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Understanding community property and relationships in California

Planning for your marriage should begin before the day you walk down the aisle. Even without a wedding, you must take care of these matters if you are entering into a domestic partnership. It doesn't matter if you are going into the union with assets and debts or if you think you will amass them during the relationship, taking the time to work out a plan now can be beneficial.

California is a community property state, which means that both parties in the relationship amass debts and assets as one entity after the union. Even though there is the assumption of community, there are some types of property that can still fall under the separate property classification.

What's the difference between separate and community property?

The primary difference between the two classifications is that community property is divided if you go through a divorce. Separate property is retained by the party who owns it. The court uses a few points to determine how property should be handled.

The time the property was obtained can have a big impact here. Property that is owned by one party at the time of the union is typically considered separate property as long as it isn't commingled, or put together with, community property. Anything that is obtained during the union is likely community property. When separate property is commingled with community assets, it can be very difficult to trace them to determine where they should end up during a divorce.

There are a few exceptions to this. One is when something is inherited. In these cases, the recipient spouse is likely going to be the sole owner of it, which makes it separate property even if it was received during the relationship. Another is when there is a premarital agreement or a postnuptial agreement that is legally binding.

How can a prenuptial or postnupital agreement help?

Taking the time to agree on financial matters before the marriage can protect both parties. A premarital agreement outlines who is going to get what property, how any property that isn't specifically mentioned will be split, and what will happen to debts. This helps to ensure that you aren't saddled with any debts that the other party has coming into the union.

If you are already married, you can enter into a postnuptial agreement, which can help do the same thing as a premarital agreement. Regardless of which one you choose, you must ensure that you aren't trying to rush to get it done. Agreements made under duress aren't legally binding.

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