Comm Prop

Question 1

Community Property: Guiding Principles:

Answer 1

all funds acquired by labor during the course of marriage are presumptively community property.

Separate property includes funds: 1) received prior to marriage or after separation, 2) a gift or devise, 3) property acquired from separate funds, and 4) profits from separate property. Courts will trace to determine the source of funding; change in form will not change characterization.

Question 2

Quasi-Community Property:

Answer 2

property acquired in another state that would be considered community property if acquired in California. Retains QP nature until 1) divorce, where treated like CP, or 2) death, where spouse has ½ interest, unless in spouse’s name (then 100% interest).

Question 3

End of economic community:

Answer 3

economic community ends when 1) either spouse dies, or 2) there is permanent physical separation.

Question 4

Community Property Management Rights:

Answer 4

Spouses have equal rights to control and manage CP, and may sell any property without consent of the other.

1. EXCP: 1) personal property for less than fair value, 2) spouses retain control of businesses, 3) transfers of real property require both spouses, and 4) inter vivos gifts are voidable without consent.

Question 5

Fiduciary Duties of Spouses:

Answer 5

marriage imposes a duty of the highest good faith and fair dealing; neither shall take unfair advantage of the other, including: 1) grossly negligent dissipation or destruction, OR 2) gain in financial advantage at the others’ expense. Benefitting spouse has the burden of proof. If lost, SP may be used to compensate.

Question 6

Anti-Lucas Statute:

Answer 6

jointly titled property is presumptively CP, BUT at divorce: any SP used is entitled to reimbursement. Reimbursement covers 1) down payments, 2) payments for improvements, and 3) principal payments.

1. At death, that SP is presumed to be a gift.

Question 7

Personal Injury Awards & Settlements:

Answer 7

Torts against third party: if COA arose during the marriage, awards and settlements are CP. At divorce, they are assigned entirely to the injured spouse UNLESS 1) funds comingled, or 2) economic hardship to other spouse. If COA arose any other time (before marriage or after permanent separation), the award is the SP of the injured spouse.

1. Torts against spouse: always the SP of the injured spouse.

Question 8

Separate Property Business:

Answer 8

If an SP business is enhanced by community labor during marriage, courts will determine divorce interests using Van Camp or Pereira methods.

1. Pereira Method: courts apply Pereira when the growth of the business is based primarily on the labor and abilities of the SP spouse. The owning spouse will receive the original principal value of business, plus 10% annual rate of return.
2. Van Camp: courts apply Van Camp when the growth of the business is based primarily on the character and nature of the business itself. The community receives a reasonable salary, reduced by community expenses, and remaining value of the business is SP of the owning spouse.

Question 9

Transmutations:

Answer 9

Agreement between spouses during marriage to change the character of an asset; no consideration is necessary. Post-1985: only written, signed, and explicit agreements allowed.

1. Minor exception: gifts of insubstantial value to the community, with personal value, used solely by one spouse.

Question 10

Prenuptials:

Answer 10

allow parties to contract out of community property laws. Valid if in writing and signed by both parties. Oral allowed if relied upon.

1. Agreements will be deemed unenforceable if: 1) involuntary, 2) unconscionable, or 3) encourages divorce.
   
   1. Involuntary presumption unless court finds 1) parties represented by legal counsel or waived; 2) party had at least seven days to review; 3) fully informed and proficient in the language; and 4) no fraud, undue influence.

Question 11

Rights of Creditors to Reach Marital Property:

Answer 11

creditors may reach CP to satisfy debts incurred before or during the marriage, including debts for child and spousal support. Debt is incurred at the time the obligation to pay arises.

1. BUT a non-debtor spouse’s earnings (generally CP) are protected if: 1) the debt occurred before the marriage; AND 2) the earnings were held in a separate account to which the debtor did not have access and no comingling. NO CP after divorce unless assigned by court.

Generally, a person’s SP can only be reached to satisfy their personal debts.

1. EXCP: 1) necessities (community obligated to pay for others’ food, shelter, and medical expenses), and tort liability