Community property or Separate property ?

[Paul_Martell101]

What is the name of your state? California
My wife and I have decided to divorce. We are in California (community property State). I have a question about characterization of a property (community property or separate property?).
We married in mid-2003. In 2001 she bought a new car (36 month LOAN). She made all the 36 payments, some while we were not married, and some while we were married. She got the title of the car in 2004 with her name only on the title. To make the payment she used a bank account that she opened (only her name on the account) before we were married. Her salary was deposited directly in this bank account. She has been with the same employer for 6 years. After we married, she used this same bank account with the same deposit every month, and made the payments for the car using this same account. The car is valued at $8,000.
From what I understand, this car is now considered community property because she commingled her (what was) separate account with earnings received during the marriage. Am I correct?

 

[fairisfair]

c'mon Paul, tell it like it is, you didn't write this whole post making your ex sound like the car was totally hers only to ask us if it wasn't. . . . . . now, did you????

 

[Paul_Martell101]

Thank you for your answer, but this does not answer my question. It does not matter what I think. I want to know what the law says. Is this a law forum? I am very surprised by your answer. This is a serious matter. I do not think that the judge is going to have your sense of humour. Please, be objective, answer like a person aware of the law should do. Thank you.

 

[fairisfair]

the car was acquired before the marriage, it is separate property. Wait for response from one of the others, they will correct me if needed.

 

[BelizeBreeze]

What is the name of your state? California
My wife and I have decided to divorce. We are in California (community property State). I have a question about characterization of a property (community property or separate property?).
We married in mid-2003. In 2001 she bought a new car (36 month LOAN). She made all the 36 payments, some while we were not married, and some while we were married. She got the title of the car in 2004 with her name only on the title. To make the payment she used a bank account that she opened (only her name on the account) before we were married. Her salary was deposited directly in this bank account. She has been with the same employer for 6 years. After we married, she used this same bank account with the same deposit every month, and made the payments for the car using this same account. The car is valued at $8,000.
From what I understand, this car is now considered community property because she commingled her (what was) separate account with earnings received during the marriage. Am I correct?

you understand wrong.

 

[tranquility]

There are many principles here, but at the core, I think the car is still separate property.

This question usually arises in regards to the house or other substantially appreciating asset. You are trying to argue some ownership of this car. The car started as separate property. If it were a house, the rule there would be that if the bank account used to pay the mortgage (Insurance, interest and property taxes disappear into the ether.) has, as it's sole deposit, the wages of the separate property owner, the house would not be transmuted to community property. I know wages are community property, but the community is only entitled to reimbursement and not a portion of equity. You have not described a comingling scenario.

Here, I would apply the same concept and give the community reimbursement only for the principal (not interest) amounts paid on the car loan during the marriage. That amount would now be split and you would get your half of the reimbursement.

On a side note, if you are worrying about this level of stuff your divorce is going to be fun, fun, fun. I'm sure the judge will love you guys.

Information edit:
The title being in her name is very problematical for you. If she *purchased* the car during the marriage, but you allowed the title in her name as separate property, there is a rebuttable presumption the item was a gift. (Marriage of Lucas, 27 Cal.3d 808) I know that's not your issue, but it should give even more pause.

 

[fairisfair]

Thank you for your answer, but this does not answer my question. It does not matter what I think. I want to know what the law says. Is this a law forum? I am very surprised by your answer. This is a serious matter. I do not think that the judge is going to have your sense of humour. Please, be objective, answer like a person aware of the law should do. Thank you.

by the way, I didn't ask you what you think. My point is that it sounded more like this was you and your car that you were talking about. Any way BB has confirmed it is not community property. so yours, hers, whatever.

 

[Paul_Martell101]

you might be right but what makes think differently is the definition of "acquired"? In this case acquired does not mean "paid in full" before the marriage. I would agree with you if "acquired" meant "paid in full" before the marriage. However, community earnings were used to pay the car. I do not think that this could be defined without any doubt as separate property, since WE paid (community earnings) for a subtential amount of the car.
It seems that courts have a tendency to classify assets that are not clearly labeled as separate property (not commingled, not transmuted even by inadvertence), as community property.
To mention a similar situation, and as surprising as it sounds, in re Marriage of Renier 854 P2.d 1382, the Court has classified stock acquired during marriage through options granted before marriage (!) as marital property. The fact that the options were the employee spouse's separate property does not mean that the stock acquired by excercising the option is likewise separate, if marital funds were used to excercise the option.

 

[fairisfair]

she purchased the car prior to marriage, it doesn't really matter that she did not receive the title until after you were married. If she had property, and then used money to pay the property taxes, do you think that you would be entitled to that too??? Of course not, not all property acquired during the marriage is community property. Besides the stock situation is totally different, these are things that were acquired after marriage.

 

[tranquility]

Um...the car *is* clearly labeled separate property. You said she had title.

This is not a comingling situation. Period. (Unless you have other facts to indicate deposits of community property other than wages into the account.)

Arguendo, you did buy into the equity of the auto. The whole asset is not changed as that remedy is saved for fungible things (like money) where tracing can't be done. The community is only entitled to its part. That's why it is important for appreciating assets. If the community gets some rights to equity, it would not only get the money paid for principal, but also get a portion of the increase in value.

Even if you were right in that the community bought part of the car, the only difference between what I wrote and what you believe is the community's portion of the increase in value (the capital gain) of the car. How much did the car go up in value during the marriage?

That's why you are wasting you time. Because in the time I've been wasting writing this response, my car has gone down in value. Maybe your wife's is different. But, I doubt it.

 

[LdiJ]

What are you really trying to accomplish here? You might get a better legal answer if you thoroughly explain yourself.

 

[Paul_Martell101]

To Tranquility:
(note: she got the car title AFTER we were married. The title was hold by the bank while she was making the payments. The car was not owned by her prior to marriage)

you might wonder why I am getting so much in the details about the measly 8K car (current value). I am trying to understand as much as I can about separate, community property, commingling, transmutation, etc. in my specific situation before seing an attorney. I do not like to walk into a law office and take all what is said as the irrevocable "The Word Of God". I try to educate my self so that I can have a bilateral discussion with an attorney.
The car is just the tip of the iceberg. The bulk is the 100K she has in a 401k and the 100K she got from the proceed of her stocks. But this is a different matter. I think I got your point of view regarding the car. Let take an example:
let's say she paid 3000 using her wages and her account before the marriage. She paid 6000 after being married using "her" wages and "her" account BUT which would be considered at this point in time community wages in a community bank account.
I would be entitled to 1/2 of the 6000. My point was that since the money used after marriage is community money, the WHOLE car would be considered as community property, and that I would be entitled to 1/2 of 9000 when dividing the assets.

you wrote: "This is not a comingling situation. Period. (Unless you have other facts to indicate deposits of community property other than wages into the account.)"

your answer implies that there is no commingling because no other deposit beside her wages were made in her account, and therefore there is no commingling. You imply that her wages are separate earnings and not community earnings. It also implies that IF other deposits beside her wages were made in her account, the situation would be different. If the deposits in her account would come from "passive" gains (interests earned from the principal for example), there would be no commingling. Here the deposits are "active" gains (community earnings even if it looks like "her" wages). Her account becomes a community account and this is a commingling situation.
Well, anyway thank you very much for your time. I really appreciate the time (too much I know) you have allocated to this issue.

 

[fairisfair]

face it, the car is not community property. Did you buy any clothes while you were married? Are you giving her half of them?? I am assuming you bought other things during that time as well, with funds that were earned while married, have you shared all of those equally??? and if they no longer exist, or have decreased in value, would you think that you owe her half of what you paid for them??

The assets in the 401K are a totally different matter, any assets added to the 401k during the marriage would most likely be community property.

 

[LdiJ]

It could be argued that the portion of the equity in the car that accrued during the marriage could be a community asset. However, since cars don't appreciate in value, but rather depreciate instead, any equity gain would have to be offset by the depreciation.

In other words....when all is said and done, no net equity may have accrued during the marriage.

As far as her 401k and stocks are concerned, obviously the bulk of that accrued prior to your marriage as well. You could only make claims for 50% of what accrued during the marriage....the stocks may even have been sold at a loss, which means that NO value may have accrued during the marriage.

 

[Paul_Martell101]

ok. Make sense.

Car was valued new at 15,000. 'Community payments" were 3,000. Payments prior to marriage were 12,000. Car is currently valued 8,000. Am I entitled to 3,000/2 = 1,500 ? and is she entitled to 8,000 - 1,500 = 6,500? or is she entitled to the whole 8,000 when considering asset division ? Again, those amounts are measly, but it is to understand the principles.

thank you all for your time. Paul.