When Spouses are Living "Separate and Apart" for Purposes of Determining When the Community Estate Stops Accumulating

The California Supreme Court has defined the rule as to when a couple is considered separated for purposes of cessation of community property.  Prior to the California Supreme Court's definitive "line-drawn-in-the-sand" ruling in In re Marriage of Davis (7/20/2015), the concept of when parties are considered separated might be explained as follows:

As long as one party communicates to the other that they believe the marriage to be irreversibly broken and they intend to live a separate life, and their actions match their words, the parties are separated within the meaning of Family Code section 771.  When pressed for more detail, some family law attorneys might offer that spouses can dwell in the same house, but as long as their actions support the fact that at least one party believes them to be separated, then they should be fine – with a caution that the client should not be providing or receiving marital benefits or the separation can be set aside by the court or the other party.

Now, in a post- Davis world, this advice and concept of living separate, but not necessarily apart, has been called into question.

We anticipated this reversal in case interpretation, and the California Supreme Court used the Davis case to do this.  In their definitive ruling in In re Marriage of Davis , in which they retraced legislative history circa 1870 to the present, they pronounced their emphatic decision, "[w]e conclude that living in separate residences ―is an indispensable threshold requirement‖ ( Norviel, supra, 102 Cal.App.4th at p. 1162) for a finding that spouses are ―living separate and apart for purposes of section 771(a)."

Family Code section 771(a) is the statute that determines when community property stops accumulating and separate property starts accumulating.  This issue touches nearly every divorce case, and in some cases can be a very costly determination.  In a case I previously tried, I successfully argued that a date of separation occurred six years later than husband contended…and I won…even though the parties lived apart for those six years and dated other people.  My client gained approximately $300,000 more in assets than she would have, had we lost that argument.  That case involved a middle class estate.  Imagine that in a high net worth estate, a similar ruling could mean millions of dollars being pushed from one ledger to the other.

I cannot stress enough that the issue of when spouses are living "separate and apart" for purposes of determining when the community estate stops accumulating, can be a very important issue.  This is particularly true in high asset cases, or when there has been a windfall, such as a lottery winning.  It can also impact a stay-at-home parent who continues to focus on the well-being of the children until the divorce is final.

Due to its potentially grievous impact on unknowing individuals, our California Supreme Court determined that parties are better served if they know the facts that are required in order for a date of separation to protect separate property assets.  The courts have grown weary with playing Jenga with litigants' lives as they pluck a fact out of a set of facts and move it to the top of the list as dispositive (in their mind) as to why there was or was not a true separation for purposes of determining the accumulation of separate property.  In the past, family law attorneys would caution separated clients to not even acknowledge anniversary dates with their separated spouse.  "Do not exchange gifts or cards, and for goodness sake – do not celebrate it over dinner!  Do not have sex (together), do your own laundry, cook your own meals, separate your bank accounts-act like a single person!  Act like a roommate…you wouldn't ask your roommate to (insert action here)…would you?"

Now, thanks to the Davis ruling, we have a clear test of whether one of the spouses has moved out and away from the residence that was once shared.  So, what used to be just one fact to be considered amongst many other facts, it is now a starting point – to wit, are the parties living in separate residences and apart from one another?  If so, has one person communicated a desire to have a final break in the marriage?  Did their actions and words continue uninterrupted from the original date of separation until the finalizing of the divorce?  If the answer is yes to all three questions, then you have a date of separation for purposes of Family Code section 771(a).

I can appreciate the need for a definitive rule that is not subject to mental gymnastics.  While I sympathize with the pending litigants whose cases may be turned upside down by the Davis ruling, we believe that having a definitive rule will work out best in the long run for all parties and their attorneys.  It should also serve to reduce attorney's fees to the litigants as the factual minutiae will not be as potentially determinative as it was pre- Davis.  However, we also believe that the Davis ruling won't be good law for very long.  Revised legislation is currently being contemplated to amend Family Code section 771 to effectuate wording clarifying that the living in separate dwellings is only one factor to consider and not a necessity for a finding as to a date of separation.

But, until the new legislation is formally enacted, Davis is the rule of law.

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