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Community Property • Anti-Lucas Legislation
CPROP#042
Legal Definition
When spouses take or acquire title in joint form during their marriage, all jointly held property is presumed community property at divorce unless the parties executed (1) a collateral written agreement or (2) a separate statement in the documentary evidence of title that the property is "separate property and not community property."
Note that the rules concerning jointly titled property do not apply to joint bank accounts.
Note that the rules concerning jointly titled property do not apply to joint bank accounts.
Plain English Explanation
This rule becomes more clear if we provide an example. Imagine if spouses, Bob and Amy, buy a house for $300,000 cash. $200,000 of this amount is from community property funds, and the remaining $100,000 was paid out of Amy's separate property bank account. Like most married couples, they would probably put both their names on the title and own it together as joint tenants. But happens when they divorce? At first glance, someone may say, "Well, it's a $300,000 house that they bought together and owned together, so it is entirely community property." But as we discussed, this isn't quite fair. After all, the only reason Bob and Amy could afford—the only way that their community could afford it—was by having Amy give up $100,000 of her personal, separate funds. The way the law looks at this is: Unless Amy and Bob have a separate agreement where it is clear that Amy and Bob agreed to maintain Amy's separate property interest in the house, then the court will consider the entire house community property.
In other words, if Amy and Bob divorce and they must sell the house for $300,000, the entire amount will be considered community property and split equally. However, if Amy can show an agreement where they agreed that she had a 33% separate property interest in the home, then $100,000 would return to Amy as separate property and the remaining $200,000 would be community property to be divided.
In other words, if Amy and Bob divorce and they must sell the house for $300,000, the entire amount will be considered community property and split equally. However, if Amy can show an agreement where they agreed that she had a 33% separate property interest in the home, then $100,000 would return to Amy as separate property and the remaining $200,000 would be community property to be divided.
Hypothetical
Hypo 1: Bob and Amy buy a vacation home together for $400,000. Bob uses $300,000 from his separate savings account, while the rest is paid from their joint account. They both are on the title. Result: At divorce, the entire property is presumed to be community property and divided equally, unless Bob can show a written agreement stating his larger separate contribution.
Hypo 2: Bob inherits $500,000 and uses it to buy an investment property. He puts both his and Amy's name on the title. Result: In case of a divorce, the property is presumed community property, and the $500,000 is split between Bob and Amy, unless Bob has a written agreement indicating his separate contribution.
Hypo 2: Bob inherits $500,000 and uses it to buy an investment property. He puts both his and Amy's name on the title. Result: In case of a divorce, the property is presumed community property, and the $500,000 is split between Bob and Amy, unless Bob has a written agreement indicating his separate contribution.
