California Property Classification Affects Division of Assets

Pasadena law firm Kearney Baker gives us a quick run down

Tuesday, November 4, 2014 | 11:28 pm

Unlike many areas of the law, divorce statutes can vary greatly from state to state. For example, courts in New York and California view property division much differently. California applies “community property” rules where a judge divides the couple’s assets in half while other states use an equitable division standard.

There are some general rules that dictate where you file for divorce. To file for divorce in California, one of the spouses must have been a resident of the California for six months. The divorce filing occurs in the county of residence (the petitioner must have resided in the county for three months).

For some couples that travel between coasts or maintain homes in two states, residency may not be a straightforward question. Residency often includes reviewing where you pay taxes, register a vehicle, bank or register to vote.

In a California divorce, real estate or other property is first characterized community, quasi-community or separate. Property division then depends on the characterization.

Community versus separate property

Community property is a broad category. It encompasses all real and personal property obtained by a spouse or partner during the marriage or domestic partnership while residing in the state. Each spouse or partner owns one-half of the community property. It goes the same with debts.

Quasi-community property is what you acquired during your marriage when you lived in a different state. If you married in New York and lived in Connecticut for several years before you moved to California, the car you bought on the East coast would be quasi-community property. This type of property is treated as community property.

Separate property is a narrow category and includes:

  • Anything you owned before the marriage or registration of domestic partnership;
  • A gift to one spouse or partner during the marriage;
  • An inheritance to one spouse or partner; and
  • Rent or profits from a separate property.

After the date of separation, property again becomes separate. Separate property belongs solely to one spouse or partner unless commingled. By placing a gift or inheritance in a joint account, it will generally lose its separate characterization. When the sale and profit from a separate property finances the purchase of a larger home after a wedding, some of the equity may be considered separate.

High-asset divorces often require careful review of property classification. These cases may also involve a prenuptial agreement that could affect property division, if valid.

Dividing property during a divorce is often one of the most difficult parts of the process after deciding child custody issues. Hiding assets or providing a lower valuation on property are ways a former spouse may seek to skew the settlement. When you have considerable assets, contact an experienced family law attorney to ensure you receive a fair settlement.

Kearney Baker is located at 2 North Lake Avenue, Suite 1000, Pasadena.  For more information, please call (866) 859-1507 or visit http://www.kearney-law.com/

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