How Do You Deal With Assets and Debts During Marriage?
This can be a tricky area, as there are a lot of potential exceptions… most of which only apply to a few people. However, in general, it is fairly straightforward to figure out what is legally yours, what is your STBX’s and what you need to split between the two of you.
Basically, it’s all about timing. An asset or debt (referred to generally as “property”) is categorized as A) Separate, 2) Community, or 3) Quasi-community depending on when you acquired it.
California is a community property state: generally, anything acquired during marriage is going to be considered to be joint or community. Earnings from your job during marriage also are community property. As such, you are each entitled to half, so you need to be mindful of this when dividing things. Although it can seem more accurate to split everything in half, it may not always be practical to do so; so people try to offset balances from one asset or debt onto another, etc. so that the overall balance is equal. However, someone gives you or your spouse something (that is clearly intended for one or the other of you alone), or if you or your spouse receive an inheritance, that property is not considered community.
Separate property consists of assets, debts and/or interests that you: A) owned before marriage, B) acquired by gift or inheritance during marriage or, C) acquired after the date you separated. Separate property also includes: profits (e.g., interest, rents, etc.) made from any of that property. earnings made before marriage and/or after separating. Some people disagree about whether something is separate property. However, in general, if you agree to what is separate amongst the two of you, then typically each person just keeps their own and there is no accounting needed.
Quasi-community property includes all assets, debts and other property (money, stock, etc.) that you and/or your spouse acquired during marriage while living in a state that DOES NOT recognize community property (like, for example, Oregon) but then you both MOVED to California while still owning that property. It matters where you and/or your spouse were living when the property was acquired–it does not matter where the property itself is located. The following states are community-property states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin.
Things can get murky if you "commingled" separate property with community property: for example, if you received a sum of money from your relatives inheritence, but deposited that money into an account that you actively use during your marriage for community things like mortgage payments (or even groceries), or into which you deposit community funds (such as your earnings). If you have sizeable funds that fall into this category and you and your spouse can't agree on how to divide it, we can connect you with an attorney. At its hariest, this can sometimes mean hiring an accounting expert to "trace" the use of these funds.
Unless it was gifted to or inherited by one party, property acquired during marriage by either partner is community property or quasi-community property, even if the title or account is only in one of your names.