California Family Code § 771 – Earnings After Separation as Separate Property

Summary

California Family Code § 771 provides that once spouses are separated, each spouse’s earnings and accumulations are generally considered that spouse’s own separate property. In plain language, this means that money earned or assets acquired by one spouse after the spouses have separated will belong only to that spouse, not to both spouses as community property. The idea is to draw a clear line at the date of separation: after that point, the “community” ceases to accumulate new property from either spouse’s labor. An important exception in this law is that if a minor child earns money under certain types of contracts (for example, some entertainment or sports contracts defined in another law), those earnings belong solely to the child, not to either parent.

Legal Citation

The statute can be cited as Cal. Fam. Code § 771. In legal documents, one might write it as “Family Code section 771” or “Cal. Fam. Code § 771(a)–(b).” Subdivision (a) contains the general rule about post-separation earnings being separate property, and subdivision (b) contains the special rule about unemancipated minors’ contract earnings. The current version of the statute was amended effective January 1, 2017, to use the phrase “after the date of separation of the spouses,” which reflects California’s legal definition of **date of separation** (see Family Code § 70).

Detailed Explanation of Family Code § 771

Family Code § 771 embodies a key concept in California community property law: after spouses have separated (meaning they have a complete, final break in the marriage), the earnings or income of each belong only to that person. During a marriage (before separation), most income either spouse earns is community property, owned equally by both. Section 771 creates an endpoint to that sharing by saying essentially “when you’re truly separated, new earnings aren’t shared.” This protects spouses from having to split money they earn after the marital relationship has ended in substance.

For Section 771 to apply, there must be a true **date of separation**. California law (Family Code § 70) defines “date of separation” as the date when there is a complete and final break in the marital relationship, proved by two factors: (1) one spouse has expressed to the other an intent to end the marriage, and (2) that spouse’s conduct is consistent with ending the marriage. Both intent and conduct are considered – often called a subjective intent and objective conduct test. Before 2017, the law required spouses to be “living separate and apart,” which courts interpreted to generally require living in separate households. In fact, in a 2015 California Supreme Court case, the court ruled that living in separate residences was a threshold requirement to be “separated” (meaning spouses who still lived under one roof could not be considered separated even if they acted like it) – this was the Marriage of Davis case discussed below. In response, the Legislature changed the law. Now, after the 2017 amendment, the focus is on the date of separation as defined by the two-part test above, and **physical separation into different homes is not strictly required** (though it is often strong evidence of separation).

In practical terms, Family Code § 771 means that if one spouse moves out and the spouses intend to end the marriage, each dollar that spouse earns at their job after that point is not subject to division with the other spouse in a divorce. Similarly, any income from investments or other endeavors a spouse receives after separation belongs only to that spouse. This statute therefore can significantly affect divorce property division, because identifying the correct date of separation is crucial – any ambiguity or dispute about when separation occurred can change what counts as community property versus separate property.

Subdivision (b) of § 771 is a narrower provision. It was added to clarify that if a minor child (not yet emancipated) earns income from certain contracts – for example, contracts in entertainment or sports that minors can enter with court approval (as described in Family Code § 6750) – those earnings remain the child’s separate legal property, even if the child is living with one parent. Normally, the wages of minor children could be considered to belong to their family unit, but this subdivision ensures that child actors/performers or similar retain their earnings for themselves.

Real-World Examples of § 771 in Action

Post-Separation Salary Increase: Imagine a couple separates on June 1. The wife gets a new job or a big promotion on July 1. Under § 771, the increased salary she earns after June 1 is her separate property. In a divorce, the husband would not be entitled to half of the wife’s post-separation paycheck. Only the earnings up to June 1 (while they were together) would be considered community property to be split.
Bonuses or Commissions Straddling Separation: Sometimes a spouse receives a bonus or commission after the date of separation, but it was partly earned by work done before separation. For example, a husband separates from his spouse in March, and in April he receives a quarterly bonus for work performed in January through March. In that case, a portion of the bonus (for January and February work when the spouses were together) would be community property, and the portion attributable to March (after separation on, say, March 1) would be the husband’s separate property. In practice, courts might prorate such earnings to determine the community vs. separate portions.
Lottery Winnings After Separation: If spouses have separated and one spouse then wins the lottery or receives a large payout, that windfall would be that spouse’s alone. For example, if a couple separated in 2024 and the wife happens to win a lottery in 2025, the winnings are her separate property under § 771. (Had they still been married with no separation, lottery winnings would be community property to split.)
Accumulations from Separate Business: Suppose a husband and wife separate, and afterward the husband starts a new business or continues an existing one on his own. The profits he accumulates in that business after the separation date belong solely to him as separate property. However, if the business existed before separation and increased in value due in part to efforts or funds during marriage, there may be some community claim for the *before-separation* portion of growth – but anything purely earned after the cutoff date is separate by virtue of § 771.
Child Performer’s Earnings: As an example of subdivision (b), imagine a 16-year-old child stars in a movie and earns income under a contract approved by the court. Even though that child lives with one parent, the money the child earned from the movie is the child’s own property – not the parent’s community or separate property. Section 771(b) ensures the minor’s earnings from certain contracts remain with the minor.

Notable Court Decisions Interpreting § 771

Over the years, California courts have grappled with what it means to be “living separate and apart” or “separated” for purposes of § 771. Here are some important published decisions that interpreted or applied this statute, with a note on what each held:

In re Marriage of Baragry (1977) 73 Cal.App.3d 444 – This early case involved a husband who had moved out of the family home and was living with a girlfriend, yet he continued to come back home frequently (dinner with the family, attending events with his wife, even doing laundry at the marital home). He argued that he was “living separate and apart” from his wife starting when he moved out, so his substantial earnings after that date should be his separate property. The Court of Appeal disagreed under those facts. It held that despite living in a different residence, the couple had not truly effected a “complete and final break” in the relationship because the husband kept one foot in the door (maintaining the semblance of marriage for social and family purposes). The court noted it would be unfair to let the husband benefit by claiming separation while still enjoying marital benefits. Thus, the court set the date of separation later (when he filed for divorce), making the earnings in that interim period community property. Baragry established that physical separation alone wasn’t enough – the spouses’ conduct must clearly show a final break.
In re Marriage of Norviel (2002) 102 Cal.App.4th 1152 – This case took a stricter view. The husband and wife in Norviel were still living in the same house even though the wife claimed they had emotionally and practically separated. The Court of Appeal (Sixth District) ruled that **living in the same residence is fundamentally incompatible with “living separate and apart.”** The court held that to qualify as separated under § 771, the spouses must be living in different residences – it called physical separation an “indispensable threshold requirement.” In other words, after Norviel, if you were still under the same roof, you legally could not be considered separated for purposes of ending community property. This decision created a bright-line rule but was controversial because it could force spouses to maintain two households to establish separation, which is not always financially feasible.
In re Marriage of Davis (2015) 61 Cal.4th 846 – This is a California Supreme Court decision that addressed the very issue raised by Norviel. In Davis, the Supreme Court agreed with Norviel’s interpretation of the then-current law: it ruled that spouses must be living in separate residences to be considered “living separate and apart” under the wording of § 771(a) as it existed at that time. In the Davis case, the couple had a complete breakdown of their marriage and were living largely separate lives (separate bedrooms, separate finances, etc.) but under one roof for a period of time. The Supreme Court, interpreting the phrase “living separate and apart,” concluded that the statute’s language required a physical separation into different homes. As a result, the wife’s earnings during the period they lived together (even though they considered themselves separated) were deemed community property. The Davis ruling provoked the Legislature to change the law. Soon after, SB 1255 was passed, which amended § 771 (and enacted Family Code § 70) to eliminate the strict separate-residence requirement. Effective January 1, 2017, the statute now uses “after the date of separation” and § 70 defines that term, allowing courts to find a separation date based on intent and conduct without absolute necessity of separate households.

*(Additional Note: In 2019, in a case called In re Marriage of Lee & Lin (41 Cal.App.5th 698), the Court of Appeal applied the new definition of “date of separation” from Family Code § 70 to a pre-2017 situation. The court affirmed that the couple’s date of separation was when the husband moved out and they showed no intent to reconcile. The decision also commented that the new statutory definition in § 70 is consistent with the older case law interpreting § 771. This shows that under current law, courts take a holistic view of spouses’ intent and behavior to fix the separation date, rather than simply asking if they live at different addresses.)*

Formulas and Calculations Under § 771

Family Code § 771 itself is a definition statute rather than a mathematical formula, but its application can involve some calculations in divorce proceedings. Key examples include:

Proration of Earnings or Bonuses: If a spouse receives income that spans the separation date, courts may calculate what portion of that income is community vs. separate. A simple method is pro-rating based on time. For instance, if a yearly bonus of $10,000 covers January–December and the couple separated on April 1 (i.e., 3 out of 12 months of that year they were together), about 25% of the bonus might be deemed community property and 75% separate property. Similarly, salary earned before the date of separation is community, and salary after is separate – so if a paycheck period straddles the separation, it can be divided by days to allocate the community share.
“Epstein” Credits (Reimbursement for Post-Separation Debt Payments): Section 771’s principle that post-separation earnings are separate leads to the concept of reimbursement when those earnings are used for a community benefit. California case law allows a spouse to claim an *Epstein credit* when they use their separate funds (for example, their income earned after separation) to pay a debt that was incurred during the marriage (such as a community credit card bill or mortgage). The formula here is essentially reimbursement dollar-for-dollar: if after separation Spouse A pays $5,000 of community debt with their own post-separation earnings, Spouse A can later get $5,000 credit or reimbursement during property division (assuming certain conditions are met and it was necessary payment). This prevents one spouse from unfairly shouldering a community obligation with separate money.
“Watts” Charges (Credit for Exclusive Use of Asset): Another calculation stemming from post-separation situations is a *Watts charge*, named after a case. If one spouse has exclusive use of a community asset after separation (commonly, remaining in the family house while the other spouse has moved out), the community may be entitled to compensation from the occupying spouse for that exclusive use. Practically, it’s calculated by taking the reasonable **market rental value** of the asset and prorating it. For example, if the family home could be rented to a third party for $2,000 per month, and Husband lives there alone for 6 months after separation, the total value of that use is $12,000. Half of that might be owed to Wife ($6,000) because she co-owns the asset but wasn’t able to use it during that period. This ensures fairness – one spouse isn’t getting a rent-free benefit without offset after separation.
Asset Valuation Date and Investment Gains/Losses: Section 771 can affect how assets are valued or divided by setting a cutoff. For instance, if spouses separated on a certain date, sometimes assets like retirement accounts, stocks, or businesses are valued as of that date, so that post-separation changes in value (which result from one spouse’s separate property efforts or market forces) aren’t automatically shared. In a divorce, the community portion might be calculated up to the date of separation, and anything after is separate. This isn’t a single formula, but it involves accounting and potentially actuarial calculations to segregate community vs. separate growth on investments.

Overall, the common theme in calculations derived from § 771 is dividing or reimbursing money according to the timeline: before separation (community) vs. after separation (separate). Many of the financial adjustments in a divorce (like the credits and charges above) aim to fairly allocate expenses and benefits that occur around the separation date.

Full Text of California Family Code § 771

California Family Code § 771.

(a) The earnings and accumulations of a spouse and the minor children living with, or in the custody of, the spouse, after the date of separation of the spouses, are the separate property of the spouse.

(b) Notwithstanding subdivision (a), the earnings and accumulations of an unemancipated minor child related to a contract of a type described in Section 6750 shall remain the sole legal property of the minor child.

Disclaimer: This page is for general informational purposes and does not constitute legal advice. Family law can be complex and fact-specific – if you have questions about how California Family Code § 771 might apply to your situation, you should consult a qualified family law attorney. Reading this summary is not a substitute for getting personalized legal advice.