One of the most contentious issues in a divorce proceeding is the division of the marital property, also known as community property or properties obtained during the marriage, between the spouses. 35 years ago, California became the first State to enact a law announcing that community property in a marriage stops being earned when the couple started to live "separate and apart." The governing statute, Family Code, section 771, subdivision (a) states, "[t]he earnings and accumulations of a spouse... while living separate and apart from the other spouse, are the separate property of the spouse."
At first glance, the meaning of “separate and apart” seems simple--husband and wife break up, wife moves out and lives with her best friend or a relative; or as often depicted in movies and TV shows, the husband, moving out and living in a hotel or an apartment. Thereafter, one or both spouses file for divorce. Per section 771(a), each of the spouse's earnings when one or both of them moved out will not be counted towards the marital property subject to division during the divorce. But this simplistic and literal understanding of the statute proved to be unworkable in real life situations.
One of the most important elements in any California divorce is the date of separation. As a general rule, everything that a person earns from the date they get married to the date of separation is treated as community property. The date of separation also has an impact on the valuation and division of assets, including pension and retirement plans as well as debts. In California, a community property state, the community estate is divided equally between the parties, and everything that a person earns or accumulates and incurs after the date of separation is usually considered to be their separate property or debt. Therefore, the date of separation can have a major impact on the valuation and division of the parties’ assets and debts. When the parties disagree about the date of separation, depending on the facts in the case it may be prudent to bifurcate the date of separation issue and have a separate trial on that issue alone.
The phrase ‘date of separation’ refers to the language of California Family Code Section 771, which is the statute that outlines the general rule described above. The phrase does not come directly from the statute. The relevant language in Section 771 is: “while living separate and apart from the other spouse.” At first glance, this language appears to mean that the date of separation occurs when one of the parties moves out of the family home. However, California law recognizes that neither real life nor relationships are that simple. Two people can continue to live in the same home long after their marriage is effectively over. This seems to have become especially common in recent years, perhaps because of widespread economic difficulties. Alternatively, a married couple may remain committed to each other even if their jobs or other factors cause them to live in separate homes, or a couple may temporarily live in separate homes during a rough time in their relationship, then get back together.
One of the most contentious issues during a divorce or legal separation is the division of assets and debts. When dividing property, the parties must place a value on the property prior to its division. The “value” of an asset is the highest price on the date of valuation at which a seller would agree to sell and where a ready, willing, and able buyer would buy.
Several specific assets have a particular valuation method that attorneys, experts and courts use to value property. Our office has found that the following are some of the most common assets subject to division: