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PROPERTY RIGHTS

By Danny Santucci

Danny C. Santucci established the law firm of Santucci, Potter and Leanders in Irvine, California in 1980. He is now a sole practioner. His practice emphasizes business taxation, real estate law and estate planning. Mr. Santucci lectures for the Continuing Education of the Bar of California, Golden Gate University, and numerous state C.P.A. societies. Mr. Santucci also teaches a variety of tax, business and real estate courses, and is in demand all across the country as a speaker for all levels of professional and civic organizations and numerous major seminar circuits. The author of 25 texts, Mr. Santucci speaks to over 2,000 people per month and travels more than 150,000 miles annually. He is listed in "Who's Who in Creative Real Estate" and is admitted to the American Exchangor's Hall of Fame. Many thanks to Mr. Santucci for his generosity in sharing his wisdom with readers of Divorce Online. His book can be obtained from Santucci Publishing (714) 650-2140.

Before beginning a property settlement, the parties must know what property is owned separately and what property is marital. State laws obviously differ as to the legal relationship between and liabilities of spouses. While the specific property laws of each state vary, the following rules can be used as general legal principals.

* Marital property: Married couples accumulate property, called marital property. However, marital property will take various forms depending on state law.

* Common law property: Traditional common law practices developed in England and came to the United States with the colonists. Under common law, marital property is divided at divorce according to who has legal title to the property. Only property jointly owned by a couple can be divided by the court. Earnings belong to the spouse who has earned the income. Note: At the time of this writing (1996), only one state - Mississippi - is a strict common law jurisdiction.

* Community Property: In a community property state all earnings during marriage and all property acquired with those earnings are community property. On divorce, community property is divided equally between the spouses. However, in some community property states, a spouse deemed at fault in ending the marriage may be awarded less than 50% of the community property. Note: There are currently nine community property states - Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin.

* Equitable Distribution: In equitable distribution states, assets and earnings accumulated during marriage are divided equitably (i.e., fairly) at divorce. While equitable should mean equal, in practice, equitable often means that as much as 2/3 of the property goes to the higher wage earner and as little as 1/3 goes to the lower (or non) wage earner. However, some equitable distribution states require the "guilty" spouse to receive less than a full share of the marital property upon divorce. Note: Forty states follow equitable distribution principles.

* Separate property: All states permit a married person to treat certain earnings and assets as separate property. On divorce, this separate property is not divided, but is kept by the spouse who owns it.

In the equitable distribution states, separate property includes:

  1. property acquired by a spouse before marriage;
  2. property received in exchange for separate property;
  3. compensation for personal injury;
  4. gifts made to only one spouse;
  5. inheritances obtained by only one spouse.
Community property states typically treat as separate property:
  1. property acquired before marriage;
  2. property received in exchange for separate property;
  3. compensation for personal injury;
  4. property acquired during marriage with premarital earnings or with the proceeds of the sale of premarital property;
  5. gifts made to only one spouse;
  6. inheritances obtained by only one spouse; and
  7. property acquired after separation. Note: In both community property and equitable distribution states, the separate property of a spouse remains separate property unless mixed with marital property of the other spouse's separate property. However, appreciation of separate property may be considered marital property, especially if the spouse's efforts contributed to the appreciation.
Under strict common law, all property is the separate property of the acquiring spouse unless a title document shows otherwise. Earnings are a spouse's separate property, and assets acquired with those earnings are not divided on divorce unless they've been commingled with jointly owned property or the property of the other spouse.

* Asset division principles: Several general principles seem to guide courts in the division of asset and provision of support on divorce or separation:
  1. need; Note: A spouse should be supported sufficient to remain off public welfare which is a savings to all taxpayers. However, support should end when need ends.
  2. training and rehabilitation; Note: If the spouse lacks the necessary skills to be self- sufficient, asset and funds should be provided for training and rehabilitation. Such payments should be of a shorter duration with a fixed termination date to encourage the recipient to enter the job market.
  3. contribution; Note: Ideally, a marriage is an economic partnership to which each spouse contributes, although one may contribute services rather than income. Section 307 of the Uniform Marriage and Divorce Act provides that in allocating property and awarding alimony, "the contribution of the spouse as a homemaker of the family unit" should be considered. On divorce, such services may need to be valued.
  4. fault, and Note: Fault allocates asset to punish the spouse that caused the divorce. While no-fault divorce statutes predominate, even in California, where no-fault divorce started, fault is admissible in child custody cases.
  5. status. Note: This principle applies a standard of living test. It presumes that a spouse should be able to maintain a similar standard of living when the marriage terminates. However, the standard is the one that prevailed during the marriage and should not encompass the post-divorce success of the other former spouse.
Note: These are general principles and the results can vary not only from state to state, but also from case to case. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional services. If legal advice or other expert advice is required, the services of a competent professional person should be sought.

--From a Declaration of Principles jointly adopted by a committee of the American Bar Association and a Committee of Publishers and Associations.

Copyright March 1996 Danny Santucci

Posted on Saturday, February 24, 2007 at 01:35PM by Registered CommenterSite Administrator in | Comments Off

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