General Property Issues Related to Divorce and Family Law in California.

community property

California is a community property state. All property that is purchased or acquired during the marriage, or transmuted (becomes) into community property during the marriage is community property.

The husband and wife in a marriage each own an undivided share of one-half of all the community assets of the marriage.

The community property is not divided, unless divorce proceedings are initiated or by the death of the husband or wife.

Community property can be real property or personal property. Community property can also be businesses, pension plans, or any other type of tangible thing acquired during the marriage.

Community property is normally one of the main issues involved in divorce actions.

Quasi-Community Property

Quasi-community property is property acquired outside the state of California during the marriage. Although married couples may have purchased property in a state that is not a community property state such as California, the property will essentially be treated as if it were community property for purposes of division in a divorce action in the state of California.

Business

Businesses started during a marriage are community property.
In some cases, a person may have owned an existing business before marriage and continue the business after marriage. In a divorce action, the courts will assign a percentage of the value to the business “after marriage” to determine how much of the business is community property.

If you owned an existing business prior to marriage, it is extremely important that you consult with an attorney in a divorce action as soon as possible.

pensions

Any portion of Pensions, IRAs, 401(k), retirement plans, etc., that were contributed during the marriage are community property.

Funds from pension plans generally cannot be obtained until the pension plan is purchased and expires. Therefore, special court orders are needed for each party to get their share of any retirement plan after it expires and vests. These orders are typically called qualified domestic relations orders, or QDROs for short.

Obviously, the parties to a divorce have a vested interest in ensuring that they get their fair share of any pension or retirement plan after the divorce.

Community income, bank accounts, stocks and investments

All income earned during a marriage is considered community income. This is true even if one of the parties to a marriage makes money in a business that they owned before the marriage. Community income is the same as community property, in that each party owns a half of an undivided interest in community income.

Each party to the marriage has the right to spend and use the income of the community, even if they are not the one who earned the money. However, after legal separation or divorce proceedings are initiated, the parties may only use the community property for the necessities of life and to pay their attorney.

Likewise, bank accounts, stocks and/or investments acquired during the marriage are also marital property. This is true even if the bank account, shares and/or investment are in only one party’s name.

Some parties try to hide money in separate bank accounts during the marriage and/or hide assets that were acquired during the marriage from the other party.

If you are a party to a divorce action, you have what is called a fiduciary duty of disclosure. What this means is that you must disclose all assets, bank accounts, and other investments that were acquired during the marriage to the other party. If you do not fully disclose your assets and/or income to the court and to the other party, the court may punish you severely.

You may have read about the case where a wife won the lottery and then filed for divorce against her husband. She did not inform the court or her husband about the fact that she won the lottery. As punishment for not disclosing the fact that she won the lottery, the court gave her husband the full amount of the lottery winnings.

Separate Property

Separate property is any property that was acquired before the marriage; during marriage by motto, will or inheritance; and after legal separation. Proceeds from a personal injury judgment or settlement are also separate property, even if received during the marriage.

Once the court determines that the property is separate property, the person who owns said separate property will leave the marriage with their separate property.

Separate property can be transmuted (converted) to community property by intention or inadvertence. For example, one party may have a separate bank account before the marriage that would be considered separate property. If the party then takes the income earned during the marriage and deposits that money into their separate bank account, they may have inadvertently turned that bank account into community property.

Obviously, the parties in a divorce proceeding will likely want to keep their own assets separate after the divorce is finalized. It is very important that you contact an attorney regarding the issue of property separation to ensure that you can keep the property separate from her after the divorce.

If you are considering filing for divorce or are currently involved in divorce proceedings, you can call our law firm for a free consultation at 818-739-1544 ext. 10, or visit our family law website at http://www.divorcio-legal.net .

By Norman Gregory Fernandez, Lic., © 2006