In today’s economy, it may be financially challenging for spouses contemplating divorce to maintain two separate residences. Especially when children are involved, a couple may therefore choose to live separate lives under one roof, with separate bedrooms, finances, etc.

 

Recent celebrity break-ups, such as the much-reported “conscious uncoupling” of Gwyneth Paltrow and Chris Martin, tend to involve a period of living together after separation, in order to maintain the family unit and provide consistency for the children. But separated spouses who remain under one roof need to be aware of the financial implications for an eventual property settlement.

 

Community Property of Separate Property?

 

In California, the division of property in divorce proceedings requires a determination of whether the spouses’ property is community property or separate property. Community property is generally divided equally. California Family Code § 760 sets forth the general rule that all property acquired by the spouses during their marriage is community property, “[e]xcept as otherwise provided by statute.”

 

There is indeed a statutory exception for separated spouses, according to which a spouse’s “earnings and accumulations . . . while living separate and apart from the other spouse, are the separate property of the spouse” (Ca. Family Code §771(a)).

 

The California Supreme Court recently ruled that this exception to the community property regime applies only when separated spouses have different physical residences. As long as they reside under the same roof, their individual earnings and accumulations will not be treated as separate property.

 

In In Re Marriage of Davis (Cal. Supreme Ct., July 20, 2015), the wife filed for divorce in 2008, asserting that the couple had separated in 2006, when she told her husband that the marriage was over and they began living separately in the marital home. Her evidence of this separation included separate bedrooms and a non-sexual relationship in which the couple lived as “roommates” but continued to participate in their children’s lives. She argued that her earnings since 2006 were therefore her own, rather than community, property.

 

The husband, however, claimed the separation date was July 2011. Although the lower courts agreed with the wife that the statutory language “living separate and apart” encompassed separated couples living in the same house, the California Supreme Court reversed those decisions. The court interpreted the statute more strictly, as requiring separate residences, as well as a demonstrated intent to end the marital relationship.

 

Separation Date Influences Spousal Support

 

The determination of a couple’s separation date is also important in fixing spousal support payments.

 

California couples thinking about ending their marriage should not wait until they are ready to file for divorce to seek expert legal guidance. A separation may last several years and each spouse needs to understand and plan for the financial implications, especially if the couple wishes to continue to live together.

 

The Carlsbad, California law firm of Fischer & Van Thiel, LLP has over 50 years of combined experience in divorce cases, helping families overcome challenges that accompany difficult divorces and related issues.

 

We also handle other types of family law issues such as child custody, child support, alimony, paternity, domestic violence, adoption, and domestic violence cases. Call us today at (760) 722-7669 to schedule a free initial consultation with one of our attorneys.