Community Property Flashcards
Community Property Presumptions
CA is a CP State
The marital economic communinty (MEC) begins with marriage (domestic partnership, or recognized CL marriage).
The MEC ends with death, divorce, or permenant seperation (express intent + conforming actions).
CP is property acquired during the marriage. SP is property acquired during or after the marriage, income from SP assets, or propety acquired during the marriage by gift or inheritance.
Spouses are presumed to have equal management and control rights and that CP is split 50/50.
Quasi-CP is property that is acquired while the couple is domicled outside of CA that would have been treated as CP if they had been domiciled in CA. It will be treated as CP upon divorce or death of the titleholding spouse.
Characterization & Source of Funds
When was it bought? (Character)
If bought during marriage, presumed CP. If bought else where, SP.
How was it bought
If bought with SP funds, presumed SP. If unclear whether it was bought with SP funds (from a comingled account) use tracing.
Direct Tracing: Look at when money was put into account. If it was SP money and (1) there was still money in the account; and (2) the person trying to claim SP can prove that it was the intent to use that money for the proposed SP property, it will be SP.
Exhaustion Tracing: If comingled, look at CP and SP funds in the account. Household marital expenses will be presumed to remove CP first. If all CP removed and only SP left, the remaining SP funds will buy SP property.
Pre-Marital Agreements
PMAs can change the standard presumptions for how CP is split. However, they are subject to certain requirements
* 1985 - Must be in writing (unless detrimental reliance)
* 1986-2002 - Must be voluntary
* Post - 2002 - Voluntary requires that: (1) independent counsel or waived right to independent counsel in writing; (2) 7 days to independently review; (3) acknowledgment of understanding of the terms in writing.
Can’t promote divorce. Can’t be unconscionable, if also no disclosure. Can’t waive child support
Title Presumptions
Title Form: Can be used to rebut presumption but NOT dispositive.
* Source of funds SP, but title CP, presumed gift to community
* Source of Funds CP, but title is SP, property is retained as CP unless transmutation
* At death, Special Title Presumption rebuttable presumption that title is as stated
Jointly Titled Property: Applies to jointly titled property where there is an SP contribution
* Lucas: at death all jointly titled property of either spouse is presumed CP at the death of either spouse, unless express agreement otherwise
* * No Right to reimbursement for SP contributions
* Anti-Lucas: at divorce/seperation all jointly titled property is presumed CP, unless express agreement otherwise.
* Right to reimbursement for SP contributions are for DIPS (down payment, improvement, principal payments only).
Transmutation
Transmutation allows a spouse to change the character of property from CP to SP, SP to CP, or from one’s SP to the other. It requires: (1) a writing; (2) signed by the party giving up the property; and (3) express intent and acknowledgement of transmutation.
Spousal Gift Exception
A gift need not meet the above requirements if: (1) to the other spouse; (2) for their personal use; and (3) of insignificant value to their combined economic status
Non-married Couples
Putative Spouse: Putative spouse is not legally married because marriage is void (bigamy/incest) or voidable (fraud, coercion) but one or both believe in good faith that the parties are legally married.
* The property acquired during the good-faith time is quasi-marital property, treated as CP.
* Estoppel: Can be estopped from asserting putative spouse status if party knew it wasn’t valid
Unmarried Cohabitants: Use contract law
Fiduciary Duties & Management/Control
Fiduciary Duties
* Duty of Good Faith and Fair Dealing: Don’t take advantage of each other
* Disclosure of Material Facts: Equal information and full disclosure of all assets and debts
Management: Each spouse have exclusive mgmt and contorl of his SP and equal mgmt and control of CP. Either spouse can buy, sell, or spend all CP. EXCEPT:
* Personal Property Gift: spouse may not make a gift or dispose of CP personal property for less than fair and reasonable value without written consent of spouse
* Real Property: Both spouses must jointly execute written instrument in order to validly convey CP real property. A sale to a BFP can be clawed back w/in 1 year
* Testamentary Limits: Spouse can only dispose of 1/2 CP through wills or trusts. If they give more than that, surviving spouse will have to elect to get their CP or share under the will
* Family Dwelling goods
Contributions from one Source to Another
SP to CP: Reimbursement
SP to other SP: Reimbursement
CP to SP Real Property: Marriage of Moore - community gets pro rata interest to the extent CP reduce principal debt. CP interest = amount CP contributed to principal reduciton/total original amount of loan.
CP Share = CP interest * capital appreciation. (only applies to DIPS)
CP to SP
* Spouse’s own SP: greater of reimbursement or increased value
* Other spouses SP: J(x) split - Reimbursement or gift, analyze both
Tort Recovery
Depends on timing:
if before or after marriage, SP
if during marriage, CP.
Upon death, CP.
Upon divorce, SP, unless: (1) it has been spent as CP; (2) comingled; or (3) in the interest of justice, up to 50% for non-injured spouse.
Pensions Plans
“Time Rule”:
years married while earning pension/total years working at job = % of pension that is CP. Divide in half to get each spouses share.
Stock Options
Hug: Used as reward for past work or as incentive for employment: [(Date of Hire - Date of Seperation)/(DoH - Date of Vesting)] * Shares Exercised = CP.
Nelson: Used as incentive for future work. [(Date of Grant - Date of Separation)/(DoG - Date of Vesting)] * Shares Exercised = CP.
Disability/Worker’s Comp
Look at what it is intended to replace.
CP to replace marital earnings
SP if used to replace post-divorce earnings.
If intended to replace pension, use time rule.
Severence Pay and Bonuses
Severance: Look at whe accrued and what intended to replace. If replaces retirement benefits, CP.
If post-divorce earnings, after separation, SP.
Bonus: Look at what it was for:
Bonus for reward for past work? CP
Truly Gratuitious Bonus? SP
Education/Degree
Degrees: Not a CP asset
Right to reimbursement for CP contributions to education that substantially enhanced other’s earnings capacity, only for direct expenses, like tuition.
Exceptions:
* Community already substantially benefitted
* Other spouse earned a degree
* Reduced need for spousal support for educated spouse (to pay the one who got the degree).
Life Insurance
Whole: Look at ratio of the CP that was used to pay the premiums. CP = amount CP contributed/total amount contributed (CP + SP)
Term: Type of asset used to pay the last premium controls.
