Additional Property with a Unique Character Flashcards
Professional education or training & assignment of debt at divorce.
A certificate or degree is the property of the degree-earning spouse and it has no monetary value for purposes of division of property at divorce.
The degree-earning spouse must reimburse the community for direct educational expenses paid for with CP (including loan repayment) unless the community has substantially benefited from the education or training (presumption applies when degree was earned more than ten years earlier).
Remaining educational debts are assigned to the degree-earning spouse at divorce.
Non-tangible property: business or practices, including goodwill.
Assets of a practice or business purchased with CP funds (such as equipment, furnishings, etc.) or an increase in value of the business attributable to labor, skills, and effort of spouse are CP. (See Peralta/ Van Camp, below.)
Professional goodwill created during marriage is a CP asset. Difficult to value. Can use professional appraisal, partnership buy-out agreement, or comparable values.
Credit acquisitions.
Credit acquired during marriage presumed to be CP. Can be rebutted by showing that lender relied solely on SP to secure the loan (Grinius) (prior standard under Gudelj was that lender relied primarily on SP of one spouse for repayment). Consider source from which lender expected repayment; signer of note; source of security; purpose of loan; and lender’s intent in prior loans.
Installment payments
Determine pro rata share when SP and CP payments are both applied to SP purchase to be paid in installments.
Community Property Personal Injury settlements and awards [CPPI]
If 3d party is liable, damage award for injury during marriage is CPPI during marriage. At divorce, CPPI becomes SP that goes to injured spouse if (i) can be traced to award (not commingled with CP or SP) and (2) has not been expended – unless interest of justice requires giving some portion to non-injured spouse (up to 50%). Finally, if the injury occurred after permanent separation, the community has a right to reimbursement for expenses related to the injury that are paid with CP.
Retirement benefits.
Apply time rule if both CP & SP contribute to retirement or pension benefit: # of yrs worked during marriage divided by total # of yrs worked in full times value of pension.
Employment termination: severance pay.
When severance pay most resembles a retirement pension, it is treated as CP to the extent that the benefit was earned during marriage.
When severance pay more closely resembles disability pay, it has been classified according to its wage replacement function.
Work Benefits: Bonuses
Employment bonuses during marriage are generally defined as CP remunerative gifts. Working spouse may try to characterize bonus as a an independent gift, but not likely to succeed.
Workers’ Compensation & Social Security Disability Income (SSDI)
Disability pay (including workers compensation treated as wage replacement money if received during marriage is a community asset.
Benefits received after dissolution are the separate and personal right of the disabled spouse.
Disability versus retirement pay: When the beneficiary can choose between disability and retirement pay, anything received in excess of retirement benefits is disability pay is SP.
Life Insurance
Whole life insurance: proceeds are apportioned according to source of payment of premiums (SP or CP).
Term life insurance: Law is unsettled, but generally consider last term only and source of payment for that term (SP or CP). If spouse became uninsurable during marriage and is only eligible for the new term after marriage terminates because of roll-over, community may receive a share of proceeds.
Proceeds go to owner of property (SP or community); if non-owner paid premiums (for example, spouse), non-owner is entitled to reimbursement unless contribution was a gift.
