We moved to California from another state. Is what we bought there community property?

Why the label depends on where you lived

California's basic rule on marital property is tied to residence. Family Code section 760 provides that, except as otherwise provided by statute, all property, real or personal, wherever situated, acquired by a married person during the marriage while domiciled in this state is community property. The words "while domiciled in this state" matter for a couple who married and earned elsewhere: on its own terms, section 760 does not reach a paycheck earned, or a car bought, while the household lived in Arizona, Illinois or New York.

The Legislature filled that gap with a second category. Section 125 defines quasi-community property as all real or personal property, wherever situated, acquired before or after the operative date of the Family Code in either of two ways. Subdivision (a) covers property acquired by either spouse while domiciled elsewhere which would have been community property if the spouse who acquired it had been domiciled in California at the time. Subdivision (b) covers property acquired in exchange for real or personal property, wherever situated, which would have been community property on the same assumption.

The Judicial Council's self-help guide on property and debts describes the result in plain terms: if you lived outside California for part of your marriage and then both of you moved here, what you earned and the debts you took out while you lived elsewhere are quasi-community property, and that property is treated like community property.

Applying the definition, one asset at a time

Section 125 asks a hypothetical question about each item: if the spouse who acquired it had been living in California on the day it was acquired, would it have been community property? If yes, it is quasi-community property now. If no, the definition does not apply to it.

That question is answered with California's own rules about what counts as separate. Family Code section 770 lists separate property of a married person as property owned before the marriage, property acquired after the marriage by gift, bequest, devise or descent, and the rents, issues and profits of that property. So an inheritance one spouse received while the family lived in Oregon would have been separate property in California too, and section 125 does not change its character. A savings account one spouse opened years before the wedding stays on the separate side of the line for the same reason.

Items that commonly fall within the definition include:

• Wages and salary either spouse earned during the marriage while the household lived in another state, and the bank or brokerage balances built from them.
• A car, furniture or other personal property bought during the marriage with those earnings, whichever spouse's name is on the title.
• Property later acquired in exchange for any of those items, which subdivision (b) reaches wherever the new property is located: for example, a car bought here with the trade-in of a car bought out of state with marital earnings.
• Debts taken out during the marriage while living elsewhere, which the self-help guide places in the same category.

How a California divorce divides it

Family Code section 63 defines the community estate as including both community property and quasi-community property. Section 2550 then directs that, except upon the written agreement of the parties, on oral stipulation in open court, or as otherwise provided in Division 7 of the Family Code, the court divides the community estate of the parties equally in its judgment of dissolution, or later if it expressly reserves jurisdiction to do so.

Put the two sections together and the out-of-state earnings and what they bought are divided on the same footing as everything acquired after the move. There is no separate pot and no different percentage for property from the years spent elsewhere. In general, as the self-help guide says, each spouse keeps their separate property, whether acquired here or in another state.

The restraining order on the summons covers it

Under Family Code section 2040(a), the summons in a divorce contains a temporary restraining order, and paragraph (2)(A) of that subdivision restrains both spouses from transferring, encumbering, hypothecating, concealing or in any way disposing of any property, real or personal, whether community, quasi-community or separate, without the written consent of the other spouse or an order of the court, except in the usual course of business or for the necessities of life. The same subparagraph requires each spouse to notify the other of proposed extraordinary expenditures at least five business days in advance and to account to the court for extraordinary expenditures made after service of the summons.

Quasi-community property is named in the text, so an account funded with earnings from a previous state is restrained just as an account opened in Los Angeles is. Subparagraph (B) allows either spouse to use community property, quasi-community property, or that spouse's own separate property to pay reasonable attorney's fees and costs to retain counsel in the case, and requires a spouse who uses community or quasi-community property for a retainer to account to the community for it.

Listing it on the disclosure and the forms

Family Code section 2104(c)(1) requires the preliminary declaration of disclosure to identify all assets in which the declarant has or may have an interest and all liabilities for which the declarant is or may be liable, regardless of whether the asset or liability is community, quasi-community or separate. Subdivision (c)(2) says the declaration may also state the declarant's characterization of each item. Nothing is left off because it was bought in another state or because one spouse believes it is separate; it goes on the list, and its character is a separate question.

The Judicial Council forms are built around the same categories. Item 10 of the Petition (form FL-100) is headed "Community and quasi-community property" and has a box, item 10b, asking the court to determine rights to those assets and debts, listed on a Property Declaration (form FL-160), on an attachment, or in the space on the petition. Form FL-160 has a box for a "Community and Quasi-Community Property Declaration," a single combined list kept apart from a separate property declaration, and column B on its pages asks for the date each item was acquired. The Schedule of Assets and Debts (form FL-142) tells each spouse to list all known community and separate assets and debts.

The acquisition date and the place the family lived on that date are the two facts that place an item. A couple who moved here partway through a marriage gathers, for each account, vehicle and debt, when it was acquired and with what funds, because section 125 turns on exactly those facts.

Real property in another state is outside the flat fee

A house, condominium, land or other real property located outside California is outside the flat fee. The law on it is in Family Code section 2660, which this post describes only as far as its text goes.

Subdivision (a) provides that if the property subject to division includes real property situated in another state, the court shall, if possible, divide the community property and quasi-community property so that it is not necessary to change the nature of the interests held in the out-of-state real property. Subdivision (b) provides that if that is not possible, the court may require the parties to execute conveyances or take other necessary actions with respect to that real property, or may award to the party who would have benefited from those conveyances the money value of the interest that party would have received.

Section 2660 speaks only of real property situated in another state. A bank account at a branch in another state, a vehicle titled elsewhere, or a house in California bought during the marriage with money earned before the move is not real property located in another state, and section 2660 does not address those.

What the statutes leave unanswered

Section 125 turns on where a spouse was domiciled when the property was acquired, and none of the sections read for this post defines domicile or explains how to decide it when a family split its time between two states, moved in stages, or kept a home in each. Those questions depend on facts the statutes do not address, and this post does not try to answer them.

The statutes also say nothing here about the law of the state the couple left, or about how that state would treat the same property. What this post describes is what a California court applies in a California divorce under sections 63, 125, 760, 770, 2550 and 2660.

Out-of-state property in an uncontested divorce

In section 2550, the words "except upon the written agreement of the parties" are what make an agreed divorce work. The self-help guide notes that spouses can agree to something other than an equal split if both think it is fair, and that even if you divided everything informally when you separated, a judge still has to make a formal order. In the guide's words, until there is a court order the property and debts of the marriage still belong to both spouses. A written settlement agreement attached to the judgment is how two spouses who moved here tell the court which item goes to whom, with the quasi-community items listed alongside the rest.

Before that agreement is signed, the declaration of disclosure each spouse serves under section 2104 lists the property from the earlier state along with everything else. Law Offices of Rozsa Gyene, acting for one spouse only, prepares and reviews every document for a flat fee; the engagement is limited in scope under California Rules of Court, rule 5.425. Filing is left to the client, who receives written filing instructions reviewed by the attorney. No filing, service, court appearance, notary, or preparation or recording of deeds is provided by the office. Rozsa Gyene, State Bar of California No. 208356, 3500 W. Olive Ave., Suite 300, Burbank, CA 91505.