In the midst of a divorce, it can be tempting to splurge on a fancy car, a brand-new wardrobe, or other expensive purchases to make yourself feel better or to kick-start your new life. Before you swipe your card, consider this: Making a major purchase before the finalization of your divorce could complicate the legal process – and even result in your soon-to-be ex-spouse acquiring 50% of whatever you just bought. If you want to keep your split simple, don’t rush into big purchases during the tumultuous time of divorce.
California’s Community Property Divorce Laws
California is one of only a handful of states that abide by community property laws instead of equitable distribution during divorce cases. In community property states, the courts consider all income and assets either spouse earns during marriage property that both spouses own as part of the community of marriage. Debts either spouse incurs during marriage also become community property. Separate property can still exist in the form of gifts and inheritance to just one spouse, as well as property each spouse owned separately prior to marriage. Community property laws will apply regardless of whose name appears on titles.
Unless a couple has signed a prenuptial agreement or other written statement that changes the rules of community property division, California courts will split community property assets and money down the middle – 50% to one spouse and 50% to the other. This includes money in bank accounts and retirement accounts, property and vehicles owned, stocks and bonds, accumulated savings, and more that belong to both spouses. What is and what is not community property can get confusing in some situations – especially when one spouse makes a large purchase after separation but prior to divorce finalization.
Why You Should Avoid a Pre-Divorce Shopping Spree
Making an expensive purchase after separation can complicate your divorce and the division of community property. You could find yourself in a web of legal terms such as “inadequate disclosure,” “date of separation,” “preliminary declarations of divorce,” and “marital settlement agreement.” You could even face legal trouble if you didn’t include the new purchase on the divorce paperwork, but you bought it while still technically married.
If you and your spouse were separated at the time of the purchase, the purchase might be separate property. Separate property in California is any property you acquire after the date of separation. The “date of separation” is the date on which one spouse expresses an intent to end the marriage, and takes action consistent with this decision. Dates of separation are notorious gray areas. The law in California changed on January 1, 2017 to nix the requirement that physical separation exists for there to be separation. Now, physical separation is not a requirement.
The courts can take into account all relevant evidence when deciding your date of separation. It may surprise you to find that the thing you purchased when “separated” actually falls under community property because you miscalculated the date. If you actually weren’t separated, your major purchase will end up getting split down the middle during the divorce. Unless you don’t mind sharing your new car with your ex, it’s best to put off making any large purchases before your divorce is final and consult with a Sacramento family law attorney.