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.
According to news reports, Clint Eastwood’s wife of 17 years, Dina Eastwood, has filed for divorce. Ms. Eastwood is seeking spousal support and full custody of their 16 year old daughter.
If you or someone you know is going through the divorce process, you have probably heard discussions about spousal support. The purpose of spousal support is to provide an ex-spouse with an income for basic needs and to maintain the marital standard of living. When calculating spousal support, the court considers many factors, some of which include: (1) the earning capacity of each party and its relationship to the standard of living established during the marriage; (2) the extent to which the supported party contributed to the attainment of education, career training, and licenses of the supporting party; (3) the ability of the supporting party to pay such spousal support; (4) the obligations and assets of each party; (5) the duration of the marriage; (6) the age and health of the parties; and (7) the balance of hardships on each party.
You may have seen a May issue of Time magazine that had an article on alimony, which is called spousal support in California. The article details the growing movements challenging permanent spousal support, the kind that is paid until a spouse dies or the recipient remarries.
There are two sides to this issue. Those in favor of spousal support say the payments are justified because those spouses who may have stayed at home for many years gave up time not pursuing a career, not building marketable skills and not networking. According to the article, on the other side are a growing number of second wives who are seeking spousal support reform, claiming that their husbands may not be able to pay their spousal support.
A recent Forbes article noted changing dynamics of married couples’ finances. A growing number of wives are out-earning their husbands in dual-income households. While this is not the new norm, the occurrence is certainly increasing. High-income earners and high net-worth couples have unique considerations regarding their marriage. Prenuptial and postnuptial agreements can help address some of these considerations by safeguarding assets and avoiding significant hassle in the event of a divorce.