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How to Protect Your Separate Property During Marriage
By: Sherry A. Thompson, Esq.
If you have separate property during a marriage, it is very important to protect that property if you anticipate having this property confirmed to you alone in case of divorce or upon death.
Separate Property is any real or personal property acquired before marriage, or during marriage by a gift to you alone, inheritance, bequest; or the rents, proceeds, or profits from separate property.
As such, here are some suggested rules to follow to protect your separate property assets: DO NOT CHANGE TITLE!!! Whether it is a house, stock, car, or cash, one of the best ways to protect separate property is to not change title on the asset!! Do not add your spouse's name to the deed, title or bank account. If you want your spouse to inherit any of your separate property assets you can accomplish that goal in many ways without changing title.
DO NOT COMMINGLE the separate property assets with any community property assets. For example, don't place money inherited into the joint checking or savings account with your spouse. If you want to give the funds to your spouse in case of your death, you can always name your spouse as a Payable On Death (POD) beneficiary on your separate account, and the bank will pay the funds to the named beneficiary upon your death.</li>
Keep all your records on your separate property assets and never shred any such records. These records include those documents showing the original source of the separate property (i.e. the will or probate records, the estate distribution records, the original purchase records showing purchases before marriage, or after date of separation, etc.) and the records showing where the funds or assets went if transferred or sold (i.e. the bank statements and/or sales records of such transactions.) These records are needed to provide any necessary "tracing" of your separate property especially if you have commingled the property with your community property or you have changed the type of asset, i.e. you sold a separate property car and used the same funds to purchase a boat. If you have these records proving the separate property character, then the court will confirm the separate property to you.
If you decide to use separate property towards the purchase of a community item, or to pay on, or improve a community asset (i.e. remodel a community house) get a written agreement with your spouse that your separate property will remain your separate property!! REMEMBER THERE IS GENERALLY NO SUCH THING AS AN ENFORCEABLE ORAL AGREEMENT REGARDING PROPERTY IN FAMILY LAW!! If your spouse won't sign such an agreement, then you can choose not to use your separate property towards that purchase or improvement. But if you still want to make the purchase or improvements, and your spouse won't sign such an agreement, not all is lost as the law will generally reimburse the separate property contributions to a community asset (if made after 1984) – but you have to prove it with your records and tracing as discussed above.
f you are not sure about how to handle a possible separate property transaction that may involve community property, please go see a competent family law attorney. It is better to spend a couple of hundred dollars now rather than lose thousands of dollars later in a divorce because you didn't properly protect your separate property during the marriage.
If you haven't married yet, and you have separate property or assets, consider a pre-marital agreement that lets you and your future spouse decide about your property rather than allowing a Judge to possibly decide later. With a California divorce rate of over 50%, the reality is that your marriage only has a 50% chance of lasting – so be smart and be prepared.