The Cost of Characterizing Assets in California Divorce Cases – In re Marriage of Ching

California divorce courts generally consider any property owned by one spouse before a marriage that spouse’s separate property to be kept by the spouse in the event of a divorce. Community property, on the other hand, includes anything that one or both spouses acquire through their efforts during the marriage, and it is typically divided equally between the spouses upon divorce. A recent case from the state’s Fourth District Court of Appeals shows how spouses can change the nature of separate property by specifically granting the other spouse an interest in it.

Husband and Wife were married for roughly 32 years before separating in 2007. Two years earlier, they signed an agreement in which the couple stated that all of the property they owned now and anything they acquired going forward would be considered community property. The spouses were eventually able to resolve many of the issues related to the divorce, but a nine-day trial was also held to consider lingering matters related to property distribution.

Wife argued that the trial court erred in awarding Husband reimbursement for his separate property under Family Code section 2640 because of the agreement to transmute all separate property to community property.

Family Code section 2640. (a) “Contributions to the acquisition of property,” as used in this section, include downpayments, payments for improvements, and payments that reduce the principal of a loan used to finance the purchase or improvement of the property but do not include payments of interest on the loan or payments made for maintenance, insurance, or taxation of the property.   (b) In the division of the community estate under this division, unless a party has made a written waiver of the right to reimbursement or has signed a writing that has the effect of a waiver, the party shall be reimbursed for the party’s contributions to the acquisition of property of the community property estate to the extent the party traces the contributions to a separate property source. The amount reimbursed shall be without interest or adjustment for change in monetary values and may not exceed the net value of the property at the time of the division.

The court rejected Wife’s contention that Husband waived his 2640 reimbursement right when he signed the community property agreement. The account became community property with the signing of the community property agreement the right to reimbursement can only be waived with a specific writing that waives the right of reimbr]ursement. Since the community property agreement did not expressly waive the right of reimbursement, the account and the court said this was therefore a contribution of separate property to the community and therefore the 2640 reimbursement was applicable at the time of divorce. However, the court further found that because Husband and his father had added Wife to the account as a joint tenant prior to the father’s death the presumption of title and a section of the probate code prevailed such that the property was not separate property at the signing of the community property agreement, but was actually community property.

California divorces often raise a wide variety of complex issues, including those related to assessing and dividing community property. These issues – and much of the stress that often accompanies divorce cases – can be minimized through alternatives to litigation, such as collaborative divorce and mediation. With offices throughout the San Francisco Bay Area, California divorce lawyer Lorna Jaynes provides innovative legal tools to resolve many family law disputes without the bitterness and acrimony engendered by the adversarial process.

Related blog posts:

How Time Limits and Filing Deadlines Can Complicate California Divorce Cases – Ellis v. Ellis

Dividing Retirement Accounts in California Divorce Cases – In re Marriage of Keitany

Why Must I File a Lawsuit to Obtain a Divorce in California