Community Property

Question 1

1st paragraph

Answer 1

CA is a CP st
All prop acquired during the course of M is presumed to CP, including salary or wages earned by either spouse and the income form community assets
All prop acquired before M or after perm separation is presumed to be CP. Any prop acquired by gift, devise or bequest is SP
The characterization of any asset depends on the source of the funds used to acquire the asset
In determining whether an asset is CP or SP, must trace back to its source

Question 2

SP

Answer 2

Prop owned by either spouse before M
Prop acquired during M by gift, will or inheritance
Prop acquired during M w/ expenditure of SP funds - tracing
Rents, issues, profits derived from SP

Question 3

CP

Answer 3

Prop, other than SP, acquired by either spouse during M
Salary or wages earned by either spouse
Income from community assets

Question 4

Community presumption

Answer 4

All assets acquired during M are presumptively CP
Absent a showing of pty’s agmt or that title was taken in a form that overcomes presumption, BOP that particular asset is SP is on separatizer

Question 5

End of econ community

Answer 5

Perm phys separation and

Intent not to resume marital relation - only need 1 pty

Question 6

Division on divorce

Answer 6

Absent a prop settlement agmt, CP divided = betw H and W

Disparity in earning power can be considered only as to spousal/child support

Question 7

Econ circumstances exception to = division

Answer 7

Can have a non-pro rata division, giving particular asset wholly to 1 spouse and “cash out” other spouse w/ other assets, w/ each spouse getting 50% of total value
ex.’s - family residence, closely held corp, pension

Question 8

Stat exceptions to = division

Answer 8

1 spouse misappropriates CP, whether before or during pendency of divorce
1 spouse has incurred educational debts - treated as separately incurred debt
1 spouse incurred tort liability not based on activity for benefit of community
PI award is CP but on divorce, is awarded to injured spouse, unless interests of justice req otherwise
Negative community - community liabilities exceed assets - relative ability of spouses to pay debt is considered so as to protect creditors

Question 9

Lifetime gifts of CP

Answer 9

Neither spouse can make a gift of CP w/o other spouse’s written consent - can set aside gift entirely or on divorce can take = offsetting assets to recover share of CP
Exception - pty may give CP away when US savings bonds - fed preemption

Question 10

Testamentary gifts of CP

Answer 10

Each spouse has power of testamentary disposition over all of his SP, but only over 1/2 of CP

Question 11

Widow’s election

Answer 11

Widow may take

• under the will or
• against the will

Question 12

Credit acquisitions

Answer 12

Funds borrowed during M are presumptively CP - community credit presumption
Borrowed funds and credit purchases are classified according to primary intent of the lender - look at where lender is looking to satisfy the debt

Question 13

FD

Answer 13

Highest duty of GFFD

Question 14

Undue influence

Answer 14

1 spouse gains an advantage from a transaxn

Advantaged spouse has BOP to show he didn’t breach his FD

Question 15

PMA

Answer 15

1. must be in writing
2. signed by both pty’s
3. oral agmt’s are invalid
   - exceptions - oral agmt valid when fully performed; estoppel based on detrimental reliance
   Pty’s can agree to just about anything except limiting either pty’s contribution to furnish child support

Question 16

Defense to enforcement of PMA - not signed voluntarily

Answer 16

deemed involuntarily signed unless ct finds that pty challenging agmt

• -> was rep’d by independent legal counsel at time agmt signed (or waived in separate writing) and
• -> was given at least 7 days to sign and
• -> if not rep’d by independent counsel, was fully informed in writing (in language which pty proficient) of terms basic effect of agmt

Question 17

Defense to enforcement of PMA - unconscionability

Answer 17

Provision in PMA re spousal support unenforceable if
- pty challenging wasn’t rep’d by independent legal counsel at time signed or
- provision is unconscionable at time of enforcement, even if pty rep’d by independent legal counsel
Anything else
- amgt unenforceable if unconscionable when made and
–> no full and fair disclosure of other pty’s prop or financial obligations
–> rt to disclosure not waived in writing and
–> pty challenging had no adequate knowledge of other pty’s prop or financial circumstances

Question 18

Transmutation before 1985

Answer 18

Oral permitted

Question 19

Transmutation after 1985

Answer 19

1. in writing
2. signed by spouse whose interest is adversely affected, and
3. must explicitly state a change in ownership being made
   Only exception - gifts of tangible prop of personal nature which aren’t substantial in value taking into acct circumstances of the M

Question 20

Married woman’s special presumption

Answer 20

Applies to prop taken in M woman’s name alone prior to 1975

Doesn’t apply to assets where some intent other than a gift is shown or where the woman controlled how title was taken

Question 21

Lucas

Answer 21

At death
Taking assets in joint title is inconsistent w/ preservation of SP interest in the asset
Any SP used to acquire asset is presumed to be a gift of the SP unless there’s an oral or written agmt to the contrary

Question 22

Anti-Lucas

Answer 22

At divorce
Taking assets in joint title
- ownership - presumptively CP and subject to = division on divorce - presumption can be rebutted by express stmt in instrument of title that prop, or portion, is SP or written agmt by pty’s that prop, or portion is SP
- reimbursement - spouse who made SP contributions to acquisition of CP is entitled to reimbursement w/o interest for contributions to down payment, improvements, or principal payments on mortgage - no reimbursement for SP used to pay interest, taxes, ins, or maintenance

Question 23

Reimbursement - improvements

Answer 23

If H uses CP to improve his own SP, community has rt to reimbursement for greater of the cost of improvements or enhanced value
If H uses CP to improve W’s SP, either no reimbursement (presumed to be a gift) or reimbursement
If H uses his SP to improve CP, Lucas at death and Anti-Lucas at divorce

Question 24

Commingled bank acct’s

Answer 24

Mere fact that SP and CP are commingled doesn’t = transmutation
BOP is on separatizer to show that each asset was purchased w/ SP funds
- exhaustion - there were no CP funds left when asset was purchased
- direct tracing - suff SP funds available and separatizer intended to use SP funds to purchase

Question 25

Family expense presumption

Answer 25

Presumed that expenditures for family expenses were made w/ CP funds, to the extent they were available, even though SP funds were available
If insuff CP funds to cover family expenses, and use SP funds, presumed that gift to community and no rt of reimbursement - to defeat presumption, would need agmt to reimburse

Question 26

Pereira

Answer 26

SP biz increases in value during M bc of community labor, that is, the owner spouse’s personal skills and efforts

• owner spouse rec’s initial SP investment and a reas rate of return
• community rec’s remaining

Question 27

Van Camp

Answer 27

SP biz increases in value during M bc of mkt factors - valuable company/asset

• community rec’s reas value of owner spouse’s services/efforts
• owner spouse rec’s remaining

Question 28

Van Camp - Pereira

Answer 28

SP biz increases in value during M

Ct will use whatever method serves interests of justice

Question 29

PI awards

Answer 29

Presumed to be CP if c/a arose during M
If c/a arose before M or after perm separation, presumed SP
At divorce, CP PI awards will be awarded entirely to injured spouse unless interests of justice req otherwise
PI awards against other spouse are always injured spouse’s SP

Question 30

Retirement benefits

Answer 30

CP if earned during M
Time rule - determines how much of pension is attributable to CP labor v. SP labor re retirement pensions/retirement benefits earned before and during M

Question 31

Disability pay and worker’s compensation benefits

Answer 31

Either CP or SP depending on the wages they’re designated to replace

Question 32

Severance pay

Answer 32

Split - argue both ways

Question 33

Stock options

Answer 33

Form of EE compensation
Characterization depends on when earned
Time rule
1. awarded to reward for past services, as a form of deferred compensation - yrs from date of employment to date econ community ends / yrs from date of employment to date options become exercisable
2. awarded to primarily encourage spouse to remain w/ company - yrs from date options are granted to date econ community ends / yrs from date options granted to date options become exercisable

Question 34

Biz and professional goodwill

Answer 34

CP if earned during M
Valuation methods
1. mkt sales valuation - price goodwill would command in sale
2. capitalization of past excess earnings - doesn’t contemplate sale, ascertains present value of future stream of income that goodwill developed during M will generate in the biz

Question 35

Education and training

Answer 35

Degrees aren’t CP and aren’t divisible
Community may be entitled to reimbursement, w/ interest, when CP funds are used to pay for education/training and it substantially enhances spouse’s earning capacity
Community isn’t entitled to reimbursement where
- community has already benefited from education/training
- other spouse has also rec’d community-funded education/training
- need for spousal support is reduced by education/training

Question 36

Prop acquired w/ CP and SP funds

Answer 36

Moore apportionment
When CP is used to improve 1 spouse’s SP, CP doesn’t obtain a pro rata ownership interest in the asset, but may be entitled to reimbursement
Installment purchase before M, payment w/ CP funds, community takes a pro rata portion of prop measured by amt of principal debt reduction attributable to expenditure of CP funds
- principal debt reduction attributable to CP / purchase price = CP %
- remainder is SP %

Question 37

Distribution at death

Answer 37

If spouse dies testate, may dispose of all of his SP and 1/2 of CP
If spouse dies intestate, CP is awarded entirely to SS - betw 1/3 and all of D spouse’s SP will be awarded to SS depending on whether there are issue or parents surviving D

Question 38

QCP

Answer 38

Prop acquired by M couple while living in another jxn which would have been classified as CP had they been domiciled in CA
At divorce, treated just like CP

Question 39

Putative spouse

Answer 39

Not lawfully M but 1 has good faith belief that legally M

Quasi marital prop

Question 40

Unmarried cohabitants

Answer 40

Persons who reside together but who are neither lawful spouses nor putative spouses
K principles apply - K’s upheld so long as KNS doesn’t violate public policy

Question 41

Spouse’s previous child support from a previous M

Answer 41

Treated as debt incurred before M
All CP and debtor spouse’s SP are liable
- if debtor spouse’s SP was available, but not applied to satisfy the obligation, community is entitled to reimbursement
- CP earnings of a non-debtor spouse aren’t liable for debtor spouse’s premarital obligations if those earnings are held in deposit acct which debtor spouse has no rt of w/d and no commingling of funds
Non-debtor spouse’s SP isn’t liable