California Supreme Court Ruling - What Does it Mean to Be Legally Separated?

On July 20, 2015, the California Supreme Court ruled that divorcing couples must live in different homes in order to qualify as legally separated and claim their income as separate property. At issue in Monday's ruling was whether a couple that continues to live in the same home for months (or years) before they divorce can qualify as separated for purposes of dividing assets. The state Supreme Court has said they cannot.

Under California's community property law, spouses must share their income and their jointly acquired property until they separate – at that time, each spouse gets to keep whatever they earn. The court's ruling clarified what it means for a couple to separate. "Living in separate residences is an indispensable threshold requirement for a finding that spouses are living 'separate and apart' for purposes" of keeping whatever they earn, the court said.

The ruling came in the case of Keith and Sheryl Davis. Ms. Davis filed for divorce in 2008 and listed the date of separation as June 2006, even though the couple lived under the same roof until July 2011. After reviewing the history of the law governing separation and assets, the court said it was convinced the Legislature intended for there to be separate residences as well as an accompanying demonstrated intent to end the marital relationship.

Chief Justice Tani Cantil-Sakauye wrote for a unanimous court: "A bright-line rule . . . promotes fairness by providing a measure of predictability to the parties and their attorneys, as well as clear guidance to judges."

Ms. Davis said she told her husband in 2006 that she was through with their marriage, and the two began acting more like roommates, taking their kids on separate vacations and using separate cars on back-to-school nights, according to court documents.

Mr. Davis listed the separation date as July 2011. He had left his job in 2006, while Ms. Davis started working full-time that year and substantially increased her earnings, according to the state Supreme Court. Monday's ruling now makes Mr. Davis eligible to receive a share of his wife's income for the previous five years, a period in which she made more money than he did.

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