In love and anticipating marriage, you put a down payment on a home with your own money and took out a mortgage because you intended to eventually live with your fiancé. It seemed like a good idea at the time.
Now, though, you are not so sure. You have heard that if you divorce in California, your spouse gets half of everything. Does that include the house you paid for? While you hope to never divorce, what would happen if you did?
Property and divorce in California
First, let’s explore how California treats property in a divorce.
It is true that community property is split evenly between spouses in a California divorce. Community property, with a few exceptions, includes anything earned while married or purchased with money earned while married.
Most of the time it does not matter whose name is on the title or who actually purchased the item. It was purchased while you were married using money you earned while you were married, thus it is community property.
Not all property is subject to division in a divorce. Separate property remains that of the person who owns it. Separate property is anything owned or earned prior to marrying.
If separate property is kept separate and is not combined with community property in any way, it will remain the property of the person who owned it prior to marrying. But if it is combined with marital property or used for marital purposes, it transforms into community property, subject to division.
Keeping separate property separate
So, in the case of property purchased prior to marrying, it is important to retain specific records of the separate financial accounts holding the money used to fund the purchase, receipts and statements showing the date of the purchase and, if challenged in a divorce, you would have to show that you intended to use your separate funds to purchase the house.
Another way to protect your separate property prior to marrying is to execute a prenuptial agreement. This is essentially a contract between you and your spouse that outlines who will own which assets if you divorce. You can state the property you purchased before marrying will belong to you if you divorce.
Ultimately, you want to be careful not to combine separate assets with community assets. Keep separate assets in separate accounts and only use them for separate purposes. If you use separate assets for marital purposes, they are now considered community assets, subject to division.