Separation: When Exactly Does Community Property End in Calif

when officially separation in California for bankruptcy

Separation: When Exactly Does Community Property End in Calif

When does community property end in California? Is it at divorce or separation, and when exactly are two spouses (or future exes) separated?

It’s usually clear when a marriage and community property begin in California.  That’s when people say, “I do.”  But it can be much harder to tell when it ends.

A quick detour: when are you officially married in California

What are the technical requirements for an official marriage in California? Saying “I do”… sure, but is that enough? California Family Code Section 300 says that consent isn’t enough. There has to be issuance of a marriage license, and a solemnization.

Marriage License: the marriage license part is set out in Family Code section 350, and says before marriage, the parties need to get a marriage license, which is good for 90 days.

Solemnization: this is what we typically think of as the marriage ceremony, and is governed by Family Code section 420. This is where the two people declare that they take each other as spouses.

Why the beginning and end matters: Community Property

You may ask yourself, “why is a bankruptcy blog spending all this time talking about marriage and community property?”

The general answer is: bankruptcy intersects with many different areas of law, and a good bankruptcy practitioner needs to know about torts, property law, contracts, estate planning like wills and trusts, and many other things… including community property law.

Cal Family Code Section 760 contains the community property presumption: “Except as otherwise provided by statute, all property, real or personal, wherever situated, acquired by a married person during the marriage while domiciled in this state is community property.”  So, crudely paraphrasing, when married, everything belongs to everyone, regardless whose name it’s in.

Now let’s say there are marital difficulties, and one of those spouses wants to file bankruptcy, but the marriage isn’t solid, but there’s no official divorce.

When someone who is married files bankruptcy without their spouse in a community property state like California, they must disclose all of the financial information of their spouse.  If the bankruptcy is filed near the start or end of the marriage, that can determine whether the other spouse’s paycheck and other information needs to come in.

Community property starts when the couple is married, using the specific legal requirements above.

Community property stops accruing when the couple is separated and/or divorced. Separation often happens first, so that’s what we’ll focus on.

When are spouses in California officially separated for community property purposes?

While there is one way to be married, there are different ways to be separated:

Legally Separated

Legally separated is when there’s an official determination that the couple is now separated. That’s usually pretty clear and obvious so we won’t spend much time and energy here.

Physical Separation

Physical separation is when the husband and wife no longer live together.

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True love could not be overcome by the physical separation of John McClane and Holly Gennaro
True love could not be overcome by the physical separation of John McClane and Holly Gennaro

Think of John McClane and Holly Generro in Christmas classic “Die Hard.”

It’s possible to be physically separated for months, and still in love, marriage still intact, and able to kick terrorist butt together and live happily ever after.

In short, physical separation, even for years, cannot end a marriage or the community property presumption.

Date of separation

The date of separation is when the complete and final break in the marital relationship happened, as laid out in California Family Code Section 70.

California Family Code 70

The Text of Calif FC 70

The key text of Family Code Section 70 says:

a) “Date of separation” means the date that a complete and final break in the marital relationship has occurred, as evidenced by both of the following:
(1) The spouse has expressed to the other spouse the intent to end the marriage.
(2) The conduct of the spouse is consistent with the intent to end the marriage.
(b) In determining the date of separation, the court shall take into consideration all relevant evidence.

So there are two key tests here. First, there has to be a declaration of intent to the other spouse the marriage is over. Second, the behavior and actions of the “separating” spouse who wants to terminate the marriage looks like someone who wants to dissolve it.  And all relevant data can help a court determine if the two things have happened.

Separate and Apart Is No Longer the Law

Notice that the above law doesn’t say “living separate and apart.”  That used to be the rule.  There was a California Supreme Court case called In re Marriage of Davis, 352 P.3d 401 (Calif Sup Ct, 2015) that interpreted the former law, Family Code Section 771.

There, the Court ruled it was impossible to be living “separate and apart” while the spouses are living in the same home under the same roof, and in fact, living in separate residences is an indispensable requirement to be separated. Id. at 865.

The very next year, the California Legislature jumped into action to change the law. That’s when it passed Cal Fam Code Section 70, which specifically stated that they’re undoing the rule of the above Davis and Norviel cases. In doing so, the plain words and intent are that separating spouses can live in the same house under the same roof, as long as there’s evidence to back up that they are really separated.

Separation Cases after 2016 Interpreting New Family Code 70

Lee and Lin

Let’s take a look at a couple of cases that interpret the new rule. Meet Tony and Sharon. They were married, and Tony moved out and rented an apartment somewhere else, but they kept things amicable. Two years later, Tony filed for divorce. They fought over when the date of separation was: when he moved out, or when they got divorced?

This is where the facts matter. The court reviewed the situation and all the circumstances, and by a preponderance of the evidence, found that the behavior of the couple changed drastically after Tony moved out. The fact that he’d send Sharon an email or attend events with their kids didn’t outweigh all the signs pointing that they were indeed separated, and the early 2012 date was upheld.  In re Marriage of Lee and Lin, 41 Cal. App. 5th 698 (Cal Ct of Appeal, 6th App Dist. 2019)

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Bittenson

Another case interpreting FC 70 involves Mark and Terry.  In 2010 there was a marital rift and Mark “moved out” when Terry learned Mark was having an affair. But Mark also kept his stuff at the house where Terry lived, got mail there, kept joint bank accounts together, took vacations together, filed taxes together, and was there every day to have dinner with the family. He didn’t sleep there though. Finally, 3 years later, Mark declared his undying love and commitment to the other person in front of Terry. Which is the date of separation: 2010 or 2013?

The trial court ruled that the date of separation was in 2013, the date the separation agreement was signed. The couple continued to do many of the things they did before 2010 after the rift. The appellate court agreed: “Mark may have believed that the 2010 marital rift ended the martial relationship, but his conduct and actions establish a much later date.” Bittenson, Court of Appeals of Calif, 2nd District, Div Six, 2020).

Khan

Contrast this with the Marriage of Khan. Here, in February 2017, the couple had a fight, and husband told wife to get out of the house. She didn’t have money for that, so she moved into a different bedroom under the same roof. They had no intimate relations, went to a wedding together, and some kid’s soccer games together.  She moved out in December. On the other hand, during those months, there was no shared access to money, there was no intent to reconcile, and they were living “separate lives.”

The trial court reviewed the facts and found:  “…the parties attended “one or two family weddings” with their child but ‘they did not do anything to hold themselves out as a married couple, did not attempt to reconcile, did not attend counseling, and did not share a bedroom.'”

The appellate court agreed, and the early February date was upheld to be the date of separation. “…other than a family wedding or two, which they attended with their child and Respondent’s mother, Appellant and Respondent did not attend social functions together. (See In re Marriage of Baragry (1977) 73 Cal.App.3d 444, 447.) There also was no evidence they vacationed together, went on a date, or participated in counseling in an effort to reconcile after February 2017. (Ibid.)

“This was not, as Appellant suggests, a couple that was simply having a rough patch. From February until December 2017, Respondent’s intent to leave the marriage never faltered. Thus, on this record, we find the evidence sufficient to sustain the trial court’s finding that the parties’ date of separation was in February 2017.” In re Marriage of Khan, (Cal Ct of Appeal, 3rd App Dist. 2021).

Summing it up

After new Family Code 70, when a couple of separated involves a very fact-specific analysis.  This matters, because if the date of separation happens after a bankruptcy is filed, then the community property presumption would still apply, and both spouses’ income would have to be part of the bankruptcy presumption.

Note, as an aside, if there is a separation, there are provisions for separating spouses involving the homestead exemption. See CCP 704.710(d), and In re Wilson, 175 BR 735 (NDCA 1994) that interpret its limiting principle may be helpful.

Bottom line: a married couple can live under the same roof in the same house in California and be separated, but facts matter, as they pertain to Calif FC 70.