Basic Principles Flashcards
These statutory definitions apply unless the character of an asset has been altered by:
- the parties’ agreement (premarital or during marriage);
- parties’ conduct; or
- how title was taken.
Separate Property (SP):
- Property owned by either spouse before marriage; or
- Property acquired during marriage by gift, will, or inheritance; or
- Property acquired during marriage with the expenditure of separate funds
- The rents, issue, and profits derived from separate property.
Property acquired during marriage with the expenditure of separate funds - we call this:
We call this “source” rule or “tracing.”
Community Property (CP):
Property, other than separate property, acquired by either spouse during marriage. The most common examples are: (i) salary or wages earned by either spouse, and
(ii) the income from community assets.
There is a community presumption:
all assets acquired during the marriage are presumptively
community property. Absent a showing of the parties’ agreement or that title was taken in a form that overcomes the community presumption, the burden of proof that a particular asset is separate property is on the party so contending.
California has extended its community property system – as of 2004, the community property system applies to WHOM upon filing a Declaration of Domestic Partnership with the Secretary of State
registered domestic partners
California has extended its community property system is only available to:
(i) same sex couples, and
(ii) elderly opposite-sex couples receiving Social Security benefits.
Legality of Same Sex Marriage in CA
Legal
Start every essay like this:
- CA is a CP state.
- There is a community presumption where all assets acquired during the marriage are presumptively community property
- There are areas of SP:
- Property owned by other spouse by marriage
- Gift will or inheritance
- Expendature of other funds
- Rents Issues and Profits
When did the economic community end?
- Permanent Physical Seperation; and
- Intent (only 1 party necessary) not to resume the marital relation
In a divorce setting, when are earnings no longer CP?
Upon filing for divorce
Continuing Jurisdiction and Division under this
For community property not divided on divorce, the court retains continuing jurisdiction to award CP that was not previously adjudicated, and on motion the omitted or
unadjudicated CP will be divided 50-50 unless the court finds that “the interests of justice require an unequal division.”
How is community property handled on divorce?
Absent a property settlement agreement, all community property must be divided equally
Disparity in earning power can be considered only as to:
spousal support (alimony) and child support
Each and every community asset (and liability) must be divided
50/50
Economic Circumstances exception
can have non-pro rata division, giving particular asset wholly to one spouse and “cash out” other spouse with other assets (with each spouse getting 50% of total value).
Statutory exceptions to “equal 50/50 division on divorce” rule, with one spouse ending up with more than 50% of total value:
- One spouse misappropriates CP, whether before or during pendency of divorce.
- One spouse has incurred educational debts; treated separately as separately incurred debt (take law school loans with you!)
- One spouse incurred tort liability not based on activity for benefit of the community.
- Personal injury award is CP but on divorce is awarded to injured spouse (unless interests of justice require otherwise).
- “Negative community” – community liabilities exceed assets; relative ability of spouses to pay debt is considered (concern is protect creditors).
When Can you gift CP?
neither spouse can make a gift of CP without the other spouse’s written consent
Whats the consequence if one of the spouses unilaterally makes gift of CP w/o written consent?
set the gift aside in its entirety
If spouse does not learn about the donation of CP till after the divorce - can do what and recover from who?
- set aside the gift as to her 1/2 CP
- recovery will be from either the donee or former spouse - whichever is easiest
Only exception to party not being able to give CP away is when:
US government savings bonds are involved.
- In this case, federal law trumps, and there is federal preemption.
Each spouse has the power of testamentary disposition over
all of his SP, but only over ½ of the CP.
Widows Options:
- take under the will and receive her residuary estate
- take against the will, by claiming her ½ CP and relinquishing all testamentary gifts
community credit presumption
Funds borrowed during marriage, and goods purchased during marriage, are presumptively community credit.
borrowed funds (and credit purchases) are classified according:
to the primary intent of the lender
We look at where the lender is looking for satisfaction of the debt.
Confidential relationship raises fiduciary duty; presumption of undue influence
Spouses are subject to fiduciary duties that arise from their confidential relationship, imposing a duty of the highest good faith and fair dealing with each other. If one spouse gains an advantage from a transaction, a presumption of undue influence arises. That spouse has the burden of proof to show she did not breach her fiduciary duty.
What is a breach of the spouses fiduciary duty?
a grossly negligent and reckless investment of community funds is a breach of a spouse’s fiduciary duty.
