Legal Question in Business Law in California

Re: Divorce

Although this question is asked under "Business Law" and has some business aspects, the applicable law is California community-property law and the LawGuru lawyers under a topic heading such as family law or divorce law might be better prepared to answer knowlegably.

However, here's what I think. There is little to nothing to be gained by divorcing for this purpose. Family Code section 910(a) says: "Except as otherwise provided by statute, the community estate is liable for a debt incurred by either spouse before of during marriage, regardless of which spouse has the management and control of the property and regardless of whether one or both spouses are parties to the debt or to a judgment for the debt." See also Code of Civil Procedure section 695.020 which authorizes collecting judgments against one spouse from community assets.

Also, transferring property from one spouse to the other, or from the community to a spouse as separate property (a "transmutation") to avoid the claims of a creditor is fraudulent. Family Code section 851 says "A transmutation is subject to the laws governing fraudulent transfers."

Civil Code sections 3439 et seq. declare certain transfers to be fraudulent and allow suits to set them aside, and for damages against both the transferor and the transferee. A transfer is considered fraudulent if its purpose or effect is to "hinder, defraud or delay" a creditor or even a potential creditor. Whether the transmutation is done while married or as part of a divorce property settlement is immaterial.

Finally, I'd say that there may be a few types of suit or types of liability for which a spouse may not be liable under Family Code section 910(a), as the language of the section itself suggests. I do not know of any exceptions myself; that's why I suggest seeing a family law specialist.