Top 5 Assets People Forget Are Community Property

1. Frequent Flyer Miles and Reward Points

Airline miles, hotel points, and credit card rewards accumulated during marriage are community property. They have value, even if that value is not always easy to calculate. A spouse who travels extensively for work may have hundreds of thousands of miles worth thousands of dollars.

The challenge is valuation and division. Airlines do not allow miles to be transferred between accounts in most cases. The court may award the miles to the traveling spouse and offset the value with other assets. Or the court may order the spouse to use the miles for the other parent’s travel when the children visit.

We include reward points in every financial disclosure. We ask clients about their travel habits, credit card programs, and loyalty accounts. These assets are easy to hide because they do not appear on bank statements. But they are community property and must be divided.

2. Intellectual Property and Creative Works

Books, music, artwork, patents, and trademarks created during marriage are community property. The copyright in a novel written during marriage belongs to the community even if only one spouse wrote it. The patent on an invention developed during marriage is community property even if only one spouse invented it.

The value of intellectual property is often speculative. A book that has not been published may have no current value but significant future potential. The court can divide the community property interest by awarding the creator the asset and giving the other spouse a percentage of future royalties.

For military families, this includes creative works produced during downtime on deployment. A service member who writes a memoir or develops an app during marriage must disclose it as community property. The fact that the work was created while away from home does not change its character.

3. Professional Licenses and Degrees

A professional license or degree earned during marriage is not directly divisible as property. But the community may have a reimbursement claim for the costs of acquiring the license or degree. Under California case law, the community that funded one spouse’s education is entitled to reimbursement if the education enhanced the spouse’s earning capacity.

This is different from dividing the license itself. The spouse keeps the medical license or law degree. But the community may be reimbursed for tuition, books, and living expenses paid during the education period. The reimbursement is a community property asset that must be addressed in the division.

We calculate these reimbursement claims in cases where one spouse supported the other through professional school. The claim is separate from spousal support, though the two are related. A spouse who invested in the other’s education has both a property claim and a support claim.

4. Security Deposits and Prepaid Expenses

Security deposits on rentals, prepaid insurance premiums, and refundable memberships are community property. These assets are easy to overlook because they are not income producing and do not appear on monthly statements. But they represent money that belongs to the community.

A $3,000 security deposit on a rental property is community property. A $2,000 prepaid annual insurance premium is community property. A $1,000 gym membership paid in advance is community property. These amounts add up, and they are often missed in financial disclosures.

We ask clients about every deposit, prepayment, and refundable fee they have paid during marriage. The other spouse is entitled to half the value of these assets. Do not leave money on the table because you forgot about a security deposit from three years ago.

5. Tax Refunds and Overpayments

Tax refunds for years when the parties filed jointly are community property. Even if the refund is received after separation, it represents taxes paid with community funds during marriage. The refund must be divided equally.

Tax overpayments are similar. If one spouse overpaid taxes through withholding and the refund is pending, the overpayment is a community asset. The same applies to tax credits, including child tax credits and earned income credits for years when the parties were married.

We also address tax liabilities. If the parties owe taxes for a joint return filed during marriage, the liability is a community debt. The divorce judgment should specify who is responsible for paying the liability and who is entitled to any refund. Without this language, disputes arise years later when the IRS finally processes the return.

The information on this website is for general information purposes only. Nothing on this site should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute, an attorney client relationship. Results vary based on specific circumstances, and past performance does not guarantee future outcomes.

Sources:

• Cornell Law School Legal Information Institute
• California Legislative Information
• Defense Finance and Accounting Service