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When a trial court concludes that property contains both separate and community interests, the court has broad discretion to fashion an apportionment of interests that is equitable under the circumstances of the case.
After a court trial in a marital dissolution action, the trial court entered judgment regarding the character and disposition of certain property of the parties, including the wife's severance pay, stock options from the wife's employment, and a diamond ring. The trial court determined that the entire salary paid during the year after the wife's departure from her company was the wife's separate property. The trial court also held that the diamond ring belonged to the wife as her separate property. The trial court also concluded that the wife's stock options included both separate and community property. On appeal, the husband argued that the wife's severance pay of one year's salary was simply a modification of her original rights under the employment contract signed during marriage, and was partly community property.
Did the trial court err in its ruling with respect to the wife's severance pay, certain stock options, and the diamond ring?
No, with regard to the wife's severance pay and certain stock options. Yes, with respect to the diamond ring.
The court of appeal held that because the right to severance pay was acquired after the parties separated, the trial court did not err in awarding the severance pay to the wife as her separate property. Further, the stock options, like the severance pay, were part of a "new deal" entered at the time the wife's employment was terminated, and the time rule was appropriate for ascertaining the community's interest. However, the court held that the diamond ring was community property. Cal. Fam. Code § 852 simply did not provide for implied or oral transmutations of a substantial gift without a sufficient writing.