New Ruling: If You Don't Move Out, You Will Still Be Considered NOT Separated.
/On July 20, 2015, the California Supreme Court's Chief Justice Tani Cantil-Sakauye shared in a unanimous decision that the definition of "legal separation" is the date you and your spouse actually live in separate residences. This is huge. Many couples in California, either for the sake of the children, or the sake of financial planning, agree to separate living conditions in the same household/residence.
Remember the anecdotes about a separated couple "drawing a white line in the middle of the house", and living on their separate sides? That is no longer an effective separation. One or the other spouse, according to In Re Marriage of Davis (2015) Case Number S215050, only can consider their income and retirement earnings separate "while living separate and apart from the other spouse." Sharing a residence but having "separate lives", in the eyes of the Court, means you are not separated.
In a divorce proceeding, one of the most important factors in the division of assets, including retirement plans, is the date of separation. Many trial court issues involve both parties agreeing, or arguing, what is the true date of separation. For example, one party might claim it was the evening the parties sat at the dining room table, and told each other "it's over", and a spouse starting sleeping in another bedroom. One year later in the courtroom, the other spouse would claim "No, my spouse and I continued to share a bedroom on occasion, and we held ourselves to our children and/or neighbors as a married couple", thus claiming the date of separation is one year later.
The California Supreme Court just made that line of separation, so to speak, much easier: "living separate and apart." The Court made it clear that separate and apart is NOT sharing a house on separate floors. Every lower court in California may be breathing easier today, knowing there is a clear standard of separation today.
But will the party in the divorce action be breathing easier? Will the cost of litigation be reduced with this updated Date of Separation decision? Likely not. Consider the following situation:
1. The date of separation is the cut-off date where your spouse as an interest in your investments/retirement plans. The date your spouse has a 1/2 interest in your 401k, 403, IRA, CalPRS, CalSTRS, has now increased if you and your spouse are still sharing the same residence. You need to calculate whether the additional cost of moving (or your ex-spouse) moving to a separate residence may be worth saving hundreds, if not thousands of dollars in future retirement proceeds. This may well affect your, or your ex-spouse's decision to move out of the residence.
2. Arguing each party pays their post-date of separate credit card debt weakens: Now a spouse may be able to argue that his/her running up the community credit card a few thousand dollars for solely that spouses purchases must be paid back to the creditor by both of you. Why? Because that credit card use, if the parties agree to separate but still live together, is a community debt before the (post-Davis) date of separation. What is to stop one spouse from going crazy on a credit card if the parties are "separated", but still living together? Good question!
3. "Hooking up" with your separate spouse may no longer be an effective argument that there is no true separation. Need I give an example? Let's just say that if you or your ex-spouse hear that Elvis Presley song "Are You Lonesome Tonight", and stay over at the same residence for an evening, that may not be considered "living together" (thus, resetting the date of separation). As long as the separate residences are maintained, the occasional amorous meeting will likely not change that date.
4. If you divorce has been ongoing for over three, four, five years...and you and your spouse are still living in the same residence, what changes? Frankly, I cannot predict the result at the moment. Will each lower court, attorney, and party now have to completely recalculate computations on a divorce settlement that is currently pending? The additional cost, and the procedural mess as a result of this case might result in a follow-up Higher Court decision that will "grandfather" this ruling. In other words, divorces that begin after June 20, 2015 might only be affected by this new rule. Apparently, no grandfather clause yet exists.
Hold onto your hats folks, things may just get even more interesting in the next few months over this decision.