"Never spend your money before you have earned it."--Thomas Jefferson
What if I told you that if you and your spouse reside in the same residence, despite knowing that you have separated, your spouse is still entitled to half of your income? As shocking as it may seem, this is now the law in California after the California Supreme Court ruling in In re Marriage of Davis.
You work hard for your money and you want to make sure it's always protected. If you know your relationship is heading towards divorce, money becomes one of the biggest items you want to protect. So, what does your money have to do with whether you are still living with your spouse? The answer is two-fold. California is a community property law state. This means that when a couple divorces it is presumed that all assets acquired during the marriage are owned by the couple together and upon divorce all assets should be divided equally between them. Your income is considered a community property asset. Pursuant to Family Code Section 771(a) any property or income you acquire while living separate and apart is deemed your sole and separate property. This means that the other party has no community interest in that income and it is all yours. The question then becomes, what does it mean to be "living separate and apart."
In the past, there was no bright line rule or definition. The Courts looked to the totality of circumstances to see if the conduct of the parties reflected a complete and final break in the relationship and the mental intent of the parties. If a couple lived in the same house because it was economical but no longer intended to be together so they slept in different bedrooms, were not intimate, no longer held themselves out as a couple in front of their family and friends; taken as a whole they were deemed to be living separate and apart. Thus, their income earned during this period was considered their sole and separate property.
Then along came In re Marriage of Davis. In the 2015 court case of In re Marriage of Davis, the California Supreme Court ruled that for the parties to be "living separate and apart" they must in fact be living is separate residences! Now, this can have severe consequences or no consequences for your case depending on the circumstances. If you and your spouse broke up and one of you moved out of the family home, then Davis will have little to no implication on your case. However, if you are still living with your spouse and even though you may consider yourself "separated," the Court will not, for purposes of dividing up your community assets, including your income.
This means that the income you have earned while living together is still deemed community property. This can be detrimental to your case if you believed you were separated and since that time you received a significant increase income due to a promotion or even started a new business. Pursuant to Davis, your spouse would have a community property interest in that business and income! This can be particularly damaging for clients who have continued living together but have considered themselves "separated" for a number of years.
The Davis ruling has indeed stirred the pot on the issue of living separate and apart. Due to how recent this decision is, it is still unclear how the Courts will take to its application. However, it cannot be disputed as current law.
The Law Offices of Shauna M. Albright ensures its attorneys are versed in the most current law to ensure you receive the most accurate legal advice and representation. If you are still residing with your spouse but know divorce is in your foreseeable future, call our office for more information on how the Davis ruling may impact your case.
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