Chp 9: Division of Marital Property at Dissolution Flashcards
Jeremiah and Kenitra are married, and are each substantial earners. During the marriage, Jeremiah uses his paycheck to fund a separate bank account, and then uses that bank account to purchase a boat titled in his name only. Without consulting with Jeremiah, Kenitra begins to lease the boat out as a short-term rental.
Which of the following best characterizes her authority during the marriage?
If they reside in a marital property or hotchpot state, she does not have the authority to lease out the boat during the marriage, because the boat is the separate property of Jeremiah.
Exp: If they reside in a marital property or hotchpot state, she does not have the authority to lease out the boat during the marriage, because the boat is the sole property of Jeremiah.
In a hotchpot jurisdiction, sometimes called a kitchen sink jurisdiction, which of the following type of property is not available for distribution at divorce?
Property acquired after the legal dissolution of the marriage.
Rudy inherited substantial assets and used them to build a thriving business. He is a multi-millionaire. He later marries Anisha, who entered the marriage with no assets or debts. Anisha stays home to care for Rudy’s aging mother, while Rudy continues to build his business. After 12 years, the couple seeks a divorce.
Which jurisdiction gives a judge the maximum flexibility in making decisions about property distribution at divorce if the distribution rule permits equitable distribution?
Hotchpot.
Exp: In a hotchpot state, the judge may distribute any property owned by either or both parties, regardless of when it was acquired.
Which of the following answers describes the American Law Institute’s (ALI’s) approach to characterizing property?
The ALI’s approach tracks the marital property regimes
Which of the following are ordinarily classified as marital property:
All of the above;
Other Choices:
- Vested pension benefits in compensation for work performed during the marriage;
- Unvested pension benefits in compensation for work performed during the marriage;
- A bond purchased during the marriage from wages that matures 5 years after the marriage ends;
Exp: Pensions, whether vested or unvested, and bonds purchased during the marriage from wages, regardless of when they mature, are ordinarily marital property.
In marital property jurisdictions, which of the following are ordinarily not available for distribution at divorce?
Money earned by one party prior to the marriage and kept in a separate passive investment throughout the marriage.
Exp: In a marital property jurisdiction, money earned by one party prior to the marriage and kept in a separate passive investment throughout the marriage is ordinarily not divisible at divorce because it was not earned during the marriage and did not increase in value during the marriage via the active labor of one of the spouses.
Susan and Pedro are married and live in California. During the marriage, Susan receives $50,000 from her parents as a gift. She puts it into a long-term bond in her name only.
What will happen to the bond when the couple divorces? Please choose the best answer:
Susan will receive the bond because it is not community property.
Exp: Because the funds for the bond were a gift, the bond is separate property under California community property law and the law in most jurisdictions.
Two days before she files for divorce from her husband Duke, Lucy gives her brother a gift of $100,000 from the shared bank account Lucy and Duke have maintained. There is $500,000 remaining in the account. Lucy initially lies to the judge about the transfer, before coming clean after being presented with indisputable documentary evidence.
What is the best prediction of how a court will respond to Lucy’s actions in dividing the property upon divorce?
The court will view the transfer and the effort to conceal it as marital misconduct, include the $100,000 as marital assets, and then penalize Lucy for her deceptive conduct in the final asset allocation by counting the misconduct as a factor against her.
Exp: Assets transferred in anticipation of a divorce are generally viewed as fraudulently transferred, and the amount transferred will still be considered a part of the marital estate. While marital misconduct is generally not relevant to property distribution, financial misconduct, hiding assets, and dishonesty in court may be taken into consideration in the overall distribution of property.
Which of the following is least likely to be characterized as marital property, and therefore not available in whole or part for division upon divorce in a marital property state:
What remains in a bank account funded only by an annual deposit by one spouse’s parent, titled in that spouse’s name, and occasionally used to pay for periodic family expenses.
Exp: What remains in a bank account funded only by an annual deposit by one spouse’s parent and occasionally used to pay for periodic family expenses is treated as separate property at the time of divorce in marital property states.
Niko and Sasha are divorcing after 26 years of marriage in a marital property state. Sasha inherited $20 million before the parties were married, which she had already placed in a fixed income account that generates annual payments. During the marriage, she spent $1 million of that income on a variety of vanity projects, including the production of a documentary film about her family, the self-publication of a children’s book she authored, and various initiatives to gain television time on daytime talk shows. Meanwhile, Niko raised their two children, taking primary care of them and managing their logistics as well as spending time with them until they each left home for college. They lived off the passive income generated by Sasha’s inheritance in the fixed income account. They reside in a lavish apartment Sasha’s parents purchased for her 20 years ago, titled in her name, and paid in full at the time of purchase.
What property is the judge likely to allocate to Niko?
The judge will likely not allocate any property to Niko.
Exp: The facts do not describe any marital property that a judge could allocate to Niko. Niko may have a claim for spousal support, however.
Rocco entered his marriage to Giovanna with an investment account containing $8 million. During the marriage, the two created a joint checking account into which they deposited their paychecks and from which they paid familial expenses. Rocco earns $600,000 each year, and Giovanna earns $28,000. Three years into their marriage, the joint checking account contained $500,000. The couple decided to purchase a vacation property for $2 million. Rocco transfered all of the funds from the joint checking account into his investment account. Four days later, at the real estate closing, he wrote a check from his investment account in the amount of $2 million, and put both his and Giovanna’s name on the vacation property title. A year later, they seek a divorce. A new $100,000 has built up in the joint checking account.
Which answer correctly characterizes the maximum amount of property that should be characterized as marital along with the appropriate legal reasoning?
The vacation home is marital because some joint funds were used to purchase it, and Rocco put Giovanna’s name on the title making it presumptively a gift, and the joint checking account is marital because it was funded by the labor of both or either of them.
Exp: The vacation home is marital because some marital funds were used to purchase it, and Rocco put Giovanna’s name on the title making it presumptively a gift, and the joint checking account is marital because it was funded by the labor of both or either of them.
Nieta owned her home when she entered her marriage to Salim. The home had $250,000 in equity at that time, and another $300,000 in mortgage debt. Salim and Nieta were married for two years, and during that time they made mortgage payments from their joint checking account, which is funded entirely by Nieta’s salary. Most of those funds went to paying interest on the mortgage, but the equity amount increased by $5000.
At the time of divorce, Salim’s best argument about the home equity will be:
That the property is hybrid, and $5000 of the home equity is marital.
Exp: While the separate property of the home and marital property of the joint banking account did commingle and create hybrid property, the amounts remain traceable, and the $5000 in home equity created from the joint checking account will be the portion of the home equity designated as marital.
Samar and George were married for five years. George entered the marriage with $50,000 in a checking account, and Samar had no assets. The day after they married, George purchased a $10,000 boat with funds from his account, and took the title in his name. On the back of the boat, he stencils the name “Samar’s Dream,” although Samar gets seasick easily. At the time of divorce, they have a disagreement about whether the boat is marital, Samar’s separate property, or George’s separate property.
Which of the following is not accurate?
The fact that Samar gets seasick easily supports her claim that the boat is marital property.
Exp: The fact that Samar gets seasick easily does not support her claim that the boat is marital property. Her seasickness is not strong evidence for any claim.
Which of the following is generally not characterized as property that is available for distribution at the time of divorce?
One spouse’s advanced degree financed by both spouses during the marriage.
Exp: A spouse’s advanced degree financed by both spouses during the marriage is not considered property subject to equitable distribution; at one time New York state viewed advanced degrees as property, but this is no longer the case. However, states do value “human capital,” (education, opportunity, and earning potential) and considers the creation of human capital in determining equitable distribution.
Sally created an in-home hairstyling business during her marriage to Bethany.
Which of the following best describes the aspects of her business that are marital property divisible at divorce?
The book value plus the business reputation, minus that portion of the value of the business reputation that Sally’s individual skills and personal qualities create, are divisible.
Exp: The remaining portion of the reputation once Sally’s skills and personal qualities are removed constitutes business goodwill, which is divisible property. The book value plus the business reputation, minus that portion of the value of the business reputation that Sally’s individual skills and personal qualities create, are divisible at divorce.
