The “date of separation” of married couples or registered domestic partners is legally significant because under California Family Code (CFC) 771, after the date of separation, the earnings and accumulations of a spouse or domestic partner are considered separate property and no longer community property. When filing a divorce in Roseville, this date can have significant financial consequences and will guide property division.
How is the Date of Separation Determined?
Under California Family Code section 70, the date of separation is “the date that a complete and final break in the marital relationship has occurred.”
Evidence to show when the date of separation occurred include:
- an expression of one spouse to the other of his or her intent to end the marriage; and
- conduct consistent with the intent to end the marriage
Obviously, such language allows for a wide latitude of interpretation, and case law has reflected the differences between what might be subjective versus what is objective evidence of an intent to end the marriage. All relevant evidence is to be considered in determining the precise date of separation. If the difference of a single day can spell the difference between substantial property that has accrued to either the community property or to each spouse’s separate property, the parties may present very opposing views – particularly if the intent to separate was not as clearly expressed as it could have been.
Courts usually find it advisable to try the issue of the date of separation prior to and separately from the other issues in a marital dispute. A clear finding of a date of separation can go a long way to clarifying the financial and property issues between the parties.
Case law has covered much of what the law has been silent on. For instance, the fact that spouses are living in separate residences is not determinative of the date of separation, unless there is also evidence that the spouses have no intention of resuming marital relations. But while not determinative, whether or not the parties are still living under one roof will still be considered as relevant evidence as to the intent of the parties.
The Community Property After the Date of Separation
After the court has established a “date of separation,” what happens to any increase in the value of the community property as a result of one spouse’s efforts? For example, after the couple has already separated, with no intention of resuming marital relations, what if one spouse put in his own time, effort and money to improving the family home, thereby raising its market value? How is the increased value of the family home to be apportioned fairly between the parties?
If the date of separation effectively ends the community property regime, how is the increased value of the community property to be apportioned?
Courts recommend the application of two common methods of apportioning earnings and profits: the Pereira and the Van Camp formulas, based on two precedent-setting cases.
- Based on the Pereira v Pereira (156 C 1; 1909) case, the Pereira method or formula establishes what is called a “fair return on investment.” Thus, a fair return is apportioned to the spouse’s separate property as separate income, and any excess is apportioned to the community property.
- The reverse is true for the Van Camp method or formula, based on the Van Camp v Van Camp (53 CA 17; 1921). Here, courts apportion the reasonable value of the spouse’s services as community property, and any balance is treated as the separate property of the spouse. “Reasonable value” is often treated as “reasonable compensation” for the spouse’s efforts and skills, based on what others in the same field and performing the same functions also earn.
Either one or both of these formulas may be applied, depending on what will promote “substantial justice,” in order to determine how community property and any proceeds therefrom should be divided after the established date of separation.