Date of Separation

According to California Law, the Date of Separation is defined as follows: 

SB 1255 was signed into law on July 25, 2016.  This new law adds Section 70 to the Family Code, which, effective January 1, 2017, will define “date of separation” as “a complete and final break in the marital relationship, as evidenced by both of the following: (1) The spouse has expressed to the other spouse his or her intent to end the marriage.  (2) The conduct of the spouse is consistent with his or her intent to end the marriage.”  The court must take into account “all relevant evidence” in making the determination.

Date of Separation Why It is IMPORTANT

Everything owned prior to marriage is Separate Property (SP) ** but can be transmuted to CP

Everything earned during marriage is Community Property

Everything earned after date of separation is Separate Property – Except for vesting of CP

Transmutation occurs when Separate Property Assets are transferred to the Community in such a way that they cannot be traced and cannot therefore be (re)claimed as SP.

Separate Property - General Concepts: Property acquired before marriage is the acquiring spouse's separate property, as is property obtained during marriage that can be traced to a premarital acquisition. [Ca Fam § 770(a)(1) & (3) ("rents, issues and profits" of SP are SP) Like community property, separate property does not lose its character as such by a mere change in form or identity.

Community Property - General Concepts: All property acquired during marriage and before separation, other than by gift or inheritance (Ca Fam § 770(a)(2)), is presumptively community property. [Ca Fam §§ 760, 771(a)]  Income derived from a spouse's labor, time or skill during marriage and prior to separation is community property. Such "earnings" includes any compensation for services, regardless of the form in which it is received and can include:

•       Stock in lieu of salary.

•       Employer contributions to an employee profit-sharing plan.

•       Incentive stock options.

•       Other employment fringe benefits based on a contract right to future benefits after separation (even though unvested and un-matured): To the extent "earned" during marriage, these interests are allocatable to the community.

Profits from a spouse's business (sole proprietorship, partnership or closely-held corporation) are "earnings" to the extent attributable to either spouse's participation in the business.  Conversely, income and profits not reflective of either spouse's labor or skill are strictly a return on the capital investment, characterized in accordance with the separate or community property status of the original investment.

If you need assistance, please contact Annette Brown, CDFA at 415-312-1987  or msannettebrown@gmail.com