One of the most common questions we receive about California divorce law is, “What does ‘separate property’ mean?” Let’s take a closer look at dividing property in a divorce, and how the rules of separate property come into play.
What is Separate Property?
Separate property is a specific category of assets which are generally not included in the division of property in a California divorce. Whether a particular asset is the separate property of a married person depends on how the property was initially acquired.
The Defining Characteristics of Separate Property
Separate property can be acquired in any of the following ways:
- The item was acquired before your marriage.
For example: You owned the item before the wedding ceremony, you’ve had it since high school, etc.
- The item is the “rents, issues, or profits” of property owned before marriage.
For example: If you wrote a hit song before marriage, the royalties are your separate property (even if the income was received after you were married). If you owned an apartment building before marriage, the tenants’ rent (paid during your marriage) is your separate property too*.
- The item was a gift from a third party to you alone and not jointly with your spouse.
For example: If your aunt gave you alone a great gift last Christmas, it’s your separate property.
- The item was an inheritance (or purchased with an inheritance).
For example: Did your grandpa leave you his farm, or did you use the farm sale proceeds to buy those initial shares of Amazon stock? If you have good records, those 40 acres and the John Deere (or those millions in Prime Stock) are all yours. [But hang on to your top hat and get ready for a spousal support analysis, Mr. Monopoly.]
- The item was acquired after separation.
For example: If you have already lived separately for months and you bought a winning lottery ticket with your recent earnings, that jackpot is yours alone. The earnings and accumulations of a spouse while living separate and apart from the other spouse are the spouse’s separate property. See Family Code §771(a). Note that the term “earnings” may include more than just “wages” or “salary.” Earnings might also include business income where one party works in the business, particularly when the business “earnings” aren’t dependent on community property capital investment. See Marriage of Imperato (1975) 45 Cal.App.3d 432, 437.
You will still have to disclose that winning lottery ticket though. Believe it or not, these facts come from a real case. Too bad she failed to disclose the lottery winnings, otherwise she might have been able to have kept that cash all for herself. See Marriage of Rossi (2001) 90 Cal. App. 4th 35 or read the November 17, 1999 Los Angeles Times article “Ex-Wife Loses Big in This Game of Chance”. Ouch!
- The last definition of separate property is simply obvious. The item is your separate property if you acquired it after entry of a divorce judgment or a judgment of legal separation. See Family Code §772.
Note: Unless there is a specific statute to the contrary, neither spouse has any interest whatsoever in the separate property of the other. See Family Code §752.
Community Property vs. Separate Property in California
In summary, the definition of separate property is any asset owned entirely by one spouse. Community property includes any assets owned equally by both spouses (typically acquired during the marriage).
Note that the analysis gets more sophisticated (and confusing) in many cases. Here’s an example: if you have a mortgage on your separate property and make payments during the marriage with community property, you and your spouse improve the property during marriage, or you mix your separate property with community property (such as in a bank account or stock portfolio), the situation is more complex.
Let Our Sacramento Divorce Lawyers Help You Navigate the Property Division Process
Have more questions about your situation? The Sacramento divorce attorneys at Hughes Law Group would love to help. Give our divorce lawyers a call or schedule a consultation appointment with a divorce attorney online.