Sounds kinky, doesn’t it?
Three players in a marriage.
Sharing.
Everything.
Only this is something you can talk about openly, without blushing: community property.
Community property is the default property arrangement in California for a married couple.
Yet it is poorly understood by those affected by it and it isn’t inevitable.
How community property works
The community property system provides that everything acquired during marriage is equally owned by the spouses, regardless of which spouse acquired it.
Property owned before marriage or acquired by gift or inheritance is the separate property of the spouse who acquired it. It retains that separate property character as long as it isn’t comingled with community property.
The most vivid way to imagine the community property system is to see marriage as comprised (for financial issues) of three players:
- husband,
- wife, and
- the community property.
Each of the three may have different exposure to debts.
Both same sex couples and registered domestic partners fall under the California community property system
Only the person who contracts for a debt is personally liable.
That personal liability will outlast the marriage. It’s your responsibility, whatever your marital status.
The community, however, is liable, regardless of who incurred the debt.
All of the community property is liable for the debts of either spouse. There’s no halvsies here: no “my half of the community is liable for my debts”.
On money issues, the community is all in.
And that’s not all: the community property is liable for the debts of either spouse incurred before marriage.
Liable for my spouse’s debts?
You don’t become personally liable for your spouse’s debts by reason of living in a community property state.
That means that the credit card company can’t sue you for a debt contracted by your spouse. So, no judgment against you for his debts.
But a judgment against your spouse can be collected from the community property, including your wages! But it can’t be collected from your separate property.
Community property can be avoided
Spouses in California are free to agree that they won’t have community property.
That’s what a pre nuptial agreement is often about. Spouses can agree that their accumulations during marriage will be the separate property of each spouse.
If you are already a married Californian, maybe the three of you want to talk about this.
