Getting a divorce is not an easy process, especially when it comes to splitting assets. California’s community property laws state that in most cases, all assets and debts acquired during marriage are shared equally between the spouses. Generally, assets and debts that the spouses acquired prior to their marriage are considered separate property.
However, in certain situations, separate property can become community property. When that happens, property division negotiations can go off the rails. In this blog post, we'll explore how separate property can become community property in California.
How Does Separate Property Become Community Property in California?
Understanding how separate property can become community property is essential for spouses involved in a divorce proceeding in California. Here are the most common ways that separate property becomes community property in California:
- Commingling of funds: Commingling occurs when separate property funds, such as an inheritance or gift, are mixed with community property funds. This can happen when the funds are deposited into a joint bank account, used to purchase community property, or used to pay community expenses. Once commingled, these funds lose their status as separate property and become community property.
- Transmutation: Under California law, transmutation occurs when a spouse changes the characterization of a property from separate to community or vice versa. This can happen when a spouse uses a separate property asset to purchase a community property asset or transfers a community property asset to a separate property asset. Transmutations can be written or oral and must be clear and convincing to be considered valid. It's important to note that transmutations that aren't in writing may be difficult to prove in court.
- Improvements to separate property: If separate property is improved during the marriage with a partner's time, effort, or community property funds, it may be considered community property thereafter. An example of this is when one spouse owns a home before marriage and during the marriage, the other spouse contributes their time to make significant home improvements or repairs. If they divorce, they can claim that a portion of the increased value of the home is community property.
- Interspousal gifts: Another way separate property can become community property is through an interspousal gift. This occurs when one spouse gifts their separate property to the other spouse. Once gifted, the property becomes community property, thus subject to division during divorce proceedings.
- Community presumption: Lastly, community presumption applies to assets or debts that neither spouse can prove are separate property. In these cases, the law presumes that the asset or debt is community property unless it's proven that it is separate property. This can happen when one spouse commingles funds or takes an informal transmutation without realizing what they're doing.
Need Help with a Property Division Dispute in California? Contact Arnold Law Group, APC Now!
Arnold Law Group, APC has been helping clients through the divorce process for decades. Our diligent property division lawyers are dedicated to taking the necessary legal steps to safeguard your rightful assets during divorce proceedings.