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Community Property vs Separate Property

*****Disclaimer: This is not legal advice and is for educational purposes only. This does not create an attorney-client privilege.

Rodriguez Law Group, Inc. March 10, 2022


Nine states in the US are considered community property states, including California. Community property is another term meaning marital property i.e. property that is shared between spouses. Property a couple owns can be either “community” or “separate”.




Because California is a community property state, this means that a marriage or the registration of a domestic partnership makes the 2 spouse 1 legal “community.” So property that this community acquires during marriage/partnership is “community property.” Likewise, if they acquire any debt during the marriage/partnership, it also belongs to them both as “community debt.”

Community property means that spouses who acquire property during marriage own that property in equal shares, 50/50. That means that one spouse on death can leave their share as they want and on divorce, it typically is divided 50/50 as well. California community property laws also don't require an "in kind" division of community property, which would mean you would have to divide each physical object. Community property division simply requires that the net value of the assets received by each spouse is equal—a 50/50 split of the value of the estate. Despite differences in employment or income, property acquired during their marriage is equally shared. What's mine is yours after all right?


Separate property, on the other hand, can refer to property that was acquired before the marriage and brought into it or property acquired during the marriage by gift or bequest. This can include items like personally acquired things and inheritances. Rents, profits, or other money you earn from your separate property is also separate property. And property you buy with separate property is also separate property.

Separate property is generally not split upon a dissolution of the marriage. However, couples are welcome to work out their own arrangement, called a settlement, between themselves on how to divide up assets.


The property and debts part of a divorce or legal separation is often so complicated, and the financial ramifications of making a mistake can be very high, so we would recommend that you should talk to a lawyer before you file your papers, especially if you have anything of value (or if you have significant debt). It is always best to make an informed decision in these matters; legal counsel can help you.


Sources:

https://www.courts.ca.gov/1039.htm?rdeLocaleAttr=en

https://www.diffen.com/difference/Community_Property_vs_Separate_Property

https://www.actec.org/estate-planning/what-is-community-property-states/

https://www.divorcenet.com/states/california/cafaq03#:~:text=All%20property%20that%20a%20couple,a%20particular%20division%20of%20property.

https://keystone-law.com/community-and-separate-property-characterization-of-a-business/ (image)