Protect your assets and make sure you get what you are entitled to following a divorce. Let’s get to the bottom of the separate property vs. community property question.
Community property vs. separate property – what’s the difference, and why does this matter when it comes to family law?
Here at the Law Office of Heath L. Baker, we recognize how important it is for you to protect your property and assets and to get what’s due to you following a divorce. To help you, we’ve prepared a handy guide to community and separate property. Want to know more about how this works in your specific situation? Reach out and book your free consultation.
Property and Family Law
The terms “community” and “separate” property appear often in both family law and estate planning. Both of these terms are important as we work to resolve property ownership issues. Lots of people get hung up over “who” picked the property out, picked it up, brought it home, uses it most, or paid for it at the store. These factors are what we might use to determine who owns which piece of property if California was not a community property state; but it isBut this is not the case in legal terms. In the separate property vs. community property debate, there are very clear guidelines that determine who owns what. Let’s take a look.
Understanding Community Property
In California and other community property states, community property is everything you acquire from the moment you get married until the time the marriage is over. In this case, the marriage is referred to as the community, and this community could terminate because of divorce or death.
Understanding Separate Property
Separate property is everything you or your spouse acquires before marriage or after the date of separation from marriage. Gifts or inheritance received during the marriage are also considered separate property. Each partner will have their own separate property, and the values are likely to be different. Most marital debt is community debt, but some remains separate property debt (i.e., like student loans for college).
What Happens to Community Property?
Both you and your spouse have a one-half, equal interest in all community property. This is the same regardless of who acquired the asset. California is a community property state, and half of everything you acquire during the marriage, including your income, belongs to your spouse.
Your Estate Plan will only dispose of your ownership interest. If you are single, you likely own the entire asset. If you are married, we recommend each party should have their own will and a family trust. Each party may choose their own beneficiary.
If your spouse’s will or trust tries to dispose of more than their one-half of the community property, you should petition the Probate Court to prevent the transfer of any more than one-half of the decedent spouse’s interest.
If you have received a “gift” or “inheritance” of a significant amount and are able to obtain documentation as to the source, I would suggest you retain a copy of those records for proof in the future if any “tracing” is necessary to prove the asset is your separate property. It is always best, and usually required, to keep that asset separate from community assets. Do not commingle money, and do not use community funds to pay for separate property asset upkeep.
Your estate could likely include (if not now, later in life): vehicles, real property, bank accounts, investments, retirement accounts, insurance policies, and personal property.
What Happens to Separate Property?
In most cases, each party will keep their own separate property after a divorce. Generally, your spouse will have no claim over your separate property, and you have no claim over theirs.
It may require legal work and analysis to identify which property assets are designated in this way.
Community Property vs. Separate Property in Different States
COMMUNITY PROPERTY is the form of property ownership recognized in California, along with Arizona, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin.
However, COMMON LAW is the law in most states. If either spouse was ever a resident of a Common Law State, records should be kept meticulously of each spouses’ separate estate prior to marriage, the state of the current marriage, the source of funds to purchase property during the marriage, legal residence at the time it was acquired, and the value if there is any desire to maintain separate property rights.
Quasi-Community Property from Out of State
QUASI-COMMUNITY PROPERTY is the property spouses acquired when they were not domiciled in a community property state, and California will characterize your out-of-state-common-law property as Quasi-Community. Basically, they are the assets acquired by any spouse while they were living in another state that otherwise would have been considered community property if acquired during the marriage in California.
Your estate is “all that a person or entity owns, including both real and personal property,” according to the legal definition. So imagine packing all your assets right now, as if you were sending them to move to the other side of the world and you had to take all your finances (banks, investments, retirements, IRAs, etc.) AND all your debt obligations as well. Assets within your reach, the next room, outside, at home, work, school, or a friend’s house; the extension of where assets lie is endless, so do not limit yourself.
Talk to a Family Estate Planning Attorney
The Law Office of Heath L. Baker is devoted to protecting what is important to your family. As a Family Attorney, Heath provides his clients with legal advice in the areas of estate planning, divorce, custody, and support. Considering probate and family law are resolved in different buildings, the combination of the different applications allows us to see hundreds of outcomes in both realms.
For over a decade, I’ve learned, studied, and built plans for families to protect their wealth, retirement, property, and children. Here, you’ll find a lawyer with the experience and knowledge to help navigate you and your family through difficult times.
Your Estate Plan creation will help you determine separate and community property assets, keeping your loved ones from fighting about it and causing waste to your assets.
Book Your Consultation Today
If there is going to be a disagreement over the characterization of property, wouldn’t you like to be involved and have a say in the matter? Reach out to our team, and let’s discuss your case. We can help you make sure you receive the right outcome. Set up your consultation today.