Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

COMMNUNITY PROPERTY > CALIFORNIA COMMUNITY PROPERTY > Flashcards

CALIFORNIA COMMUNITY PROPERTY Flashcards

1
Q

Basic Community Property Presumption

A

“All property acquired during marriage is presumed to be community property, unless acquired by gift or inheritance, in which case it is presumptively separate property”

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Characterization of Assets

A

The source presumption of an asset depends upon:

  1. who acquired the asset;
  2. how was the asset acquired; and
  3. when was the asset acquired
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Quasi-Community Property

A

Property acquired by one of the spouses while domiciled in a non-community property state that would have been community property had the spouse been domiciled in California or any other community property state at the time of the acquisition is Quasi-Community Property

Until divorce or death, the quasi-community property remains the separate property of the acquiring spouse.

BUT, property acquired in a non-CP state by spouses while domiciled in a CP state is CP, NOT QCP

At divorce, or on the death of the acquiring spouse, as well as for the purposes of creditors’ rights, quasi-community property is treated the same as CP

If the non-acquiring spouse dies first, the quasi-cp remains the separate property of the acquiring spouse.

if the property is acquired by both spouses in joint title in a non-cp state, follow the joint title rules

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Quasi-Marital Property

A

Putative spouse: one that has a good faith belief that he or she is lawfully married, even though they are not.

First set out rules regarding putative marriage and quasi marital property

handle the rest of the questions as if it were a regular CP question BUT always refer to Quasi Marital Property (QMP) rather than community or quasi-community property; SP remains discussed as SP

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Quasi-Marital Property

A

If you have a putative spouse fact pattern, lay out and discuss Quasi Marital Property:

“All property acquired during the putative marriage is labeled as Quasi Marital Property (QMP) whether it otherwise would have been CP or QCP.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Unmarried Cohabitants

A

Do NOT apply CP principles.

Apply Contract principles (express or implied contract) and if applicable, restitutionary remedies (unjust enrichment, constructive or resulting trust)

Consideration MAY NOT include sexual services

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Pensions, Stock Bonuses, and Options

A

Bonuses and pensions are treated as wages.

Bonuses, pensions and stock options acquired in part during marriage and in part outside of the marriage, use the pension time rule

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Pensions, etc. - Application of Rule

A

For bonuses, pensions, stock bonuses:

CP Interest = (total shares of stock/bonus/pension earned) x (years of marriage in which asset is earned/total number of years in which asset is earned until payable)

For stock options:

CP interest = ((total options) x (years from grant of options during marriage until dissolution)) / (years from grant of options until exercise)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Personal Injury Damages

A

Characterized based on when they occurred:

  1. Community Property if the personal injury cause of action arises during marriage
  2. SP if injury arises before marriage or post-separation
  3. SP if injury is due to tort of other spouse

For divorce purposes, community estate personal injury damages are assigned entirely to the injured spouse unless the interests of justice require otherwise

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Life Insurance

A

Proceeds are largely CP.
if deceased spouse names a beneficiary other than spouse, determine character.

Term life: character of proceeds is character of last premium paid

Whole life: cash value is allocated based on proportion of premiums paid by SP and proportion paid by CP; term amount (death benefit) based on character of last premium paid

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Disability Pay

A

Disability pay (including workers’ comp) is characterized by what it is intended to replace.

earnings during marriage (CP)
earnings before or after marriage (SP)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Business Valuation

A

When a business is developed entirely during a marriage, it is entirely community property. the Van Camp and Pereira rules do not apply

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Pereira/Van Camp Apply if:

A

Spouse brings SP business into marriage; OR spouse inherits SP business

AND

EITHER spouse works in the business AND
Business value increases at least in part due to efforts of either spouse

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Two theories for Community Increase

A

If you have a separate property business worked on by either spouse, and need to calculate the portion of value belonging to the community:

Pereira - increase in value due to management efforts

Van Camp - increase in value due to character of business

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Pereira

A

Management efforts of the spouse are the primary cause of the growth of the value of the business

SP portion = (Value of managing spouse’s SP business at time of marriage + [fair rate of return (10% per annum) value length of marriage])

CP = value at dissolution - SP portion

Pereira applied:

Value of business on date of marriage = $100K

Length of marriage = 20 years

Calculate CP and SP portion

SP = $100K + [($1ooK) x (10%) x 20)] = $300K

CP = $500K - $300K = $200K

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Van Camp

A

When the character of the business, or external circumstances, are primarily responsible for business growth in value, apply the Van Camp rules

(Market salary - family expenses paid from salary) * years of marriage = CP

SP = FMV of business at dissolution - CP portion

Van Camp applied:

W’s services worth $40K per year, but she takes only $25K per year in salary

W pays $5K per year in household expenses

Business operates 6 years during marriage at time of dissolution

Value at dissolution = $100K

Calculate CP and SP portions: ($40K - $5K - $25K) x 6 = $60K so that is CP, and $40K is SP

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Business Value

A

Courts use two business valuation methods

  1. market sales valuation (expert opinion) and;
  2. Capitalization (past excess earnings attributable to goodwill)

Court not bound by private valuation agreements

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Goodwill

A

Goodwill is the difference between total value and value of assembled physical assets

Represents those qualities that generate income beyond that derived from the labor of a spouse and the reasonable return on capital and physical assets

Goodwill is treated like CP if created during marriage (the difference between a business’ total value and the value of its assembled physical assets)

19
Q

Education and Training

A

Education and training acquired during marriage are NOT community property

Community has an equitable right of reimbursement, with interest, when community funds are:

  1. used either to pay for education or training or used to repay a loan used for education or training; and
  2. the education or training substantially enhances the earning capacity of the educated party

exceptions: reimbursement reduced or eliminated if EITHER:
1. already substantially benefited from the education and training (10 year presumption), or
2. if the education reduces the educated spouse’s need for spousal support

20
Q

Prenuptial Agreements

A

Agreements made before marriage (prenuptial agreements) do not require consideration, but they must be in writing signed by both parties to satisfy the SoF

Premarital agreements will not be enforced if they “promote divorce”

Premarital agreements will not be enforced if they are not “voluntary”

21
Q

Was Prenuptial Agreement voluntary?

A

The party against whom enforcement is sought:

  1. represented by independent counsel, or expressly waived representation;
  2. had 7 days to review before execution and advised to seek independent counsel; and
  3. if unrepresented, the party is
    - fully informed in writing of the terms and rights she would be giving up, and
    - proficient in the language of the agreement and the explanation, and
    - no duress, fraud, or undue influence
22
Q

Prenuptial Agreement - Unconscionability Test

A

Alternatively, a party could set aside a prenuptial agreement that is unconscionable when executed and the party did not and could not have had adequate knowledge of the wealth of the other party, and didn’t waive her right to disclosure of such wealth

23
Q

Agreements during Marriage: Transmutation

A

Agreements made during marriage to alter the character of property - transmutation

Pre-1985 Agreements: oral transmutation agreements OK

Post-January 1, 1985 Agreements: express declaration in writing

If property is acquired in joint tenancy before January 1, 1985 (or in tenancy in common BEFORE January 1, 1988), the property retains its joint character, and is treated as separate property

24
Q

Joint Title Rules

A

Under the anti-Lucas legislation all jointly held property acquired during marriage is presumed CP at divorce and legal separation. This applies to joint tenancy from and after 1/1/85; and to tenancy in common from and after 1/1/88.

  • but at death:
  • if joint tenancy = all to survivor
  • if TIC, to whomever inherits

SP contributions to the acquisition of the property are reimbursed to the SP contributor without interest or appreciation

25
Q

Credit Acquisitions

A

Refers to loans/credit obtained during marriage

Presumption is that it is a community debt

Presumption can only be overcome by evidence that lender primarily relied on the borrower’s SP in extending the credit

26
Q

Tracing of Funds

A

Two presumptions:

Family expenses are presumed to be paid first from community funds

When SP funds are used to pay family expenses, presume a gift of the SP to the community

Two methods:

Exhaustion: community funds exhausted by payment of family expenses, so only SP left

Sufficient funds: always sufficient SP funds so no need to commingle - if balance never fell below SP amount, presume all family expenses paid from CP, and enough SP left to purchase asset

27
Q

Community Payments on Purchase Price of SP

A

Fact pattern: property purchased before marriage - but uses CP (i.e., wages) to make payments after marriage

Apply the Moore formula - CP interest is proportional to amount of CP dollars used to reduce principal amount of loan

Moore applied:

Purchase price = $500K
Pre-marriage down payment = $150K
Loan = $350K
Marriage 1 year later - over 10 years, community pays $100K of loan principal 
Value on divorce: $1,000,000

Calculate CP interest: ($100K/$500K) x Value at divorce = 20% x $1,000,000 = $200K

28
Q

CP improvements to SP

A

When a spouse makes community payments to improve their own SP, the community is entitled to the greater of:

  • reimbursement or
  • amount by which the improvement increases the value of the asset

When a spouse makes community payments to improve the other spouse’s SP, presumed to be a gift (traditional) or reimbursement (modern)

29
Q

Sale of CP without Spouse’s Consent

A

A transfer to a good faith purchaser without knowledge of the marital relationship is presumed valid

The non-consenting spouse can overcome this presumption only if she:

  1. brings an action to void the transaction within one year of the recording of the transfer; and
  2. demonstrates she did not in any way consent to or participate in the transfer

IF she succeeds, she may void the conveyance, but she must first return the purchase price

30
Q

Sale of Personal Property without Spouse’s Consent

A

If spouse sells household furnishings, clothing and the like without the other spouse’s consent, community is entitled to reimbursement

31
Q

Debts and Obligations

A

Creditors’ rights follow management rights. Thus, a creditor may reach any property over which a debtor has the legal right of management and control.

Two major issues that are tested:

  1. which property (community, debtor spouse’s separate property, or non-debtor spouse’s property) is liable for the debts; and
  2. in what order of those types of property is the debt satisfied?

Discuss them separately and in that order.

32
Q

Types of Debts, When they are Incurred, and Which Property is Liable

A

Contract debts are incurred at the time the contract is made

A tort debt arises when the tort is committed

Criminal liability (for restitution, or fines) is treated in the same way as tort liability

Child and spousal support from a previous marriage is treated as a debt incurred before marriage

33
Q

Debts before Marriage

A

All the community property, and the debtor’s separate property, are liable for a contractual debt incurred by the debtor spouse BEFORE marriage

But the separate property of a non-debtor spouse is NEVER liable

34
Q

Debts During Marriage

A

All the CP and the debtor’s SP are liable for a debt incurred by the debtor spouse during marriage

The SP of a non-debtor spouse is only liable if the debt is contractual and is for “necessaries” (food, shelter, medicines, and the like)

Non-tortfeasor spouse’s separate property not liable (unless that spouse would be liable for the tort)

35
Q

Order of Satisfaction - Contract Liability

A

No order of satisfaction for contractual liability

ONLY an issue of WHICH property is liable to satisfy the contractual debt

36
Q

Order of Satisfaction - Tort liability

A

Activity benefits the community:

  1. CP
  2. debtor spouse’s SP

Activity not for community benefit

  1. first be satisfied from the debtor spouse’s separate property, and
  2. second, from the CP
37
Q

Assignment of Debts at Divorce

A

Community debts are assigned to the community
Separate debts are assigned to the debtor spouse

  • incurred by spouse before marriage
  • debts for non-necessaries incurred post-separation
38
Q

Bad Faith

A

If spouse expended funds in bad faith (for example, the spouse sold real property without other spouse’s consent and then spent it, or gambled away community funds), or deliberately dissipated CP, or acted with recklessness or gross negligence, the community is entitled to offset or reimbursement. But mere negligence is not grounds for reimbursement

39
Q

Exceptions - Spousal and Child Support

A

Spousal and child support from a prior marriage is considered prior debt, and payable from CP. But if, at the time of payment, SP was available to pay the support, the CP is entitled to reimbursement

40
Q

Exceptions - Pre-marital Debt

A

Also, if the non-indebted spouse put their earnings into a separate bank account in the spouse’s sole name to which debtor spouse had no access, those funds cannot be reached to pay any pre-marital debt of the debtor spouse

41
Q

Survivor’s (Widow’s) Election

A

Applies IF testator-spouse attempts to bequeath surviving spouse’s CP

Survivor may elect to either take benefits under the will OR their 1/2 of CP - BUT NOT BOTH

42
Q

Federal Preemption

A

Two part test:

  1. does the property right conflict with the express terms of federal law?
  2. if yes, does the state law cause sufficient injury to federal objectives to require preemption?

For bar purposes, just know which assets are subject to federal preemption

43
Q

Preemption

A

CP DOES NOT APPLY TO:

  • federal homestead law
  • armed forces life insurance benefits
  • US savings bonds, social security law
  • railroad retirement benefits and
  • VA disability benefits

CP DOES APPLY TO:

  • federal civil service and foreign service retirement benefits
  • ERISA pension benefits in a divorce are divisible under CP law

COMMNUNITY PROPERTY (1 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions