California Divorce: Community Property Tracing Issues
Tracings are used to clarify what each spouse’s share of a marriage’s community property. In some cases, California law may require tracings. One scenario that commonly requires tracing is when commingled cash or assets were used to purchase property during the marriage. A commingled purchase is a transaction that was made using some separate property funds or assets and some community property funds or assets.
Tracing Issues in Orange County, California Divorce:
- Tracing may be used to characterize a marital asset as either community or separate property for the division of assets. Tracing determines community or separate property attributes of a marital asset that was purchased or acquired using commingled funds (some community property and some separate property). Tracing attempt to pinpoint if the asset belongs in whole or in part of the community estate or if it belongs to one party’s separate estate, or if it belongs to both, and in what part. For instance, when a mortgage principal payment is made for a separate property asset using commingled funds.
- Many California divorce cases include a “community property asset” or improvements to a community property asset that trace at least partly to a separate property source. For example, many parents gift their child part or all of their first home’s down payment. During a divorce or legal separation, California Family Code Section 2640 provides a tracing right of reimbursement to the community or separate property interests that purchased the property. This section of the law is the key to determining your legal interests regarding any claims to separate property used during your marriage.
- Reimbursement claims may also arise from payment of debts (joint or separate) using commingled funds. In some cases, tracing can be used to determine one party’s right to reimbursement of funds used to pay towards debt that is determined to be separate property.
- Many California divorce cases include unintended transmutations. A transmutation occurs any time the character of property changes from community to separate, separate to community, or one party’s separate property to the other party’s separate property. When this occurs, tracings may be necessary to establish legal interest for the parties involved.
Tracing is a method used to unwind transactions during a marriage where separate and community property/funds were commingled. The party seeking to declare a property as separate bears the responsibility of establishing reliable tracing evidence for the court.
If you are filing for an Orange County, California divorce and you have questions about property tracing issues, please don’t hesitate to get in touch with one of the experienced divorce attorneys at The Maggio Law Firm today.
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