- Community Property: Generally, community property includes all assets and debts acquired by either spouse during the marriage, from the date of marriage until the date of separation. This can encompass earnings, real estate purchased during the marriage, and retirement accounts accumulated during the marriage. Even if an account is in only one spouse's name, if the funds were earned or acquired during the marriage, they are typically considered community property.
- Separate Property: Separate property, on the other hand, typically includes assets owned by a spouse before the marriage, or acquired during the marriage by gift, inheritance, bequest, or after separation. It also includes any rents, issues, or profits derived from such property, as long as it was kept separate and not commingled with community funds. Funds earned after the date of separation are also considered separate property, even if the divorce is not yet finalized.
The division of bank accounts in a California divorce involves a two-step process: first, determining whether the money is community property, separate property, or a mix of both, and second, determining how to divide the account.
- Source of Funds is Key: The name on a bank account does not automatically determine its character. The focus is always on the source of the money in the account. If funds in a bank account can be traced to a separate property source (e.g., an inheritance, a gift, or earnings before marriage), those funds may be separate property. If the funds were acquired during the marriage from community property sources (e.g., wages), they are community property.
- Date of Separation: The date of separation is a critical factor. The balance in a bank account as of the date of separation is generally considered community property and is subject to equal division. Any earnings deposited into an account after the date of separation are typically considered the separate property of the spouse who deposited them.
- Commingling: It's common for bank accounts to contain both community and separate property funds, a situation known as "commingling". This often happens when separate property funds are deposited into a joint account, or when community earnings are deposited into an account that initially held separate property. Untangling commingled funds can be complex and may require the assistance of a forensic accountant to trace the origin and use of the funds.
- Disclosure is Mandatory: During divorce proceedings, both spouses have an affirmative obligation to disclose all assets and debts, including all bank accounts, regardless of whether they are considered separate or community property. Concealing accounts or information can lead to serious legal consequences, including claims of breach of fiduciary duty.
- Equal Division: In general, a judge will order that each spouse keeps their separate property and that community property is divided equally.
- Negotiation and Agreement: While the law provides guidelines, spouses can often reach an agreement on how to divide their bank accounts and other assets. A judge will then need to approve this agreement.
- Legal Guidance: Divorce and asset division can be complicated, especially when dealing with commingled funds or disputes over the character of property. Consulting with an experienced family law attorney is crucial to ensure your financial interests are protected and to navigate the complexities of property division in California.