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COMMUNITY PROPERTY AND SEPARATE PROPERTY |
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DEFINITION
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EXAMPLE |
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COMMUNITY PROPERTY:
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Earned during marriage or registered domestic partnership |
Wages during marriage; house purchased with wages earned after registering as domestic partners; mortgage on house purchased with community wages
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QUASI-COMMUNITY PROPERTY: |
Earned during marriage or registered domestic partnership in a non-community property state
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Same as above; but in a state that does not have community property laws
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SEPARATE PROPERTY OF ONE MEMBER:
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Earned before marriage or registered domestic partnership or a gift during marriage or registered domestic partnership |
Wages before marriage; house purchased before registering as domestic partners; inheritance during community; birthday gift from one community member to another; savings account from before marriage
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SEPARATE PROPERTY OF TWO MEMBERS:
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Earned before marriage or registered domestic partnership or a gift during marriage or registered domestic partnership
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Both community members use separate property to purchase a house together; both members inherit a vehicle
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What is the difference between separate property and community property?
While many of our American laws are based on English common law, the concept of community property is based on Roman civil law, which may be why it seems unusual to us when compared to other areas of law. It is based on the concept of a community which is created when two parties legally marry or register as domestic partners, and it treats each member of the community as equal regardless of the economic benefit that member contributes to the community. For instance, if one member contributes to the community by staying home to raise children, that member has an equal right to community assets as another member who contributes their wage to the community.
Here the term “community member” refers to a spouse or to a registered domestic partner and “the community” refers to either a marriage or a registered domestic partnership.
In California, all property falls into one of three characterizations:
1) separate property,
2) community property or
3) quasi-community property.
Separate property is any property that one owns when entering the community and any gift acquired during the length of the community. (Inheritance is considered a gift.)
Community property is any property acquired through the efforts of either community member during the length of the community (other than by gift.)
Quai-community property is property that would have been considered community property except for the fact that it is located in a state that does not follow community property laws. This blog post treats quasi-community property the same as community property.
Community members may characterize their property any way they wish. So, even if an asset would normally be characterized as community property, both members of the community can agree that the asset is the separate property of one member. Alternatively, both community members can agree that an asset that would normally be considered separate property is the community property asset of both members. However, any such agreement must be in writing and should be signed both community members.
If you have signed an agreement about whether your assets are community or separate property, that characterization must be the same for death, and divorce or termination. This means that when you are preparing your estate documents, any asset listed as separate property on your pre-marital or pre-registration agreement must be listed as separate property on your trust schedules, and any asset listed a community property on your pre-marital or pre-registration agreement must be listed as community property on your trust schedules.
If community members do not have a written agreement regarding their community and separate property, the default laws will apply.
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