(12) Community Property: Rights and Duties of Spouses

Question 1

Overall Rule & Exceptions

Manage Property

Answer 1

Each spouse has equal rights to manage and control community property. Thus a spouse may sell, encumber or otherwise dispose of community property without the others consent. Several Exceptions exist, including:
1. Real Property
2. Inter Vivos Gifts
3. Personal Property
4. Business Management

Question 2

Real Property

Manage Property - Exception

Answer 2

Real community property require both spouses to join the transaction. If one spouse sells or encumbers community real property without the other spouses consent the non-consenting spouse may void the transaction within one year if sold to a bona fide purchaser. If not sold to a bona-fide purchaser it can be voided at anytime.

Question 3

Inter Vivos Gifts

Manage Property - Exception

Answer 3

Inter vivos gifts of community property require written consent. If a spouse gifts community property without written consent then the other spouse may void the gift during the donor’s lifetime or may void half the gift after the death of the donor.

Question 4

Personal Property

Manage Property - Exception

Answer 4

Personal community property transfers for less than fair and reasonable value require written consent.

Question 5

Business Management

Manage Property - Exception

Answer 5

if one spouse is the primary manager and controller over a community property business. That spouse is required to provide prior written notice to the other spouse of any sale, lease, exchange, encumbrance or other disposition of all or substantially all of the property used in the operation of the business.

Question 6

Rule & Breach of Duty

Fiduciary Duty: Good Faith and Fair Dealing

Answer 6

Rule: Marriage is a confidential relationship which imposes a duty of the highest good faith and fair dealing on each spouse and neither shall take any unfair advantage of the other.

Breach of Duty: The following are a breach of this duty: (1) an intentional, grossly negligent, or reckless dissipation or destruction of property; (2) a gain in financial advantage at the expense of the other spouse. In such circumstances of breach the breaching spouses separate property can be used to reimburse the community.

Question 7

Who has the burden of proof re: Breach of - Fiduciary Duty: Good Faith and Fair Dealing

Answer 7

The spouse who obtained an advantage will have the burden of proving that the transaction was entered into by the other spouse freely and voluntarily with full knowledge of all the facts relevant to the transaction and the basic effects of the transaction.