Community Property

Question 1

Allowable reimursements (SP expenditures on behalf of CP)

Answer 1

Down Payments, Improvements, Principal

Question 2

Can spouse make a gift or dispose of community personal property for less than fair and reasonable value?

Answer 2

Only with written consent of other spouse.

Question 3

CP Contribution to SP Business: Pereira approach. When is it used, and what is the formula?

Answer 3

Used when the success of business is ased on the spouse’s management skills.

SP = SP Contribution +reasonable rate of return

CP Interest = value of business - SP interest.

Reasonable rate of return: 10% of SP Contribution for each year family had SP business during year

Question 4

CP Contribution to SP Business: Van Camp approach. When is it used, and what is the formula?

Answer 4

Used when success of business has to do with character of business; favors SP estate.

CP Interest = fair market value salary - family expenses - salary taken

Sp interest = value of business - CP interest

Question 5

Creditor’s rights to community property

Answer 5

creditor can reach any property over which debtor has legal right of management and control.

Question 6

Does a spouse managing community business alone need to consult with spouse on business decisions?

Answer 6

No

Question 7

Does each spouse have a fiduciary duty to the other spouse?

Answer 7

Yes. fiduciary duty to fully disclose all material facts about community assets and debts and provide equal access to all information upon request. Good faith & Fair Dealing.

Question 8

Does joint title trump tracing for bank accounts?

Answer 8

No - tracing always allowed for jointly held bank accounts (because bank accounts governed by Probate Code)

Question 9

Does spouse managing community business alone need to provide notice of sale or disposition of all or substantially all of personal property used in business of operations?

Answer 9

Yes.

Question 10

Family expenses presumption

Answer 10

When tracing funds, presumption that expenditures for family expenses were made with CP funds even if SP funds were also available.

Question 11

How is property acquired after separation characterized?

Answer 11

Separate property

Question 12

Presumption: source of funds SP, but title is CP

Answer 12

Presumed to be a gift to the community unless there is contrary written intent subject to reimbursement at divorce.

Question 13

Does Joint Title trump tracing for real and personal property?

Answer 13

Joint title trumps tracing for real and personal property

Question 14

Life insurance

Answer 14

Whole: Estate paying premium controls. CP and SP has interest in cash value to extent they paid premiums. Term life insurance: Estate paying premium on latest term controls.

Question 15

For settlements received due to personal injury during the marriage - CP or SP?

Answer 15

Upon death of injured spouse: community property. Divorce: personal injury awarded to injured spouse is SP

Question 16

Putative spouse

Answer 16

not legally married because marriage void or voidable, but one or both parties believe in good faith that parties are married.

Question 17

Rule: Jointly titled properly benefited by expenditures of SP. Presumption at divorce.

Answer 17

Divorce or legal separation: jointly titled propertly presumed CP. Right to reimbursement for SP contributions. (anti-lucas)

Question 18

Rule: Jointly titled properly benefited by expenditures of SP. Presumption at death.

Answer 18

Jointly titled property presumed to be CP at death of either spouse in absence of express agreement to contrary. No right to reimbursement for SP contributions. (Lucas)

Question 19

Rule: Jointly titled properly benefited by expenditures of SP. Presumption at divorce.

Answer 19

Divorce or legal separation: jointly titled propertly presumed CP. Right to reimbursement for SP contributions. (anti-lucas)

Question 20

Rules for education/training

Answer 20

Education/training acquired during marriage Not a community asset unless written agreement to the contrary. At divorce: reimbursement. Defense: community already benefited, education offset by CP funded education, education reduced need for spousal support.

Question 21

Presumption: Source of funds CP but title is SP

Answer 21

Property retains characterization as CP unless there is written transmutation, or gift.

Question 22

Tracing Method: Direct Tracing

Answer 22

Direct Tracing: Direct link from SP funds to the purchase such that sufficient SP funds in account were available and SP owner intended to use SP funds to make purchase.

Question 23

Tracing Method: Exhaustion

Answer 23

Requires showing that at the time property purchased, all community funds in commingled account had been exhausted by community expenses, so only SP funds available.

Question 24

Tracing methods used by courts to trace SP

Answer 24

Exhaustion & Direct Tracing:

Question 25

Transmutation: Writing required?

Answer 25

Yes. Valid transmutation requires writing describing change in ownership and consent of adversely affected spouse. EXCEPTION: Gifts between spouses of insubstantial value.

Question 26

What happens if one spouse conveys to BFP? Is the conveyance valid?

Answer 26

Valid, but can be voided by other spouse within one year of filing instrument.

Question 27

what is quasi-marital propertly?

Answer 27

Property acquired during a void or voidable marriage, which would have been CP or QCP if marriage had not been void/ale.

Question 28

What is transmutation?

Answer 28

Agreement between spouses during marriage alter ownership characterization of property.

Question 29

What portion of CP can be disposed of through a testamentary disposition?

Answer 29

1/2.

Question 30

Who has absolute power of disposition of community personal property in marriage?

Answer 30

Either spouse.

Question 31

Who has the burden to show that property is SP?

Answer 31

Party claiming SP

Question 32

Who has to execute instrument to convey or sell community real property, or for leases greater than one year?

Answer 32

Both spouses.

Question 33

What is quasi-community property?

Answer 33

Property that, had the couple been living in california, would have been treated as community property

Question 34

CP used to improve other spouse’s SP - gift or reimbursement?

Answer 34

Split - apply both

Question 35

CP Used to improve spouse’s own SP - reimbursement to CP?

Answer 35

Yes - reimbursement to CP for cost of improvement, or increase in value to SP - which ever is greater.

Question 36

Cp contributions to SP real property - what does the community get?

Answer 36

CP gets proportional ownership interest to the extent CP payments reduce principal debt.

Question 37

SP contributions to other spouse’s SP?

Answer 37

Reimbursed, w/o interest, for down payments, improvement, principal, unless written waiver.

Question 38

SP Contributions to CP property or business

Answer 38

Reverse Pereira: Community gets a fair rate of return, remainder is SP. CP interest = CP (@separation) + Rate of return; SP = business value - cp interest.

Reverse Van Camp: Separate estate gets a fair salary, less expenses, remainder is CP.

SP = fav salary amount paid - Salary paid. CP = value of business - PS interest

Question 39

Is SP used to purchase a CP asset reimbursable upon divorce to SP contributor (without interest?)

Answer 39

yes. incl. value of inheritance - but not the gain.

Question 40

How to courts determine the character of property acquired on credit?

Answer 40

By lender’s intent to rely on purchaser’s separate property, or community asset or income stream.

Question 41

if asset is titled in only one spouse’s name, can courts consider asset to be SP if court