California is a "community property state" meaning that all property real or personal acquired during a marriage is presumed to be community property. All other property, which includes property acquired prior to marriage or after separation and property acquired by gift or inheritance (regardless of whether the person is married) is considered"separate property".
The distinction between labeling an asset as "community property" or "separate property" is important for three main reasons.
In terms of management and control, both spouses have equal management and control of community assets, but neither can dispose of community assets without the knowledge and consent of the other. In contrast, each spouse alone has management and control of their own separate property assets and can dispose of these assets in any manner and without the knowledge or consent of the spouse.
Community assets may be levied against for a debt incurred by either spouse before or during marriage. For example, a court could force the sale of a community property asset to satisfy the pre-marriage debt of either party. In contrast, separate property assets can only be levied against for a debt incurred by the separate property owner.
Finally, absent an effective estate planning device (i.e., a will or trust), upon death community assets are transferred wholly to the surviving spouse; whereas separate property assets are divided between the surviving spouse and other living relatives.