Community Property Flashcards
Four scenarios re: Call of the Questions
not rule
- Spouses Married in CA
a) If the essay begins with the parties having gotten married in California, it will be a vanilla community property question.
b) Occasionally, you also must determine a creditor’s rights to certain assets to satisfy certain liabilities. - Spouses Married in Non-CP State who later move to CP State; Quasi-Community Property
a) If the husband and wife begin the essay having gotten married in a non-community property state and then move to California, part of the question will include quasi-community property issues as to the property acquired during the marriage but before the parties domiciled in California. - Putative Spouses; Quasi-Marital Property
a) If the parties aren’t legally married, but one of them in good faith thinks they are, then the issues involve putative marriage and quasi-marital property. - Unmarried Cohabitants
a) the parties will be unmarried cohabitants, in which case the community property laws do not apply at all—rather the issues will involve the existence of an implied contract and possible equitable remedies
b) Although they think they are married, under law not marriage and thus treat them as co-habitants
The Main Rule fo Community Property**
California is a community property state. All property acquired during marriage is presumed to be community property unless acquired by gift or inheritance, in which case it is presumed to be separate property. The court determine the character of an asset by tracing back to the source of the funds used to acquire the asset. A mere change in the form of an asset does not change its characterization.
At divorce, the community assets are equally divided in kind unless some special rule requires deviation from the equal division requirement or the spouses agree otherwise; a spouse’s separate property (SP) remains her SP at divorce.
Progression of Presumptions on Each Asset
Approach
- Each major heading should be an asset, a debt, or a creditors’ rights issue.
- For each asset or debt, discuss and apply each and every presumption applicable to the item in this order:
- Start here and apply: Basic CP presumption – The initial community property presumption and its effect;
- Then source presumption (who, how, when) and its effect;
- Then conduct presumption – what did parties do to the asset or what specific rule applies to this asset/debt?
- Distribution – the final character of asset or debt
Initial Presumption
not rule
The property was acquired during marriage is presumed to be community property
Rules applicable under Source Presumption
Subrules
Generally, property acquired with separate property funds retains the separate property character.
Wages earned and used during the marriage is community property. But salary earned after separation is SP.
Rules applicable under Conduct Presumption
Guide
- Transmutation law
a) anti-lucas legislation
b) 1985 cutoff - Joint tenant rules
- Management rules
Transmutation
approach
- Under the anti-Lucas legislation, all jointly held property acquired during the marriage is presumed community property at divorce and legal separation. This applies to:
a) joint tenancy from and after 1/1/85 and
b) tenancy in common from and after 1/1/88. - But at death:
a) If joint tenancy – all to survivor
b) If TIC, to whomever inherits.
Agreement during Marriage - Transmutation
Agreements made during marriage to alter the character of property - transmutation.
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Note: It is divided into two groups: agreements made before January 1, 1985, and agreements made thereafter.
Transmutation + jointly held property (TIC and JT)
general rule
Transmutations are agreements made during marriage to alter the character of property. In pre-1985 agreements, oral transmutation agreements are okay.
Under the anti-Lucas legislation, all transmutation agreements post-1985 must be in the form of an express written declaration, which expressly state their intention to change the characterization or ownership of the property. Moreover, because of the presumption that all property acquired during marriage is community property, merely taking title in one spouse’s name will not overcome the presumption.
If the property is acquired in joint tenancy pre-1985 (or in tenancy in common pre-1988), the property retains its joint character, and is treated as separate property. Under anti-Lucas legislation, all jointly held property acquired during marriage post-1985 is presumed community property at divorce unless the parties executed a collateral written agreement or a separate statement in the documentary evidence of title that states the property is “separate property and not community property.”
transmutation - joint title rules
approach
- transumation R-A
- Jointed Title rules R-A
Pre-1985 Agreements
Oral transmutation agreements OK.
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If the spouses agreed to transmute their property before January 1, 1985, they could do so orally, and courts inferred the intent to transmute from the parties’ behavior.
(1) E.g., a reference on a tax return to “our” house was sufficient evidence of the intent to transmute from separate property to community property.
Pre-1985 Agreements
approach
If the exam contains a pre-January 1, 1985 oral agreement, discuss the characterization of assets under two scenarios:
(1) one that assumes the enforceability of the oral agreement, and
(2) one that assumes the non-enforceability of the oral agreement.
Post-January 1, 1985 Agreements
- Under the anti-Lucas legislation, all agreements entered into after January 1, 1985 to transmute property must be in the form of an express written declaration.
- The express declaration must expressly state that a change in the characterization or ownership of the property is intended.
- Moreover, because of the presumption that all property acquired during marriage is community property, merely taking title in one spouse’s name will not overcome the presumption.
- You need the separate express declaration, either in a separate document or sufficient language in the granting clause, stating that the intent is to change the character of the property
- If the property is acquired in joint tenancy before January 1, 1985 (or in tenancy in common before January 1, 1988), the property retains its joint character, and is treated as separate property.
Transumtation of Title Identified as CP after 1985
Rule
All agreements entered into after January 1, 1985, to transmute property must in the form of an express declaration. The express declaration must expressly state that a change in the characterization or ownership of the property is intended by the spouse whose interest is adversely affected. Moreover, because of the presumption that all property acquired during marriage is community property, merely taking title in one spouse’s name will not overcome the presumption.
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[sample rule]
After January 1, 1985, all transmutations of property from community property to other means of holding title, including separate property, must be done in a separate writing evidencing the intent to effect such transmutation.
Anit-Lucas, jointly held property during marriage post 1985**
sample of rule**
Under anti-Lucas legislation, all jointly held property, including property held in joint tenancy, acquired during marriage after January 1, 1985, is presumed community property at divorce unless the parties executed a collateral written agreement or a separate statement in the documentary evidence of title that the property is “separate property and not community property.”
Joint Title Rules**
3 rules
Under California law (the anti-Lucas legislation), if property is purchased or acquired during marriage in joint title, then all jointly held property, including property held in joint tenancy, is presumed community property at divorce unless the parties executed a collateral written agreement or a statement in the documentary evidence of title that the property is “separate property and not community property.”
…
Rule 2 (not in mega rule)
If the jointly titled property is treated as community property, then at divorce the separate property contributions to the acquisition of the property shall be reimbursed to the separate property contributor without interest or appreciation.
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Rule 3 (not in mega rule)
If jointly titled property is not presumed community property on death, it either remains joint tenancy and goes to the surviving spouse, or tenancy in common and goes according to decedent’s will.
Exception to Transmutation Non-Substantial Personal Gift from Spouse
The writing requirement does not extend to a gift between spouses that is of personal nature, principally used by the spouse to whom the gift is made, and is not substantial in value, taking into account the marriage’s financial circumstances.
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The writing requirement does not extend to gifts between the spouses of items of a personal nature that are used principally by the spouse to whom the gift is made and that is not substantial in value, taking into account the marriage’s financial circumstances.
Fidicuary Duty to Manage Assets rules
Under Conduct Based
Spouses owe each other fiduciary duties, which govern the actions of persons in confidential relationships, with respect to management and control of the CP. Thus, deliberate dissipation of community property, recklessness, and grossly negligent conduct that results in the loss of community property are actionable, and and may impose the culpable spouse to reimburse the community for any loss. However, these are not as strict as a prudent investor standard, so merely negligent investment will not result in a requirement of reimbursement.
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[selected topics]
In the management and control of community assets, each spouse must act in accordance with the general rules governing fiduciary relationships which govern the actions of persons in confidential relationships. Thus, deliberate dissipation of community property, recklessness, and grossly negligent conduct that results in the loss of community property are actionable, and can result in the requirement that the culpable spouse reimburse the community for any loss. However, these are not as strict as a prudent investor standard, so merely negligent investment will not result in a requirement of reimbursement.
undue influence
Under Conduct Based - fidicuary duty
Spouses owe each other fiduciary duties, which govern the actions of persons in confidential relationships, with respect to management and control of the CP. Thus, a rebuttable presumption of undue influence arises when one spouse gains an advantage over the other in a property transaction; the spouse who obtained the advantage bears the burden of rebutting the presumption.
barbri
Rules applicable under Distribution
- property under joint tenancy
- separate property and its appreciation
Distribution for jointly titled property is treated as community property
If the jointly titled property is treated as community property, then at divorce the separate property contributions to the acquisition of the property shall be reimbursed to the separate property contributor without interest or appreciation.
SP on Divorce
Distribution
On divorce, separate property contributions to the acquisition of the property are reimbursed to the separate property contributor without interest or appreciation.
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If a spouse, during marriage, contributes separate property into the acquisition of property in joint title, apply the anti-Lucas legislation so that there is a CP presumption at divorce, but then discuss that such spouse has a right to reimbursement of the SP in the value of the property as of the date of contribution into joint title.
Distribution for Separate Property and Its Appreciation
When the separate property of a spouse increase in value during the marriage due to external factors, the status of the property does not change from its original classification.
Quasi-Community Property**
Quasi-community property (QCP) is property acquired by either spouse that would have been community property had the spouse been domiciled in California at the time of the acquisition. At divorce, quasi-community property is treated the same as community property.
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Note:
* analyze with the three presumption, except it is QCP
* ALWAYS explain HOW and WHY QCP would have been community property had the spouse been domiciled in California – using presumptions
* look at the Essay 2 for QCP