Date of Separation – Regaining Financial Independence

In a proceeding for legal separation or dissolution of marriage, the date of separation is an important financial date.  It is the date after which property (including earnings, retirement benefits earnings, lottery winnings, etc.) acquired by a spouse is the separate property of that spouse, as opposed to the community property of both spouses. (It goes without saying that if a significant disparity exists between the incomes of the parties, the date of separation may be advantageous to only one of them.)  There are day-long trials just to determine the date of separation because in many divorces it can be such an important financial date.  As a litigant, you should carefully consider the date of separation before preparing and filing the petition or, conversely, the response.
 
Specifically, Family Code section 771 states in part:  (a)  The earnings and accumulations of a spouse and the minor children living with, or in the custody of, the spouse, while living separate and apart from the other spouse, are the separate property of the spouse.
 
On July 20, 2015, the Supreme Court of California, after reviewing the history of Family Code section 771(a) and its predecessor statutes, clarified lower appellate court differences as to the meaning of “living separate and apart.”   Many courts believed the term could be construed to mean spouses could still live under the same roof if other indicia of finality of the marriage were present.  (This view tempers the harsh results of circumstances such as when a spouse cannot afford to relocated from the marital home.)

However, the Supreme Court of California determined that “the Legislature intended the statutory phrase “living separate and apart” and therefore the date of separation to require both separate residences and an accompanying demonstrated intent to end the marital relationship.”  (Marriage of Davis (2015).)  The term refers to “a situation in which spouses are living in separate residences and at least one of them has the subjective intent to end the marital relationship, which intent is objectively evidenced by words or conduct reflecting that there is a complete and final break in the marriage relationship.”  (Id.) The Supreme Court of California refused to stray from historical interpretation and invited the Legislature to correct the judiciary’s interpretation of Family Code section 771(a) if the Legislature believes public policy warrants it.

The Legislature has acted on the Supreme Court’s admonition to correct current law.  Senate Bill 1255 (Moorlach, R-Costa Mesa), amending Family Code sections 771, 910, 914, and 4438, and adding a new Family Code section 70, was signed by Governor Jerry Brown on July 25, 2016. It will become effective on January 1, 2017, and apply to all cases pending on that date.  

The new definition of the date of separation will overrule the Davis decision and remove the current heavy burden of having to end the acquisition of community property by living separate and apart physically when it can be financially impractical or impossible for one of the spouses to relocate from the marital home.  The latest amendment (of June 1, 2016) of the bill shows tentative Family Code section 70 to read:

(a)  “Date of Separation” means the date that a complete and final break in the marital relationship has occurred, as evidenced by both of the following:
       (1)  The spouse has expressed to the other spouse his or her intent to end the marriage.
       (2)  The conduct of the spouse is consistent with his or her intent to end the marriage.
(b)  In determining the date of separation, the court shall take into consideration all relevant evidence. 

Until January 1, 2017, however, to determine the date of separation there must be: (1) separate residences (although the Supreme Court of California acknowledged and left for another day the issue of whether separate residences can occur under the same roof); and, (2) at least one of the parties must reasonably demonstrate by words or conduct that the marriage is irreparably broken down.  The date of separation, and therefore the date on which a spouse’s current and future earnings and accumulations become his or her sole and separate property, is the date on which the later of these two prerequisites occurs.