chap 2 CP Flashcards
real property acquired before marriage by H?
H’s SP
real property acquired before marriage by H and mtg plus upkeep paid by community for 30 years.
Who gets what?
House remains SP asset unless it was transmuted by agreement. However, community is entitled l to reimbursement for CP payments. In CA, allows buy in for CP. Norm, in AZ, is remains SP asset but comm gets reimbursement of all payments towards principal and shares in appreciation that took place during marriage in proportion to what share of it comm paid. OJO! _EVERY $ OF downpayment = principal. Double OJO: characterization of loan as SP or CP will affect % share in apreciation.
what is a defined benefit pension? Approach to distribution?
The amount of benefit to be paid is known in advance, usually related to # of years worked and level of seniority. It is the harder of the two kinds to value. Distribution can be in lump sum (preferred) discounted appropriately at time of dissolution or in a lump sum or periodic payments upon maturity. Payment of non-employee sps’s interest cannot be delayed past maturity unless with agreement and ct supervision under narrowly defined circumstances.
defined contribution
amt (usually a % of salary) contributed by employee is known, as is match by employer. Value can be affected by performance of investments, among other factors.
The $ value of present value can be known with certainty at dissolution as amt in the account. The CP share would be the current value of the right to withdraw the fully matured value
In Miller v Miller H argued that wife’s share was only what would have been available if account liquidated at dissolution, when employer match hadn’t vested yet. Ct. said no – the CP interest is in the pension benefit itself. So you have to find a way to figure it out, discount the present value, etc.
what are the two ways to distribute CP pension benefits?
Lump sum current discounted cash value OR
retained jurisdiction after respective % shares are calculated.
What factors are to be considered when determining discounted present cash value?
age, risk of vesting, risk of maturing, risk of death, inflation (maybe, maybe not depending on the interest structure).
Taxes NOT unless the retirement date is close enough so that the full picture for taxes can be appreciated.
What is core holding of Koelsch?
That non-employee spouse has a right to take at maturity, though not necessarily to force employee spouse to retire. The non-empl. sps does not share in the post-maturity increases. But one who waited until maturity to take, by inference from Miller, might still share in the pre-maturity increases (not expressly overruled in Koelsch). it’s confusing bcs examples were dealing with matured pensions. Factor to determine share of present value of pension should be numerator: # of months married while in the plan. Denominator: # of months in plan up to dissolution. Gives several alternatives for payment plans when one spouse intends to continue working. But the most important holding is that one spouse may not unilaterally control control the distribution of benefits to which the other spouse has a matured right.
Goodwill?
In AZ is part of the value of a community interest in an business developed during community. It is the present value of ability to earn in future. Scrupulous care to be taken in the many schemes of valuation to avoid including projections of future earnings. Ct must make a specific finding of value (factors to be considered) and how to be distributed.
Stock options:
For past performance, quasi-salary, use Hug Formula:
#months in this job pre-separation/ # months at job until exercisable.
For future performance, Nelson formula: time worked married from date option granted/total time worked from granting to exercisable
Characterization of prof’l degrees, licenses etc in AZ
Not property. An advanced degree is an educational achievement that cannot be simply purchased. Therefore neither SP nor CP. Can’t be sold, transferred, unique to the person holding, terminate upon death.
NB: AZ statute 25-319 specifically includes among factors to be considered:contribution to education of other spouse and contribution of the spouse seeking maintenance to the earning ability of the other spouse
What result when W works and puts H through school, then dissolution.
Can be taken into account under spousal maint. assuming there has not been a long community enjoyment of enhanced earnings. In facts like Payette (your turn/my turn) no K remedy. No spousal support bcs no need for it. Remedy was in quasi-K (for which mutual assent not necessary) and RESTITUTION is necessary an an equitable means to avoid unjust enrichment.
Involved in restitution is tuition, other expenses, but not ordinary living expenses. The latter can be offset in spsl maintenance but it seems like if you have one you would not have the other.
Wife could also pursue reimbursement (if not in fact in practice via the distribution of CP) for the unusual /extraordinary expenditures.
Debt: what is AZ system for classifying
Mixed community and separate. Separate is anything from before marriage as well as something borrowed during mrrg. by one spouse with no community benefit.
CP is available for Community Debt.
SP of the debt-incurring spouse as well.
SP of non-debtor spouse is hands-off during marriage for SP debt of other spouse.
CP may be attached for Pre-marital debt of one spouse but only to the extent that the funds would have been SP but for the marriage.
Sp debt from another state is treated as if it were incurred in AZ.
Torts
No automatic presumption. However, if the activity during which tort was committed benefited the community, or was a routine community activity, even if one sps only involved, tort is CP.
In the case of Neligence, there is no automatic presumtion.
In the case of an intentional tort, the burden is on plaintiff to prove that community benefited (or was actively engaged in) before it is considered CP. Presumption is that torts of malice are not community torts.
What are the Management and Control provisions in AZ for community liabilities.
Now governed by 25-214. Both spouses have equal management and control over assets and equal power to bind the community individually.
However, joinder is required for:
*Buy, sell, encumber RP or leases of more than one year.
*To guarantee, indemnify or offer surety.
NB: in partnerships, the community interest is in the personal property that the net partnership interest represents, not the assets of the partnership. In Az Cummins (1951) governs for now: The community interest in a partnership is subordinate to the powers of the partnership.
Cp debt at dissolution
Ct will order distribution between spouses, but not usually order to pay certain debts. Allocation can be as Ct finds best, debt doesn’t have to follow asset. UNALLOCATED DEBTS REMAIN JOINT OBLIGATIONS AND CREDITORS CAN GO AFTER EITHER SPOUSE.
