Recent Posts in Domestic Partnerships Category

• One spouse has money in a savings or investment account before marriage. They then deposit earnings into that account after marriage. The account is used for living expenses. At the end of the relationship, what portion of what remains is separate and what is community?

• The other party is added to a formerly separate property deposit account, for instance so that the account can be held in joint tenancy to avoid probate in the event of death. 

• Spouse A inherits $500,000 from grandma during the marriage. This separate property inheritance gets put into a jointly titled bank account, into which other monies flow in and out. How is the balance divided?

• Spouse A then contributes some of this inheritance to the purchase of a new residence. Title is taken jointly. When the couple splits, Spouse A naturally wants their contribution back. How is this achieved?

• A married couple decides to establish a Living Trust to protect them both in the event of death or incapacity. They fund the Trust by transferring cash and real estate into it. A common mistake made by Estate lawyers is to describe the trust property as "community property" and to add a provision that says that if the parties divorce, this property will not be considered to be community and will be restored to each contributing party. Unfortunately, once separate property is declared in such instruments to be community a transmutation has occurred and the language that it is to be restored is of no legal effect - only a new transmutation will resurrect the status quo before the transfer. However, Family Code section 2640 provides that separate property contributions will nonetheless be reimbursed to the extent that the amounts can be separated out and established. The person seeking to confirm their SP contribution must trace the funds in order to receive this reimbursement.

• One spouse places their separate property into the name of the other spouse, possibly to hide it from creditors or other family members. Upon separation, the receiving spouse claims it was a gift and wants to keep it all.

• During the marriage one spouse's separate property is used to build an addition to the jointly titled home that significantly increases its value. When the house is valued and ordered sold, or purchased by one of the two partners, this contribution to improvements may be reimbursed if it can be traced to a separate property source.

Variations of this theme are endless because people when they get married just don't contemplate the relationship failing, don't understand the legal consequences of what they do, are reassured by their spouse in pillow talk that they will be reimbursed, and so blindly throw assets into a common pot in which the character and value of the contributions become mixed and muddied. 

The separation of these interests all require tracings, often involving transactions spanning many years. Maybe bank and other records still exist, but maybe they have been lost, destroyed, or hidden by the other. Even attorneys with some years in family law practice don't have a firm grasp on what tracings require in determining community separate property interests. When separate property and community property are commingled in an account, tracing issues arise. 

Sometimes these accountings are relatively simple. Frequently they require the use of a forensic accountant.