California Separate Property Laws
What is separate property?
What is Separate Property?
Family Code 770 states:
"(a) Separate property of a married person includes all of the following:
(1) All property owned by the person before marriage.
(2) All property acquired by the person after marriage by gift, bequest, devise, or descent.
(3) The rents, issues, and profits of the property described in this section.
(b) A married person may, without the consent of the person’s spouse, convey the person’s separate property.”
Anything that can be community property can also be separate property
For example, if a house is acquired prior to the marriage, the odds are pretty good that the spouse who acquired it has a separate property interest in it. Notice I use the words “separate property interest” and I did not write the house is 100% that spouse's separate property. That is because acquisition before the marriage is not the end of the discussion. It is the beginning.
A home can be acquired prior to the marriage but if the community through community earnings or community savings pay down the principal on the mortgage payment, there are improvements made to the property with community property earnings or savings or under certain circumstances there is a title transfer were the other spouse is placed on title, all of these situations could potentially create a community property interest.
There really is no way to have an inflexible rule that applies to every situation. Sometimes, the above situations can create a significant community property interest and sometimes they can create a very small one. That is why the individual facts of the case are the most important consideration.
California separate property laws apply to property acquired during the marriage by gift, bequest, devise or descent
For example, if a wife's parents give her a gift of $100,000 to place as a down payment on property acquired during the marriage, the wife may have a separate property interest up to that $100,000 amount if there is a later divorce. Now imagine a scenario where the wife's parents by the house outright for the wife and the house is paid off without the community making any contributions toward it. In that situation, the house may be 100% the wife's separate property.
But what happens if the wife places the husband of the joint title owner such as placing title in a joint tenancy or otherwise as community property? The question then becomes whether the wife “transmuted” her separate property interest into a community interest? Once again, these are not black and white issues.
Rents, issues and profits of separate property are generally separate property
For example, if a husband owns rental property prior to the marriage and the rent received from that rental property pays the mortgage on the property and there is a little bit of net profit left over, that net profit may be his separate property. Is that always the case? Again, it depends on the facts of the case.
Are earnings separate property?
If after separation the husband earned income, that income is arguably the husband's separate property but this issue is also not that simple. Was the income earned during the marriage and just paid after separation such as, for example, with severance pay or a bonus package? Or is it just wages and salaries that are paid post separation for work performed post-separation? In the second scenario, there is a better argument that income is separate property.
Learn about community and separate property
There are literally as many complex rules and exceptions to rules for separate property interest as there are for community property interest and there is no substitute for experienced family law representation. This experiencce teaches how a family court may divide the pie that is the community and separate property estate of one or both spouses.
We provide you with links below for additional reading we hope you will enjoy. The next series in our guides concern preliminary and final declarations of disclosure.