Liability of Community Property FAQ’s
Liability of Community Property for Debts Owed by a Spouse – FAQs
There are several commonly asked questions in family law relating to the liability of community property assets to certain debts. Common questions include (and the answers are below):
- Are our community property assets liable if my spouse has a separate debt from before marriage?
- Are our community property assets liable if my spouse incurs separate debt during marriage?
- Are my community property earnings liable for my spouse’s separate debts incurred before we married?
- Is my separate property liable for my spouse’s separate property debt incurred before marriage?
Are Community Property Assets Liable for Separate Property Debt Incurred Before Marriage?
Yes, unless an exception applies. Cal. Fam. Code 910(a) states, “Except as otherwise expressly provided by statute, the community estate is liable for a debt incurred by either spouse before or during marriage, regardless of which spouse has the management and control of the property and regardless of whether one or both spouses are parties to the debt or to a judgment for the debt.” The term “during marriage” is defined in subpart (b) to specifically exclude any time period that parties are separated and living apart from one another.
Are Community Property Assets Liable for Separate Property Debts Incurred During Marriage?
Yes, unless an exception applies. Separate property debts may be incurred before or during marriage and therefore Family Code 910(a) applies. The common circumstance in which separate property debts are incurred during marriage stem from separate assets owed before marriage or acquired during marriage by gift, bequest, devise or inheritance. For example, if a spouse owns a business before marriage and during marriage that business incurs some substantial debts, the community property assets of both parties will be liable to pay for those debts.
What are the Exceptions to when Community Property Assets would not be Liable for Separate Debts?
The first exception when community assets are not liable for separate debts is when earnings during marriage by the spouse that did not incur the debt are deposited into a separate account and have not been commingled. (See below). The second exception is when a valid premarital agreement is executed with proper provisions and proper notice to the creditor before marriage. (See below).
Are the Earnings of one Spouse Liable for Separate Debts by the Other Spouse?
No, but only if certain steps are taken to protect those earnings. The spouse earning the income must be sure to keep their earnings in a separate account and not commingle their earnings with other community property. If the earnings are used to acquire a joint asset with the other spouse, the assets purchased will be subject to liability for the separate debt of the other spouse. Cal. Fam. Code 911(a) states, “The earnings of a married person during marriage are not liable for a debt incurred by the person’s spouse before marriage. After the earnings of the married person are paid, they remain not liable so long as they are held in a deposit account in which the person’s spouse has no right of withdrawal and are uncommingled with other property in the community estate, except property insignificant in amount.”
Is One Spouse’s Child or Spousal Support Obligation from Prior to Marriage Collectible from Community Property?
Child support and spousal support obligations “incurred” before marriage are treated as “separate” debts pursuant to the law. As a result, the community property assets of the parties will be subject to attachment to help cover such debts if the owing spouse goes into arrears. The earnings of the non-owing spouse may also be subject to pay such debt unless that spouse’s earnings are deposited into a separate account and not commingled. It doesn’t matter if the order for child or spousal support is modified or made during marriage.
Can a Premarital Agreement Help?
Yes. A valid prenuptial agreement may help to ensure that assets are kept separate and therefore not attachable by a creditor. The premarital agreement must be properly executed and it must be properly “published” to creditors to ensure that the creditor is effectively “on notice” of the prenup stating that the non-owing spouse will not be responsible for the debt during the parties’ marriage.
For more information about the liability of the community property of spouses or the separate property of a spouse during marriage for the separate debt of the other spouse, contact our office today for a free consultation. Our office is conveniently located and we offer free, easy access parking. Call our experienced attorneys today.