The short answer is…YES, if the wages or bank account funds are considered “community property.”
In California, the law presumes that any property acquired or wages earned during the marriage belong to both spouses, regardless of which spouse did the acquiring or the earning. Property subject to this presumption is called “California community property.”
This means Spouse # 1 is generally considered to have a “community property interest” in the wages of Spouse # 2.
California law allows a judgment creditor to levy against most types of “assets” owned by a judgment debtor. This includes assets that are California community property. So, Spouse # 1’s wages can be levied to pay a judgment entered against Spouse # 2. Similarly, an account that includes “community” funds can be levied even if it is held in the name of the non-debtor spouse.
Some exceptions apply for debts that pre-date the marriage. But, wages of the non-debtor spouse can’t be levied to pay debts that pre-dated the marriage. And, those wages remain immune to levy as long as they are kept in a (1) SEPARATE bank account in the non-debtor spouse’s name only AND (2) the funds are not commingled with “community” funds. [California FAM. CODE §911.]
What is “California Separate Property”?
On the other hand, inheritances are presumed to be what’s called “separate property”– that is, property that belongs 100% to the spouse who inherited it. There are other exceptions to general community property rules as well.
And, the general presumption of community property can be overcome if you can trace the source of the asset or funds to a separate property source.
For example, a wife inherits $10,000 from a relative and deposits it in an account with $200.00 that came from the husband’s paycheck. The account is levied to pay a judgment that was entered against the husband only.
If the wife can “trace” the source of the funds and show that only $200.00 is actually community property, then she may be able to overcome the presumption that the other $10,000 is community property.
Obviously, tracing becomes very difficult if co-mingling goes on for any length of time.
Solution: DO NOT COMMINGLE SEPARATE AND COMMUNITY PROPERTY! Get a separate account to hold any separate property.
How can you overcome a community property presumption?
You might also be able to overcome the community presumption if: (1) there is an agreement transmuting community to separate property, (2) you can trace the asset or funds to a separate property source, (3) the form of title by which the property is held allows you to rebut the community property assumption (but do NOT try this with joint bank accounts in California), (4) you can prove the asset was acquired by gift, will, or inheritance, OR (5) the asset was acquired after the parties separated.
Most people are shocked to learn that a bank account in a wife’s name only can be levied to pay a judgment entered against the husband. (And vice versa. This also applies to same-sex marriages as well.)
What can you do to prevent spousal garnishment and levy?
There are some preventative measures you can take, however. If your spouse has judgments against him or her, contact an attorney to find out how to protect your assets.