Steven Fernandez |

Community Property

No one gets up in the morning and expects to be involved in a car accident. Unfortunately, accidents happen every day. Accidents don’t just affect the drivers and passengers who were involved in the crash. Injuries, financial expenses, and emotional trauma can also have a huge impact on family members. Legal issues arising from an accident can also be particularly troubling for families. It’s possible that you could be held financially responsible if your spouse causes a serious accident.

California is a Community Property State

The way in which you own property changes when you get married. Before marriage, you are the sole owner of all of your property and debts. After marriage, you share ownership of property with your spouse. How property is shared depends on where you live. California is one of nine community property states in the country.

Community property typically refers to assets (and debts) that either spouse accumulates after marriage. Anything you owned prior to getting married is classified as separate property. Certain assets acquired during the marriage –  including inheritances and some personal injury settlements – can also be classified as separate property. You retain full ownership of separate property unless you take steps to put it in your spouse’s name, as well. Community property, on the other hand, is owned jointly by you and your spouse. You each share a one-half interest.

Is Community Property Vulnerable In a Personal Injury Lawsuit?

Let’s say that your spouse is involved in a Los Angeles car accident. After an investigation, it’s clear that she’s at fault. The other person involved in the crash has suffered some very serious injuries. It’s unlikely that insurance will cover the victim’s full costs. In order to recover additional compensation, they file a personal injury lawsuit against your spouse. They’re demanding $100,000 in monetary damages for medical bills, lost wages, and emotional distress. If the lawsuit is a success, your wife will be on the hook for paying the victim for their injuries.

Most of your assets are considered community property. This can include wages and income, retirement accounts, and real estate. Community property can be fair game for creditors. Courts can also issue orders to seize assets, garnish wages, and secure property to pay for a personal injury settlement. The property you own together with your spouse can be taken without your consent, even though you have a legitimate ownership interest.

How Can I Protect My Property If My Spouse Causes Accident?

There are ways to protect your assets should your spouse find themselves in trouble.

Convert Community Property

Separate property, or those assets you own individually, is typically fully insulated from your spouse’s legal troubles. A creditor or court can’t go after your separate property to pay for your spouse’s debts. An asset’s legal classification (i.e., community vs. separate) isn’t set in stone forever.

Just because something you own is currently classified as community property doesn’t mean that it has to stay that way. You do have the right to strategically convert community property into separate property. However, you and your spouse will both have to be on the same page and agree to make the change. Converting the asset into your separate property essentially takes your spouse’s ownership right away.

If you get divorced, you’ll own that property free and clear. The property will also be protected if your spouse is named in a lawsuit or finds themselves in legal trouble.

Use Separate Bank Accounts

Joint bank and financial accounts can make your life as a married couple much easier. You can funnel both incomes into a single account and manage it together. However, joint accounts are community property. You risk losing assets if your spouse is in trouble. You can avoid this by simply keeping separate financial accounts. You keep your income and money in one account, and your spouse keeps theirs in another. This way, at least some of your money will be protected if legal issues arise.

Consult With an Experienced Attorney

It’s important to speak with a qualified personal injury lawyer any time you are involved in an accident. Others will be quick to point fingers and blame you (or your spouse) for any injuries they suffer. However, just because you’re partially to blame for an accident doesn’t mean you should be fully responsible for damages. In California, fault is apportioned between at-fault parties. You’re only responsible for damages up to the degree you caused an accident. Hiring an attorney will help to limit your liability if you share fault. The less fault you share, the less money you’ll owe. This, on its own, can help to protect your assets.

Are you interested in learning more about how you can protect your marital assets? Contact the family law attorneys at Fernandez & Karney. We offer a free consultation and will help you fully understand your legal rights and options. Call today to learn more.