that is theirs,” “this is my retirement, that is theirs,” and so on…

In California, property division in divorce cases is largely determined by whether the property is considered “separate” or “community” property. The court must “characterize” the property to determine how it will be divided, and generally, the community estate must be divided equally. However, there are specific presumptions in California law that the court must follow if the parties are not in agreement as to whether a specific item of property is separate or community. These presumptions can be complex and fact-intensive and may require expert witnesses to perform forensic accountings and calculate real estate and retirement interests. It’s important to note that property can have a community and separate component, the community may gain interest in a spouse’s separate property, or the community may owe one spouse for contribution of separate property funds.

What is “Characterization”

Characterization refers to the process of when a court determines whether property is “separate” or “community.” The court must characterize property because California law, generally, requires the court to divide the community estate equally. Just because a married person solely uses property (tangible items, financial accounts, etc.), or their name solely appears on an account, those things do not mean the property is characterized as separate.

Much of the time, spouses are not in agreement as to whether a specific item of property is separate or community. Without a premarital agreement (also known as a “prenuptial agreement”) in place strictly defining the community and separate property of married couples, and if neither party is able to provide proof supporting their claims, the Court must follow specific presumptions set forth under California law.

Common claims we see in our divorce cases:

What if a married person claims that an item of property is separate property, and everyone agrees that item was acquired during the marriage while the spouse’s permanent residence was in California?

Without more information, the courts are going to presume the item is community property. Therefore, the person claiming this item is separate property must prove their position with evidence, otherwise the person claiming it is community property will prevail.

The addition of one piece of information may change the entire analysis.

For example, what if that one spouse received that item of property as inheritance during the marriage?

The courts are now going to presume the item is separate property. Therefore, the person claiming this item is community property must prove their position with evidence, otherwise the person claiming it is separate property will prevail.

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The addition of a second piece of information complicates the entire analysis further.

What if the item of property inherited by the spouse during marriage is held in joint tenancy?

The presumption will swing back to community property, and the spouse claiming separate property will have the burden of proof again.

Going even further;

Property can have a community and separate components,
The community may gain interest in a spouse’s separate property,
or the community may owe one spouse for contribution of separate property funds.

These scenarios can be very fact-intensive and the analyses are quite complex with layers of facts, evidence, and witnesses, and, often, missing facts, evidence, and witnesses who are no longer available. Our clients may need expert witnesses to perform forensic accountings, calculate real estate interest, interest in retirement, and other necessary work to prove their positions.

To illustrate this point:

Obtaining settlement leverage in a case often requires being on the favorable side of any presumption, and acquiring the information to support a client’s position is the most important part of a case. The disclosure and discovery process will be important tools if a client does not have all the information they need.

Again, sometimes all of the information may not be available, or the cost of supporting a position may outweigh the benefits, and that will assist a client in assessing their risks in Court as well.

Property division in divorce cases in California can be complex and fact-intensive, as the court must determine whether the property is considered “separate” or “community” property. There are specific presumptions in California law that the court must follow if the parties are not in agreement as to whether a specific item of property is separate or community. These scenarios can be very fact-intensive and the analyses are quite complex with layers of facts, evidence, and witnesses, and, often, missing facts, evidence, and witnesses who are no longer available. It is important to know your rights, responsibilities, and options regarding the characterization of property and property presumptions in the divorce process. The Family Law Team at Naimish & Lewis, APC is here to help guide you through this process. We understand that navigating the legal system can be overwhelming, and that’s why we’re here to provide expert advice and representation. Don’t hesitate to contact us to schedule an initial consultation and let us help you protect your rights and interests.

Common Law, Divorce, Estate Planning, Prenuptial Agreements & Post-Nuptial Agreements

Robert J. Allison, Esq.

Mr. Allison is a resolution-oriented associate attorney in our Family Law Practice. Even-keeled and fact focused, he is able to assist our clients understand their rights and obligations through the stress and smoke and mirrors presented in their divorce, custody, and domestic violence matters. During the initial consultation, and again once facts and evidence have been collected, Mr. Allison provides various strategies to help clients present their cases, considering cost, time, and client needs. He prides himself in not making false promises to his clients and is unafraid to speak the raw and sometimes harsh reality of how a Court will decide a matter given a specific set of facts and circumstances, both to his clients and to opposing parties. Many potential clients share that they are unhappy with their previous attorneys because they felt a lack of communication, an uncertainty about the family law process and timeline, and they do not understand the strategy in their case or the invoices they receive. While the legal process is complex, Mr. Allison attempts to reduce the confusion through a reasonable case management process involving client participation, because a family law case is often the most difficult period of time in a client’s life.