Divorce Topics by Shawn Skillin

Community vs Separate Property next article >>

When you get divorced, you have to identify, characterize and divide your assets (things you own) and your obligations (debts you owe).

Identification is the easy part, you list everything. Then you characterize each item as community property or separate property. Some things might be a bit of both. You get your separate property items back, you divide your community property.

Community property is everything you accumulate from the date of marriage to the date of separation. Your wages, savings, household items, real property, vehicles, retirements, IRA’s, 401(k)’s etc. This includes debts such as mortgages, credit cards, car loans, lines of credit etc. These things are community assets or debts whether or not they are in only one party’s name. For example, if you have a savings account in your own name and the money you have put in it, was money you earned from your job during the marriage, that savings account is still community property. If you have a credit card with only your name on it, any balance accumulated during the marriage is a community debt, even though your spouses name is not on the card.

Separate property is anything you owned prior to the date of marriage, something you acquired after the date of separation with money you earned after the date of separation, or something you inherited at anytime. For example, you still have the car you bought in high school, it’s your separate property, your spouse has no interest in it, you get it back in the divorce. You inherited $50,000 from your long lost Aunt while you were still married, you put it in a savings account in your name it’s your separate property, you get it in the divorce.

Some things get co-mingled or mixed up together. When this happens you have to “trace” the money. For instance you took the $50,000 you inherited from your aunt and you put it in a savings account in both your name and your spouse’s name. There was also money in that account that you saved from earnings during the marriage. Some of this account is community property and some is still your separate property. It’s easy if you haven’t made any withdrawals from the account. It’s more difficult if you have made withdrawals and have not kept records identifying which money was spent and which was not. There are some legal rules which help sort this out, but good record keeping can be important. Your attorney or mediator can help you determine what is community and what is separate property. Even without good records, the spouses may both have a fairly good understanding or recall of what was separate and what was not.

Retirement savings, IRA’s and other retirement plans can often have separate property and community property assets mixed up together. If you worked at a company for 5 years before you got married and for five years after you got married and for the entire 10 years you contributed to a retirement savings plan, then the portion contributed prior to the marriage is your separate property, the portion contributed during the marriage is community property.

Another common example is a down payment made on the community residence with money from one spouse that was theirs prior to marriage or their separate property money. Say your spouse had $100,000 saved prior to marriage and used that money as a down payment on the house you bought together after marriage. Your spouse gets their $100,000 back without interest or appreciation.




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