Community Property vs. Separate Property in Divorce

How are property and valuable assets split up in a divorce? That depends on state law.

Community Property

One of the primary issues in a divorce is how to split up the community property assets. Community property is everything that a husband and wife OWN TOGETHER. California, for example, is a community property state. This means that both the husband and wife are deemed to equally own all money earned by either one of them from the beginning of the marriage until the date of separation. In addition, all property acquired during the marriage with "community" money is deemed to be owned equally by both the wife and husband, regardless of who purchased it.

Like community property, all debts contracted from the beginning of the marriage until the date of separation are community debts, and thus, each spouse is each equally liable for these debts. In most cases, this includes any unpaid balances on credit cards, home mortgages and automobile loan balances. It is important to close out all credit cards, bank accounts, and all other "joint" accounts as soon as possible after a divorce has been decided. It is not enough to remove names from the account, or both with still remain liable.

Separate Property

Separate property, on the other hand, is everything that a husband and wife OWN SEPARATELY. Separate property does not need to be divided between the spouses. In most cases, separate property is:

  1. Anything owned prior to marriage
  2. Anything inherited or received as a gift during the marriage, and
  3. Anything either spouse earned after the date of separation.

Separate property can also include anything that one spouse gives up to the other spouse in writing. In certain cases, separate property can become mixed with community property. In this case, it is important be able to trace the payments and show where certain money came from. For example, a husband may have put in the down payment for a house, got married, and then paid off the mortgage with community property. In this case, the husband would be reimbursed for the downpayment if he could prove that his separate funds were used to pay it. No interest would be payable on the downpayment amount.

Similar to separate property, separate debts belong to one spouse. All debts incurred before marriage are separate debts. Thus, for example, educational loans or job training loans incurred before marriage are separate debts.

Date of Separation

The date of "separation" is the date when both husband and wife finally decide that the marriage is over, with no intention to stay together as husband and wife. This is a very important date because it marks the end of when property is characterized as community property. Unfortunately, the date of separation is subjective and often open to debate. Courts will look for physical evidence as to a final breakdown of family relations, such as moving out of the house.

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