Characterization of Property

Question 1

Community Presumption

Answer 1

all property acquired during marriage by the labor of either spouse is PRESUMPTIVELY community property

Absent agreement showing alternative intent, burden of proof that a particular asset is separate property is on the party so contending

Question 2

Separate Property

Answer 2

(1) Property owned by either spouse before marriage; (2) property acquired during marriage by gift, will or inheritance; (3) property acquired during marriage with the expenditure of separate funds; or (4) rents, issue, and profits derived from separate property

Question 3

Community Property definition

Answer 3

Property, other than separate property, acquired by either spouse during marriage

Most common examples are (1) salary or wages earned by either spouse, and (2) the income from community assets

In 2004, CA extended CP system to apply it to REGISTERED DOMESTIC PARTNERS upon filing a Declaration of Domestic Partnership w/ Secretary of State, retroactive to January 1, 2000. Available to (1) same sex couples, and (2) elderly opposite sex couples receiving social security

Question 4

Economic Community Termination

Answer 4

(1) permanent PHYSICAL separation, AND (2) intent not to resume the marital relation (only needed from one party)

Question 5

Overcoming CP presumption

Answer 5

(1) statutory facts that it is SP; (2) agreement that property would not be CP; (3) BOTH spouses KNOWINGLY took title jointly in a form other than cp; (4) one spouse took title in a form that evidences a GIFT to the other spouse; or (5) the purchase funds are TRACED to an SP source

Question 6

Community Property upon divorce

Answer 6

Absent a PROPERTY SETTLEMENT AGREEMENT, all CP must be divided equally

Question 7

Disparity in Earning Power

Answer 7

Considered only as to spousal support (alimony) and child support

Question 8

Economic Circumstances Exception

Answer 8

When there is no division. Instead, particular asset is given wholly to one spouse and the other is cashed out of their 50% with other assets.

(1) family residence, when loss of home would uproot couple’s minor children (very common), (2) closely held corporation, when a spouse is CEO or something and the small amount of share are CP, (3) pension

Question 9

Exceptions to “Equal 50-50” on divorce rule

Answer 9

When one spouse ends up with more than 50% of the CP

(1) when one spouse MISAPPROPRIATES CP, before or during divorce; (2) One spouse incurs EDUCATIONAL DEBT (treated separately as separately incurred debt); (3) one spouse incurred TORT LIABILITY NOT based on activity for benefit of the community; (4) PERSONAL INJURY award is SP if after separation; (5) Negative community (when community liabilities exceed assets, relatively ability of spouses top ay debt is considered to protect creditors)

Question 10

Testamentary Gift of CP

Answer 10

Neither spouse may make a gift of CP w/o the other spouse’s WRITTEN CONSENT (power to manage CP is not equal to the power to give it away).

Choice of: (1) setting the gift aside in its entirety, or, (2) alternatvely on divorce, spouse can take equal offsetting Cp assets to recover 1/2 devised away

EXCEPTION: US bonds (preempted by federal law. Spouse cannot recover 1/2 interest in US bonds purchased with community property)

Question 11

Testamentary Gift of Cp after Death of Spouse

Answer 11

Surviving spouse can set aside the gift as to her half of CP

Recovery will be either from 3rd party Donee or dead spouse’s estate

Question 12

Widow’s election

Answer 12

Occurs when there is an invalid testamentary disposition.

Widow can either take under the will or against the will

if take against the will, must relinquish all testamentary gifts in her favor, as well

Question 13

Community Credit Presumption

Answer 13

All funds borrowed during marriage, and goods purchased during marriage, are presumptively community credit

HOWEVER, borrowing spouse may show that the loan proceeds or credit purchases are SP if he can show that the lender PRIMARILY RELIED on borrower’s Sp in granting the loan or extending the credit

Question 14

Fiducariy Duties of Spouses

Answer 14

Highest duty of good faith and fair dealing between spouses

Grossly negligent and reckless investment of community funds is a breach of fiducary duty

Question 15

Presumption of Undue Influence

Answer 15

When one spouse gains an advantage from a transaction, this presumption automatically arises.

Burden of proof is on that spouse to show she did not breach her fiduciary duty.