4.B Difficult to Classify (Other) Flashcards
Disability pay, workers comp & severance pay?
These will be classified as CP if replacing CP wages.
Describe how wage replacements are handled?
A wage replacement is characterized based on when it is earned (i.e., earned during marriage, paid after, still CP).
How is a pension distributed at DEATH?
Example:
“Government Employee Pension” CP and your half in it (assuming it’s your spouses) can be devised by will. But if hubby is a private sector employee, with ERISA, cannot devise your half of that CP - rights end at death, federal law preempts CA law.
Disability pay?
Ask: Does it replace CP wages or SP wages? Spouse can opt for disability pay instead of pension, that can’t deprive community.
If paid in lieu of retirement pay, earned during marriage, then CP.
If MILITARY disability pay OR disability retirement pay, then always SP - federal law preempts CA.
If purely military retirement (no disability element), then CP.
Severance pay?
Treated as the wages it’s intended to replace/compensate for. But if it goes on for many years or until their death, treat as retirement pension - i.e., CP if earned during marriage.
How are pensions distributed at DIVORCE - if it has matured?
If it has MATURED:
1st: No. years in marriage / total pension-earning years (i.e. worked for 2 years, married for 1 = 1/2)
2nd: Multiply fraction by monthly benefit. Then divide in half for non-working spouse’s share.
Note: Can’t avoid pension payment - paid to spouse at divorce either out of the pension or from the other spouse.
How are pensions distributed at DIVORCE - if it has partially vested/not fully matured?
For vested/unvested pension, court will use its discretion.
Court can:
(1) reserve jurisdiction until fully vested;
(2) determine value as of that date and apportion, or
(3) when/if received, entitle spouse to portion.
What is the rule for armed services pensions?
If armed services pension or federal employee retirement benefit, distributed at divorce according to state law.
What is the community credit presumption?
All funds borrowed during a marriage and goods purchased are community property.
Creditor can reach CP and the debtor’s SP, but not the non-debtor’s SP. QCP treated the same.
To rebut presumption must prove that lender relied on separate property.
What is the rule for stock options (formula is a different flash card)?
Characterization depends on purpose: REWARDING past service or INCENTIVISING future service. If unvested, must look to EMPLOYER’S INTENT.
Formulas apply if awarded DURING a marriage but NOT VESTED at permanent separation.
What is the stock option formula if rewarding past service?
No. of stock options multiplied by following fraction:
No. years from start of employment to end of community OVER no. years from start of employment to date exercisable.
What is the stock option formula if incentivizing?
of stock options multiplied by following fraction:
No. years from grant date to end of community OVER no. years from grant date to exercisable.
How is education classified?
Costs of education obtained during marriage that enhanced earning power are reimbursed to the community.
There are four defenses:
(1) contractual waiver
(2) getting an education offset need for spousal support
(3) both obtained community-funded education
(4) community already substantially benefited (>10 years)
How are education loans classified?
Usually at divorce, division is 50/50, but there is an exception for student loans. They are assigned to the benefiting spouse.
How are personal injury awards handled?
If injury OCCURED during the marriage, award is CP (unless other spouse was responsible). If after permanent separation or before marriage, award is SP. At divorce, entire award to injured spouse (unless only community asset).
