Characterization of Property - Community Property

California Family Code, section 760

760. Except as otherwise provided by statute, all property, real or personal, wherever situated, acquired by a married person during the marriage while domiciled in this state is community property.

761. (a) Unless the trust instrument or the instrument of transfer expressly provides otherwise, community property that is transferred in trust remains community property during the marriage, regardless of the identity of the trustee, if the trust, originally or as amended before or after the transfer, provides that the trust is revocable as to that property during the marriage and the power, if any, to modify the trust as to the rights and interests in that property during the marriage may be exercised only with the joinder or consent of both spouses.

(b) Unless the trust instrument expressly provides otherwise, a power to revoke as to community property may be exercised by either spouse acting alone. Community property, including any income or appreciation, that is distributed or withdrawn from a trust by revocation, power of withdrawal, or otherwise, remains community property unless there is a valid transmutation of the property at the time of distribution or withdrawal.

(c) The trustee may convey and otherwise manage and control the trust property in accordance with the provisions of the trust without the joinder or consent of the husband or wife unless the trust expressly requires the joinder or consent of one or both spouses.

(d) This section applies to a transfer made before, on, or after July 1, 1987.

(e) Nothing in this section affects the community character of property that is transferred before, on, or after July 1, 1987, in any manner or to a trust other than described in this section.

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In other words, if the property was acquired during the marriage while the parties were domiciled in California, a general presumption applies that the property is community. The presumption can be rebutted by showing by a preponderance of the evidence (i.e., that it is more likely than not) that the property is separate—that is, it was acquired before marriage, while the parties were living separate and apart, or by gift, or is otherwise traceable to a separate property source, or by establishing a contrary agreement or understanding.

The major exceptions to this basic community property rule are those relating to separate property. See, Family Code, sections 770 (separate property of married person), 771 (earnings and accumulations while living separate and apart), 772 (earnings and accumulations after judgment of legal separation), 781 (cases where damages for personal injury are separate property).

Section 760 is not the only portion of the Family Code that defines property classified as community. For example, Section 761 classifies property in certain revocable trusts as community property), and section 780 classifies damages for personal injury to a married person as community property.

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