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Separated in the same house? An FAQ on the Davis ruling

Growing estranged from a spouse yet sharing the same house is an emotionally difficult but not uncommon experience. But when does estrangement become an actual legal separation that affects property division?

After all, if the parties are merely estranged, but not separated, property accumulated by a spouse is still community property, not separate property, and must be divided.

Last July, in a case called Davis v. Davis, the California Supreme Court held that under section 771 of the Family Code, spouses must physically live in separate residences in order for property that they acquire to be classified as separate property. The holding overturned a Court of Appeals ruling and has led to lively debate about whether the Legislature should change the law to get rid of the separate residences requirement for separation in certain circumstances.

The Legislature has not yet acted on any of these proposals. In this post, we will address some frequently asked questions about the Davis ruling.

What were the facts of the Davis case?

Davis involved a couple who were married in 1993 and had two children, one born in 1995 and the other in 1999.

After the second child was conceived, sexual intimacy stopped. Eventually there were separate bedrooms, separate vacations, separate bank accounts and separate trips to children's activities. There was also a joint bank account, though each party was dissatisfied with the other's contributions to it.

Despite the estrangement, the two people stayed in the same house, thinking this was best for the children. The wife informed the husband in January 2006 that she was "through." But she did not file for dissolution of the marriage until December 2008. She finally moved out of the house in July 2011.

Why does the date of separation matter so much?

The date matters because if the parties are not separated, a spouse's earnings (and accumulations of value of existing separate property) are not separate property. And if the amounts of separate property are affected, that can affect the entire property settlement in a California divorce.

In Davis, the parties were five years apart on the date of separation. The wife put it in 2006, when she told her husband she was done with the marriage. The husband put it in 2011, when she moved out of the house. After 2006, the wife's earnings went up considerably, as she began working full-time.

If one party is financially stronger than another, this can result in an advantage for that party upon separation. This point comes out strongly in an article in the Fall 2015 issue of the Journal of the California Association of Certified Family Law Specialists.

For example, suppose one spouse has a well-paying job with retirement account contributions while the other is a homemaker. In that type of case, allowing the well-paid spouse to announce a separation without actually moving out of the home could disadvantage the economically weaker spouse by classifying accumulations in the retirement account as the well-paid spouse's separate property.

What does "living separate and apart" mean?

In Davis, the California Supreme Court was interpreting section 771(a) of the California Family Code. Under this section, a spouse's "earnings and accumulations" are separate property if the spouse is "living separate and apart" from the other spouse.

The Davis made clear that a merely mental separation from the other spouse is not sufficient to make earnings and accumulations into separate property. This is true even if one of them has expressed an intention to end the marriage.

Instead, Davis announced a bright-line rule that living separate and apart means living in separate residences?

Might there be exceptions to the separate-residences rule for separation?

The court did insert a footnote in its opinion indicating that exceptions could be possible in certain circumstances to the rule that separate residences are required for separation. And the two spouses could conceivably make an agreement that stipulates a separation date, even if there has been no physical leaving or moveout.

And of course it is possible that the California Legislature will act to overturn Davis.

Regardless of what happens next, the changes in the law make it especially important to get knowledgeable legal counsel when facing issues of legal separation.

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