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The Nexus Between Joint Tenancy Property and Bankruptcy

The California Supreme Court grappled with the issue over joint tenancy property, when one of the spouses files for bankruptcy protection. As you likely are aware, California is a Community Property state and there is a presumption that property acquired during a marriage is part of the community. When one of the spouses filed for bankruptcy protection, the court needed to determine the characterization of the property, which was held as a joint tenancy asset.

The California Supreme Court held that the community property presumption is superior to title, when the two issues conflict; when community funds are used to purchase an asset, the presumption is that the asset is community property under the family code and a dispute between the couple and the bankruptcy trustee arises; and when community funds are used to purchase an asset, the title of the asset is not sufficient evidence to convert presumed community property into separate property.