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Communal Property Laws
Confusions and Adaptations, California - 2008

Background: Hispanic Legal Influence

Even in the 1700s, women in the Spanish Empire in North America had legal rights that would have astonished their British counterparts half a continent to the east. Hispanic tradition allowed women to maintain separate property, and married women could control and manage not only their own property but even that of their husbands. They could inherit and will property, and in case of separation or widowhood, were entitled to the property they brought into the marriage as well as one-half the common property.

The Anglo-American frontiersman found the idea of common ownership of the gains of marriage between husband and wife much more agreeable to his society than common-law principles. Protection of certain land and tools of husbandry and trade from creditors' claims was also appealing to him, as opposed to the creditor-oriented rule of common law. In the United States there are now nine community property states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. In addition, Puerto Rico is a community property jurisdiction.

What is community property jurisdiction? Most property acquired during the marriage (except for gifts or inheritances) is owned jointly by both spouses and is divided upon divorce, annulment, or death. Division of community property may take place by item, by splitting all items, or by value. In some jurisdictions, such as California, a 50/50 division of community property is mandated by law. In others, such as Texas, a divorce court may decree an "equitable distribution" of community property, which can result in an unequal division of such.

The first dispute in contested cases is, which marital assets are community property? Although community property law seems simple, in fact it is almost always complicated. Community property may have, over the years, become commingled with separate property (property owned before the marriage or inherited property). Or a spouse may try to hide marital property. Since most divorces in the United States are initiated by women, and in some regions fifty percent of all marriages will end in divorce, questions of property rights remain even when laws seem to favor both parties. Comments by California lawyers regarding cases they have handled reveal ways in which now males might be disadvantaged over females!


1) Monterey Divorce Attorney Discusses Community Property Declaration -May, 2008:

“If you are considering filing for a divorce in California...you may not realize how much or your property is considered community property. Anything accumulated during your marriage is considered community property in California unless it was a gift or an inheritance. Anything that is community property must be divided during the divorce and your spouse is entitled to one-half.

Most people realize that community property laws will impact how bank accounts are split and whether a house must be sold but there are other assets that people often overlook. A good example of this is in the case of John Moore and his wife Becky who are going through a very public divorce. Mr. Moore is owner of the baseball team the San Diego Padres and his wife filed a motion with court over access to the owner’s box at the stadium. Of course most couple do not have such expensive items like a luxury box at a professional stadium to worry about but they may have two season tickets to a professional sports team. This is a community property item. Also most people overlook other items like frequent flyer miles and vacation time accrued during marriage.

Any item acquired during marriage in California is presumed to be community property and can be divided in kind, i.e., splitting stock shares, or monetary compensation paid out, receiving one-half of the value of your spouse’s accrued vacation time. As community property assets can be varied it is important to consider all of the possible community property assets that you may be entitled to.”


2) San Jose Divorce Lawyer comments on Gambling during the marriage - Dec. 2007:

“Under the California Family Code, debt incurred during a marriage is considered community property or each party owes half of it. While community debt is common for auto loans, mortgages, or credit card debt, does it also apply to gambling debt? For example, if a husband went to Reno and bet $10,000.00 on the Oakland Raiders to win last week’s football game and they lost, then is it the community which should be responsible for that $10,000.00? Is the wife responsible for $5,000.00 of the debt even though she never knew of the bet?

Although a wife whose husband gambled away the retirement fund as well as marriage has no recourse against the casino, she may have recourse in the divorce. Under the California Family Code, gambling loss during marriage is considered a debt not in the benefit of community property and, therefore, the husband’s separate debt. That means that the husband owes the community for the money lost and the wife can offset that lost money against other property in a divorce. This is not surprising since no wife would ever agree to a bet on the Raiders regardless of the odds. Therefore, the wife could get her $5,000.00 back by taking more of the equity in the house, getting the better car, or just taking more of the remaining cash left in the community account.

However, California is not so kind to the husband who bet against the Raiders and won big. All gambling winning made during marriage is considered community property and the wife is entitled to half of that at divorce. Therefore, the husband will have to give half his winnings to the wife in the form of more equity in the house, the better car, or just more cash. The moral of the story is that the house may have an edge on the odds but the wife can’t lose, sort of.”


3) San Jose divorce attorney comments on division the Moore-Marsden formula - November, 2007:

“These days it is not uncommon for one spouse to enter a marriage having already purchased a house. Imagine a situation in which one spouse (Spouse A) purchases a house before marriage. Spouse A makes the down payment, and starts paying the mortgage. Spouse A then marries Spouse B; they continue to make mortgage payments on the house. Spouse A and B then decide to get divorce. The question is how much of the equity in the house is each spouse entitled to? Under the law, when community funds are used for mortgage payments on property purchased by one of the spouses before marriage, the community acquires a pro-tanto interest in the ratio that the payments on the purchase price made with community funds bear to the total payments on the purchase price, and any appreciation must be apportioned accordingly. (Marriage of Moore, 28 Cal. 3d. 366 (1980)). The approach, further clarified in the Marriage of Marsden 130 Cal. App. 3d 426 (1982), indicates that the community interest is determined by the ratio that the payments on the purchase price made with community funds bear to the total payments on the purchase price. Similarly, the separate interest is determined by the ratio that the payments on the purchase price mad with separate funds bear to the total payments on the purchase price. Going back to our interest above, Spouse A is entitled to one half of the community interest and the separate interest. Spouse B, is entitled to one half of the community interest.

As a practical matter, the following are the “key figures” that each spouse needs to determine their respective interest: (1) purchase price, (2) amount of down payment, (3) amount of payments on loan principal made with separate funds, (4) amount of payments on loan principal made with community funds, (5) fair market value of the house at date of marriage, and (6) the fair market value at time of division. While an appraiser can determine the value of the house at various points and time, it is critical that spouses keep accurate records of mortgage payments in order to accurately assess their separate and community interest.”


4) Santa Clara family attorneys examine the lifestyles of the rich and unfaithful - 2008:

“They say that money cannot buy happiness. Yet, to those who desire luxurious material goods, the pricey homes, manicured lawns, and luxury automobiles nestled among the rolling hills of Palo Alto and the tree-lined streets of San Jose’s Rose Garden District symbolize a level of comfort highly coveted by the average American. Nevertheless, while a life steeped in wealth may seem intriguing and desirable to many, a new report published by Forbes Magazine today indicates that spending power does not equal staying power when it comes to moneyed marriages. According to the study, conducted by Connecticut firm Prince and Associates, nearly 50% of America’s wealthiest citizens indicate that they are stuck in unhappy marriages, and over 50% of those surveyed report that they have been or are currently involved in an extramarital affair. It comes as no surprise to our family law attorneys in Santa Clara County that one third of the individuals surveyed for the study were examining divorce as an option.

In the experience of family attorneys in Monterey County or Santa Clara County, where there are many wealthy residents, divorce is a financially intimidating prospect, but not an impossibility. If a person is in an irretrievably broken marriage, it is better to research divorce as a solution than to give up and exist in a miserable or unfaithful relationship. However, it appears that wealthy individuals who are dissatisfied with their marriages do not necessarily go through with the divorces they dream about, and that the prime motivation for remaining in an unhappy marriage is financial. “Divorce itself is a businessman’s biggest deal,” remarked celebrity divorce attorney Raoul Felder. “He’s going to lose half he has.” Although attorney Felder refers to businessmen in his statement about the financial pitfalls of divorce, businesswomen are equally implicated on this issue. 51% of female breadwinners cited business issues as their main obstacle to seeking a divorce, with legal costs as the second biggest concern (42.8%). Surprisingly, only 14% of the women surveyed cited emotional damage to the children as the primary obstacle.

So what do those in the highest tax brackets do with their unhappy marriages, if they are too afraid to get divorced? Apparently, they horde money. Over half of the women who responded to the survey (56%) revealed that they had hidden or protected certain assets, and 36% of the men indicated that they had done the same. Additionally, more money seems to equal less security about the future of one’s marriage—respondents with a net worth of over $10 million disclosed that assets had been hidden. This behavior may be due to the lack of prenuptial agreements among America’s rich. Surprisingly, only 5.8% of those worth over $1 million, and 11% of those worth over $10 million had a prenup in place.”

Source: The Sangria Law Firm at “California Family Law Blog,” 2007 -08


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