Consider using a margin loan?

If you’re thinking about using a margin loan during marriage, especially to help buy a house or fund something for both spouses, there are a few family law issues to keep in mind. Margin loans let you borrow against your investment account without selling assets. It might feel like a clean way to use separate property to support your family, but California law may treat that money very differently than you expect.

California presumes that property acquired during marriage is community property. That includes assets bought with borrowed funds. If you take out a margin loan during marriage using your separate brokerage account as collateral, and use the money for something shared like a down payment, that loan—and the asset purchased—may be considered community property. Even if the collateral is clearly separate.

In the Marriage of Grinius case, the court focused on whether the lender relied on community income or joint financials. If so, the loan proceeds were treated as community. This means that using your separate account as collateral might still create a community debt, especially if both parties are involved in the purchase or the asset is titled jointly.

This gets more complicated when the repayment comes from a joint account, or when there’s no written agreement clarifying the character of the funds. The result can be that one spouse takes on risk by using separate collateral, only to lose any separate interest in the property down the line.

If you’re thinking about using a margin loan during marriage, talk with a family law attorney first. We can help document your intent, keep your records clean, and avoid outcomes that feel unfair later. The earlier you clarify, the more flexibility you have.

When Separate Property Becomes Joint: Understanding Moore/Marsden and Family Code §2640 After a Refinance

“If I inherited a home during the marriage, and later we refinanced it into both of our names, do I still get my separate property back?”

The short answer is: Yes, but how we calculate it depends on timing—and two key tools in California law: the Moore/Marsden formula and Family Code §2640.

The Setup: Inherited Property + Refinance + Community Payments

Let’s say one spouse inherits a home during marriage—so it starts off as that spouse’s separate property under California Family Code §770. Over time, the couple pays the mortgage using community funds. Then, they refinance and put the home in both names, changing the character of the property to community property.

So now we’ve got three things going on:

1. The home was separate property by origin (inheritance).

2. The couple used community funds to pay down the mortgage.

3. The couple later transmuted the home to community property by going on title together.

Where Moore/Marsden Comes In

The Moore/Marsden formula is used to determine the community’s interest in a property when community funds were used to pay down the mortgage on separate property. It doesn’t just reimburse the amount of principal paid—it also gives the community a proportional share of the property’s appreciation.

But once the property is transmuted to community property—by adding the non-owner spouse to title—the legal landscape changes.

Where §2640 Steps In

If there was no express waiver of the original owner’s separate property rights (which is common), then Family Code §2640 applies. This statute allows a spouse to reclaim their separate property contributions, even when the asset is now community property—but only dollar-for-dollar, without interest or appreciation.

Here’s the key: To know how much to reimburse under §2640, you first need to calculate what portion of the property was still separate at the time of the refinance. That’s where the Moore/Marsden formula helps.

So, yes—Moore/Marsden is still relevant, but only to establish the separate property value as of the date the title was changed. After that point, the home is treated as community property, and future growth or payments belong to both spouses equally (unless agreed otherwise).

Putting It All Together

If you’re in mediation or litigation involving an inherited property that was later refinanced into joint names, here’s the usual sequence:

1. Use Moore/Marsden to calculate the separate vs. community interests up to the date of refinance.

2. Use that value as the basis for the separate property reimbursement under Family Code §2640.

3. Divide the remainder of the equity equally (assuming no other agreement exists).

Why This Matters

This scenario comes up all the time, especially when couples mix separate and community finances without formal agreements. Being able to trace and distinguish contributions—especially when inheritance and transmutation are involved—can make a major financial difference in divorce outcomes.

If you’re navigating these questions in your own case, working with someone who understands the intersection of family law and property characterization is key. It’s not just about who paid what—it’s about when, how, and what the law says about those payments.

10 Creative Ideas for a Prenuptial Agreement

Prenuptial agreements don’t have to be one-size-fits-all. A thoughtfully crafted prenup can reflect your unique relationship, protect your assets, and foster collaboration and trust. Here are ten creative ideas to make your premarital agreement both practical and fair:

1. Gradual Vesting of Separate Assets

• Allow premarital assets like businesses or real estate to gradually vest into community property over time. For example, a portion of the asset can become community property after five, ten, or fifteen years of marriage, reflecting your commitment to the relationship.

2. Sharing Real Estate Appreciation

• Keep the original value of real estate as separate property but treat any appreciation during the marriage as community property. This approach balances asset protection with fairness and acknowledges joint contributions.

3. Income Reclassification

• Income generated from separate property, such as dividends, rental income, or profits from a business, can be classified as community property. This ensures that both partners share in the financial growth during the marriage.

4. Annual Financial Gifts

• Include provisions for annual financial gifts from one spouse’s separate property to the other spouse’s separate property or to the community. These gifts can help support shared goals, like purchasing a home or saving for future expenses.

5. Customized Spousal Support Structures

• Define spousal support in a way that works for both parties. Options include lump sums tied to the length of the marriage, support that decreases over time, or formulas that reflect changes in financial circumstances.

6. Hybrid Community Property Approach

• Some couples choose to classify specific assets as separate property while treating others as community property. For instance:

• Retirement Accounts: Contributions during the marriage might remain separate property while other marital earnings are classified as community property.

• Income Streams: Income from employment could be community property, but income from certain passive investments might remain separate.

• Real Estate: Contributions to mortgage payments might be classified as community property, but the property’s value at the time of marriage stays separate.

7. Sunset and Modification Clauses

• Build flexibility into your prenup by including a sunset clause that ends certain provisions after a set number of years or modification clauses that allow for updates as circumstances change.

8. Equitable Sharing of Growth

• Agree that a percentage of the growth of certain premarital assets, like investments or businesses, will be shared as community property during the marriage. This recognizes the partnership’s contribution to financial success.

9. Real Property Contributions Without Reimbursement

• Allow for contributions of separate property toward the purchase of real property during the marriage without requiring reimbursement at the time of divorce. This provision can be a meaningful way to show generosity and commitment.

10. Estate Planning Integration

• Align your prenup with your estate plan to protect children from prior relationships while providing for your spouse. This creates clarity and avoids conflicts over inheritance.

Each of these ideas offers a way to personalize your prenup and reflect your shared goals. The best agreements aren’t just about asset protection—they’re about fostering trust, fairness, and a partnership mindset. If you’re considering a prenuptial agreement, I’d be happy to help craft one that meets your unique needs. Let’s work together to create a strong foundation for your future.

Premarital agreements, also known as prenuptial agreements or “prenups,” are powerful tools for protecting individual assets, defining financial responsibilities, and setting expectations in marriage. In California, these agreements are governed by strict legal standards to ensure they are enforceable and fair.

A premarital agreement is a contract signed by both parties before marriage, outlining how property, income, and debts will be handled in the event of divorce or death. In a community property state like California, where marital assets and debts are generally shared equally, a prenup allows couples to define what will remain separate property or how assets will be divided. This can be especially important for individuals with significant premarital assets, business interests, or financial obligations like children from a previous marriage.

To be enforceable in California, premarital agreements must meet specific requirements. Both parties must fully disclose their assets, debts, and income, and the agreement must be in writing and signed voluntarily. California law requires that both parties have at least seven days to review the agreement before signing, ensuring ample time to consider its terms. It’s also recommended, though not mandatory, that both parties have separate legal representation to avoid conflicts of interest and to ensure fairness.

Premarital agreements can cover a range of issues, including the division of property, spousal support terms, and financial responsibilities during the marriage. However, California courts will not enforce provisions that negatively impact child custody or support, as these decisions must be made in the best interests of the child at the time of divorce.

When done correctly, a premarital agreement can provide clarity, protect assets, and reduce conflict in the event of divorce. However, poorly drafted agreements or those perceived as unfair can be contested in court, leading to costly litigation. It’s essential to work with an experienced family law attorney to draft a solid prenup that meets all legal requirements and reflects the couple’s intentions.

For those considering marriage in California, a premarital agreement offers an opportunity to start the partnership with clear expectations and mutual understanding. Whether you’re looking to protect premarital assets, plan for future financial arrangements, or safeguard your business interests, a well-drafted prenup is an invaluable tool.

Exploring Deferred Sale of the Home in California Family Law

In California family law, a deferred sale of the family home can be a critical tool to ensure the well-being of children and fairness in spousal support arrangements during or after divorce proceedings. Here’s a closer look at what this entails, factors considered by the court, and practical implications for families navigating these decisions.

What Is a Deferred Sale of Home Order?

A deferred sale of home order allows one party to remain in the marital home temporarily, usually to provide stability for children or to facilitate a smoother transition. The court may treat this arrangement as a form of spousal support, specifying the duration of the order and details such as the legal description and assessor’s parcel number of the property. Once issued, these orders can be recorded with the county recorder.

Key Considerations for the Court

The court evaluates several factors to determine whether a deferred sale of home is appropriate:

1. Financial Feasibility:

The court assesses whether the remaining party can cover mortgage payments and related costs. This includes analyzing:

• The party’s income.

• Availability of spousal or child support.

• Other financial resources.

This step ensures payments are maintained, avoiding defaults and potential foreclosures, in line with the legislature’s intent.

2. Children’s Needs:

The court considers the length of time the children would benefit from staying in the home. Stability during divorce is often prioritized to minimize disruption to their lives.

3. Timeframe for Sale:

For the moving party, the court evaluates the time they might need to prepare and sell the home.

4. Equitable Impact:

Other factors include:

• Tax consequences for either party.

• Hardships that maintaining or selling the home might cause.

• Use of community or separate property funds to acquire or maintain the home.

• Any additional circumstances deemed relevant and just by the court.

Practical Implications

For families, a deferred sale can provide stability, especially for children, by allowing them to remain in familiar surroundings. However, it is essential for the parties involved to have a clear understanding of financial responsibilities to avoid potential conflicts or misunderstandings.

Bridging Legal Insight and Emotional Dynamics

As a family law attorney, my role extends beyond providing legal guidance; I aim to address the emotional complexities of these situations. A deferred sale of the home exemplifies how the law can balance fairness, financial considerations, and the emotional needs of families.

If you’re navigating this challenging process, understanding your financial situation, being open to communication, and seeking professional guidance can make a significant difference.