Community Property

Community Property

All property acquired by married people during the course of their marriage is presumptively community property. This includes the rents, issues, profits, interest, etc. of community property. Community property also includes the efforts of each spouse (significant in family owned businesses) as well as all wages earned by either spouse during marriage. An exception to this rule applies to wages maintained in a separate bank account and which are not co-mingled with other community property. Such property will remain the separate property of the spouse who earned it. Since wages are seldom maintained exclusively in a spouse’s separate, non-comingled bank account, generally speaking, all wages earned during marriage are community property.

In California, any dispute over whether property is separate or community, the separate property proponent has the burden of proof (i.e., that the item in question was acquired by gift devise, descent or bequest); or that the item was acquired prior to marriage.

Upon dissolution, the court (either after trial or pursuant to a stipulated agreement—a marital settlement agreement) will order the community property divided between the spouses. The division need not be exact, but should be a "fairly equal" division. Some items may be sold (i.e., the family home). Other items may be awarded in whole to either spouse depending upon his or her connection with the item. If one spouse is primarily responsible for a business the court will likely award the business to that spouse, and make up for the community property interest of the other spouse in the business by awarding him or her other items, or money. Alternatively, the spouse with the business may "buy out" the other spouse’s community property interest.

It is important to note, that for purposes of dividing property at divorce, the form of title to any item of real or personal property is immaterial. Therefore, although the marital home may be titled in the name of just one spouse, if payments on the mortgage or trust deed are made with community property funds, there will be a community property interest in the property in proportion to the community funds used to pay down the debt. Property titled as "joint tenants" (with rights of survivorship) likewise may be divided by the court as community property. Nevertheless, at death, the rules of joint tenancy will operate to pass the entire joint tenancy item to the survivor. For this reason, a person involved in divorce should consult his or her attorney regarding the changing of title of items held in joint tenancy with the other spouse. In the event of death prior to the entry of a judgment terminating the marriage, the joint tenancy item would pass to the surviving spouse rather than to the estate of the deceased spouse (the exception to this rule is if the property issues have not been resolved within four (4) years after judgment is entered teminating the marriage). In making any such changes, however, care must be taken not to violate the automatic temporary restraining orders which go into effect upon the filing of the summons. It is therefore highly recommended that counsel be consulted on this issue prior to making any changes.

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