Community property principals govern property division in a divorce proceeding under California law. Therefore, both spouses are presumably entitled to an equal share of all community property assets and liabilities. However, the marital community is not entitled to a spouse’s own separate property.
Under California law, any real or personal property that a spouse acquires during the marriage is considered to be community property, except for property a spouse receives as a gift or through testamentary transfer. All property that the spouse receives before marriage and after separation is considered the spouse’s separate property.
Real property includes an individual’s ownership interest over land. Personal property refers to items that are movable from one place to another. Personal property includes money and an individual’s interest in receiving money.
Characterizing Personal Injury Damages as Separate Property
Under Family Code Section 781, all “money or other property received or to be received by a married person in satisfaction of a judgment for damages for personal injuries, or pursuant to an agreement for the settlement or compromise of a claim for those damages, is the separate property of the injured person if the cause of action for the damages arose as follows:
1)After the entry of a judgment of dissolution of a marriage or legal separation of the parties.
2)While either spouse, if he or she is the injured person, is living separate from the other spouse.”
For example, if a married couple got a divorce accompanied by a final judgment in 2015, and the husband was injured in a slip and fall accident in 2016, an award or settlement for damages regarding his slip and fall injuries will be considered his separate property.
Additionally, an award for damages also qualifies as separate property if the cause of action arose while the married couple separated. To illustrate this concept, imagine that a married couple separated with the husband moving out of the marital residence in January of 2015. A month later, the husband was bitten by a neighbor’s dog in February 2015. The couple filed for divorce in March 2015 and concluded on January 2016. If the husband received an award or settlement for damages relating to his dog bite injury in February 2015, it would be his separate property.
Characterizing Personal Injury Damages as Community Property
Under Family Code Section 2603, “community estate personal injury damages” means “all money or other property received or to be received by a person in satisfaction of a judgment for damages for the person’s personal injuries or pursuant to an agreement for the settlement or compromise of a claim for the damages, if the cause of action for the damages arose during the marriage but is not separate property as described in Section 781, unless the money or other property has been commingled with other assets of the community estate.”
For example, if a wife was injured in a car accident in 2013 and got a divorce in 2015, an award or settlement for damages is regarded to be community property. This is true even if the award or settlement for damages was received after 2015.
However, unlike other community property, community estate personal injury damages are assigned to the injured spouse upon divorce. California law gives the court discretion on how to distribute damages upon dissolution of marriage, but the injured spouse is guaranteed to receive at least half of the awarded damages – no less.
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