Writing their name on something is one of the earliest ways kids learn to declare they own an object. As an adult, having your name on an object remains one of the best ways to define ownership. Your name just gets written on the deed instead of the item itself.
However, it’s not a foolproof solution. Even if your name is the only one listed on the deed to your home or the title of your car, these assets may still be considered marital property. That means they could be eligible for asset division if you file for divorce. Here’s what you need to know about the impact of titles and deeds on the division of assets and how you can protect your possessions.
Understanding the Purpose of Property Titles
While people use the terms “deed” and “title” interchangeably, they are not the same. The person with the title to an asset owns that property; the title refers to the legal assignment of ownership. Parties with the title have the right to use the asset within the bounds of the law. However, titles are not physical documents or objects that can be held.
Deeds are, though. They are legal documents that explain who has the title to a piece of real property, such as land or vehicles. The names on the deed describe who has the title to the property and when it was acquired.
In most cases, saying someone has the title or the deed means the same thing: they own the property. However, there are some circumstances in which someone whose name is not on the deed may share ownership of the asset and its title. This issue is particularly common in marriage and divorce in California because of how state marital property laws work.
Property Titles vs. Community Property Laws
California is a community property state, as opposed to an equitable division state. Under state law, all assets a couple acquires during their marriage are jointly owned, regardless of who earned, bought, or accrued them. A few exceptions exist, such as gifts, inheritances, and items declared separate in prenuptial or postnuptial agreements. However, outside of these narrow exceptions, the assets you acquire during your marriage are community property.
So, how does the name on a title impact community property? In many ways, it doesn’t. Let’s explore three scenarios to understand how titling intersects with marital ownership laws.
Example A: Items Purchased After Marriage
Suppose you choose to buy a house after marriage, but your spouse’s credit score is poor, and they do not work. As a result, your name is the only one listed on the mortgage and the deed. You pay the mortgage out of your joint checking account, but your spouse doesn’t have income to contribute to the purchase.
So, is the house your separate property? No. Regardless of who’s name is on the title, it was acquired after your marriage and paid for using the money you earned after you got married. That means it is jointly owned and eligible for asset division. Theoretically, you could be divorced with your name still on the deed, but your spouse could be awarded the sole title. In this case, you’d need to go to the title company with a copy of your divorce decree to update the deed.
Example B: Items Purchased Before Marriage
What if you buy a house before you get married? That makes things a little more complicated. If you purchased it before your wedding and you’re the only name on the title, the home is initially your separate property. However, if you make mortgage payments with your marital income, it may become a commingled asset.
When an asset is commingled, it is partially separate and partially community property. For instance, suppose you had $500,000 in equity on your home when you married, and you paid off the remaining $500,000 mortgage balance using money you earned before filing for divorce. In that case, half the home’s value would be your separate property, but half would be eligible for asset division because you paid for it with community funds. This is true regardless of whose name is on the deed.
Example C: Items Acquired After Marriage With Separate Assets
There are circumstances when a title may have an impact, though. Suppose you have a source of separately owned funds, such as an inheritance or an investment account you funded before your marriage. If you purchase an asset entirely with those funds and title it solely in your name, it remains your separate property.
However, if you buy the house with separate assets but include your spouse on the deed, it may be considered joint property. Similarly, if you inherit a home and name your spouse on the deed, they may have the right to half its value should you divorce. This type of situation quickly becomes complicated, so it is best to discuss your case with a skilled high-asset family law attorney before adding your spouse’s name to any deed.
Legal Options for Protecting Your Assets
While having your name on the deed to an asset does not guarantee you’ll keep it in a divorce, there are techniques to protect your ownership of real assets. Contracts like postnuptial and prenuptial agreements are longstanding, trusted tools for clarifying asset ownership within marriages. You may also be able to keep gifts and inheritances separate by maintaining them in siloed accounts. However, these techniques require careful planning to protect your assets properly. If you have concerns about titles and deeds in your marriage or divorce, consider contacting the experienced Marin County family law attorneys at Kaspar & Lugay, LLP. We have decades of experience navigating California’s community property laws to help high net worth clients protect their assets. Schedule your consultation today to discuss how to safeguard real property in your marriage or divorce.