Community Property Flashcards
Allowable reimursements (SP expenditures on behalf of CP)
Down Payments, Improvements, Principal
Can spouse make a gift or dispose of community personal property for less than fair and reasonable value?
Only with written consent of other spouse.
CP Contribution to SP Business: Pereira approach. When is it used, and what is the formula?
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
CP Contribution to SP Business: Van Camp approach. When is it used, and what is the formula?
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
Creditor’s rights to community property
creditor can reach any property over which debtor has legal right of management and control.
Does a spouse managing community business alone need to consult with spouse on business decisions?
No
Does each spouse have a fiduciary duty to the other spouse?
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.
Does joint title trump tracing for bank accounts?
No - tracing always allowed for jointly held bank accounts (because bank accounts governed by Probate Code)
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?
Yes.
Family expenses presumption
When tracing funds, presumption that expenditures for family expenses were made with CP funds even if SP funds were also available.
How is property acquired after separation characterized?
Separate property
Presumption: source of funds SP, but title is CP
Presumed to be a gift to the community unless there is contrary written intent subject to reimbursement at divorce.
Does Joint Title trump tracing for real and personal property?
Joint title trumps tracing for real and personal property
Life insurance
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.
For settlements received due to personal injury during the marriage - CP or SP?
Upon death of injured spouse: community property. Divorce: personal injury awarded to injured spouse is SP
Putative spouse
not legally married because marriage void or voidable, but one or both parties believe in good faith that parties are married.
Rule: Jointly titled properly benefited by expenditures of SP. Presumption at divorce.
Divorce or legal separation: jointly titled propertly presumed CP. Right to reimbursement for SP contributions. (anti-lucas)
Rule: Jointly titled properly benefited by expenditures of SP. Presumption at death.
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)
Rule: Jointly titled properly benefited by expenditures of SP. Presumption at divorce.
Divorce or legal separation: jointly titled propertly presumed CP. Right to reimbursement for SP contributions. (anti-lucas)
Rules for education/training
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.
Presumption: Source of funds CP but title is SP
Property retains characterization as CP unless there is written transmutation, or gift.
Tracing Method: Direct Tracing
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.
Tracing Method: Exhaustion
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.
Tracing methods used by courts to trace SP
Exhaustion & Direct Tracing:
Transmutation: Writing required?
Yes. Valid transmutation requires writing describing change in ownership and consent of adversely affected spouse. EXCEPTION: Gifts between spouses of insubstantial value.
What happens if one spouse conveys to BFP? Is the conveyance valid?
Valid, but can be voided by other spouse within one year of filing instrument.
what is quasi-marital propertly?
Property acquired during a void or voidable marriage, which would have been CP or QCP if marriage had not been void/ale.
What is transmutation?
Agreement between spouses during marriage alter ownership characterization of property.
What portion of CP can be disposed of through a testamentary disposition?
1/2.
Who has absolute power of disposition of community personal property in marriage?
Either spouse.
Who has the burden to show that property is SP?
Party claiming SP
Who has to execute instrument to convey or sell community real property, or for leases greater than one year?
Both spouses.
What is quasi-community property?
Property that, had the couple been living in california, would have been treated as community property
CP used to improve other spouse’s SP - gift or reimbursement?
Split - apply both
CP Used to improve spouse’s own SP - reimbursement to CP?
Yes - reimbursement to CP for cost of improvement, or increase in value to SP - which ever is greater.
Cp contributions to SP real property - what does the community get?
CP gets proportional ownership interest to the extent CP payments reduce principal debt.
SP contributions to other spouse’s SP?
Reimbursed, w/o interest, for down payments, improvement, principal, unless written waiver.
SP Contributions to CP property or business
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
Is SP used to purchase a CP asset reimbursable upon divorce to SP contributor (without interest?)
yes. incl. value of inheritance - but not the gain.
How to courts determine the character of property acquired on credit?
By lender’s intent to rely on purchaser’s separate property, or community asset or income stream.
if asset is titled in only one spouse’s name, can courts consider asset to be SP if court
