In California, property is anything you can buy or sell that has value. This includes the following:

• Investment Real Estate: Whether held outright or in entities such as LLC’s, multi-family, residential, or commercial.
• Business Interests: This includes interests actively managed by the spouse involved, those owned in whole or part, and in a variety of corporate or partnership forms.
• Your home: Whether a primary residence, or a vacation home.
• Tangible Personal Property of Value: Such as art collections, antiques, collectible vehicles, vessels, jewelry, memorabilia, furniture and furnishings of value.
• Retirement Plans
• Equity Compensation
• Bank and Brokerage Accounts
• Stocks & Bonds: And any other investment vehicles
• Intellectual Property: Including the underlying rights, and residual and royalty income streams

California is a community property state, which means that anything purchased or acquired during the marriage is presumptively considered to be owned equally by both spouses. All community property must be divided equally in a divorce, although assets and debts can be assigned to one spouse, with offsetting value to the other.

Separate property is property acquired before the marriage, property acquired after the official date of separation and property acquired during the marriage that was given as a gift. A premarital agreement may establish that there be no community property, only separate property.

Examples of community property include:

• Income from employment earned during the marriage
• Any real estate purchased during the marriage (although reimbursement claims for separate property used for its acquisition can be asserted)
• Retirement contribution made by the employee during marriage, or by an employer during marriage
• Checking & savings accounts (regardless of if they are jointly titled, if deposits were made during the marriage)
• Intellectual property for creative projects and designs conceived during marriage
• Vehicles, furniture and furnishings, artwork, equipment, tools and other tangible property purchased during the marriage (regardless of which spouse is listed on the title to vehicles or other titled tangible property)

Examples of separate property include:

• A house acquired before the marriage
• Money saved in a retirement account before the marriage
• Residuals, royalties and other income streams from property owned prior to marriage
• Inheritance received during the marriage
• Gifts from one spouse to the other (cars, jewelry, art) under circumstances
• Gifts from family members or other third parties

Examples of how community and separate property can be mixed:

Example 1: You invested heavily in the stock market before you were married, and continued to do so after the marriage, spending substantial amounts of time in buying and selling. If so, you may be subject to a claim that assets held in your investment accounts are “mixed” in character.

Example 2: Your spouse purchased a home before the marriage, but the mortgage was paid or the home was improved during marriage. To add another level of complexity, the premarital home was sold part way through the marriage and the money was put towards a new house. In this situation, and depending on how title to the home is held, both parties have an ownership claim to the home.

Example 3: You owned a business before your marriage, but the value of the business grew during the marriage. Not only was your compensation package increased during this time, but profit paid to you (or held in the business) also increased. In this situation, (one of the most complex among property division scenarios) there may, or may not, be an ownership interest in the non-owning spouse. This all depends on business borrowing, title changes, the type of business (capital vs. labor intensive), the existence of “buy-sell” agreements, and other factors.

Debt, just like property, must be divided if deemed community property. All debt acquired during the marriage is typically considered to be community debt, although certain unique forms, such as student loans, are not.

Both spouses will be equally responsible for the debt incurred during the marriage, except in the circumstances where the value of the debt exceeds the value of assets. It does not matter if only one spouse is listed on the credit card, promissory note, or other debt document.

It is possible to bifurcate your dissolution action and enter a Judgment of Dissolution as to marital status before all of the issues in your case are resolved. This permits the parties to remarry before property is divided, support is established or child custody issues are fully resolved.

Bifurcation requires that either the parties agree or the party seeking the bifurcation go to the court on a motion seeking the end of the status of marriage. These motions are usually granted absent extraordinary circumstances but often include temporary conditions to protect the spouse not seeking the bifurcation. For example, an order providing that the spouse be maintained as a death beneficiary of a pension, or providing for continued health insurance coverage.

When married, a couple is in a fiduciary “confidential” relationship. This means that each person in the relationship cannot act to financially better him/herself at the expense of the other spouse, unless such decisions are made with the knowledge and understanding of the other spouse.

Sometimes debt is incurred, property ownership changes, or assets are improperly gifted without the knowledge of one of the spouses. When a breach of duty happens, claims for reimbursement can be made. At Kleeman Kremen, we have successfully litigated breach of duty claims and received monetary compensation for our clients.

Sometimes couples make decisions to co-own property that was previously owned by only one spouse. In this event (a common occurrence being during a refinance) or if the non-owning spouse makes an investment in the property or business, a couple may
want to change ownership rights and/or clarify which spouse owns what portion of an asset.

Spouses can contract during marriage concerning their ownership of property, so long as these “transmutation” agreements follow certain mandatory legal requirements. At Kleeman Kremen, we prepare transmutation agreements, to assure that these changes are knowingly and intelligently made, and done according to legal mandates.