California is one of only nine states in America that has a community property system or regime. The other states are Arizona, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. In Alaska and Tennessee, community property is elective for married couples.
This does not, however, mean that all properties owned by either or both spouses or domestic partners are automatically considered community property in California. California also recognizes two other marital property systems: quasi-community and separate property.
So while there is a presumption of community property in California, couples can still come to an agreement about what part of their assets become community property and what remains their separate properties. This is usually done through a premarital or postnuptial agreement.
A clear understanding of what property classification applies to the assets that a person owns is important in property division in divorce, liability division in divorce, and if either party should pass away, for purposes of inheritance and succession rights.
This article looks at the three different classifications of marital property systems recognized under California law.
A married couple in California is considered one legal entity, or a “community,” and no longer two separate units. They, therefore, share all assets and debts acquired during the marriage or domestic partnership, although some exceptions might be made for inheritances and gifts.
Community property refers to any real or personal property, asset or income acquired during the marriage, whether located within or outside of California, while they were domiciled in California. Community property is owned equally by both spouses, regardless of the length of marriage.
Quasi-community property is any property acquired by one or both spouses or domestic partners while living in another state that, if they had been living in California, would have been considered community property.
So if either one or both spouses were living outside of California during the course of their marriage, and they acquired assets or property during that time, whether located within or outside of California, that property would be treated as quasi-communal property.
In practical terms, although such property would not fall squarely under the category of community property as recognized by California law since the couple was not living in California at the time, the property will still be treated as community property by the California courts.
Separate property refers to anything that either of the spouses or domestic partners earned or acquired prior to, during, or after the dissolution of the marriage or domestic partnership.
Any inheritances or gifts acquired by either spouse or partner, whether prior to or during the marriage or domestic partner, are also considered separate property.
This means that the individual is the exclusive owner of the separate property, and this includes any income or profits that may subsequently be derived from such separate property.
Commingled Property Systems
Commingling happens when a property is a mixture of either community or separate property systems.
A clear example of commingling of property happens when you sell a house you owned prior to your marriage and used the proceeds to purchase another house in which you and your spouse now live.
While it seems clear that the money used to purchase the new house is separate property and therefore the house should also be considered separate property, the lines become blurred if both spouses or domestic partners put in money to pay off the house loan. Even though the title to the property is only in one person’s name, the equity in the house might be considered to have been commingled.
Property division between married couples after they split up can be both stressful and complicated, especially given the emotional turmoil caused by the ending of a relationship. If you and your partner or spouse are going through a separation or divorce, it might be worthwhile to get the assistance of a Roseville divorce lawyer to assist you in classifying community and separate property, and how commingled properties can best be handled.