Community Property Flashcards
California CP basic Presumption
o California is a community property state. All real or personal property, including earned wages, acquired during the marriage while domiciled in CA is presumed to be community property, regardless of which spouse’s name is on the title.
o Separate property is property acquired: (a) before marriage or after separation, (b) by gift, will, or inheritance, (c) by separate funds, or (d) profits earned from separate property.
o Where the asset is unclear, courts will trace the funds used to purchase a property to determine whether it is community property or not.
o When 1 spouse dies during the marriage OR on the date of separation, all CP is divided equally between the spouses, and spouses SP remains his own.
o With these basic principles in mind, each item of property will be examined.
o [only add this line if there was property acquired outside of CA] Quasi Community Property is property acquired by either spouse while living in a NON-CP state that would have been considered community property had the spouse been domiciled in California when the property was first acquired. It retains its separate property nature and may be transferred. However, the property will be treated like community property upon divorce OR if during the marriage the purchasing spouse dies and title is still in his name, the surviving spouse will get HALF interest in the property.
o [only add if putative spouses] Quasi Marital Property is property acquired during a void or voidable marriage, which would have been treated as CP or QCP if the marriage had been valid.
Community Property
What is the status between the parties at the time EACH item was acquired?
End of Economic Community: death or date of separation (intent + consistent conduct)
Valid Married/Domestic Partnership - CP
Invalid Marriage: Putative spouse – QMP
Unmarried living together – Contract Law
* CP law does NOT apply, CA will apply general contract principles according to Marvin. Courts should enforce EXPRESS contracts between non-married partners, UNLESS it is based on only sexual services. If no express contract, then an Implied contract may be proven based on the parties behaviour or agreement.
(1 spouse will argue tracing, 1 spouse will argue implied contract)
- Transmutations
After 1985, writing + adversely affected signed and consented + clearly declare change in ownership.
o Exception: A personal gift from 1 spouse to the other will be considered SP IF (1) the gift is used solely by receiving spouse AND (2) its of insubstantial value relative to the lifestyle of the parties
Under Lucas, all property aquired in joint title is presumed to be community property.
- Title presumptions
o Special Married Woman Presumption = title married wife name only + acquired before 1975
o CP funds used to buy property is presumed CP (rebut by: written transmutation or gift to other spouses evidencing title in other spouses name)
o Jointly Titled Property is presumed CP — NO tracing allowed, unless it’s a joint bank account
- Pre-Marital Agreement
avoid CP laws if: writing + both sign + not invalid: involuntary, unconscionable, promote divorce
o Presumed Involuntary rebut: (1) 7+ days to review, (2) no duress, fraud, undue influence, and (3) represented by lawyer or advised to seek counsel advice or separate waiver: fully informed of terms/rights/obligations and proficient in the language
o Unconscionable = terms unfair OR before signing unknown extent of other spouses property
o Defenses: Estoppel if fully performed or Latches
Spousal Support = A pre-nuptial agreement is unconscionable with respect to spousal support when the party challenging it was not represented by independent legal counsel or the provision is unconscionable at the time of enforcement.
- End of Marital Community
The marital economic community begins upon marriage, and ends at either permanent physical separation, divorce, or death of a spouse.
Date of separation (intent + consistent conduct) complete final break
o SP business enhanced by value of CP funds or labor
Pereira = favors CP. where spouses personal skills are the primary reason for the business growth
* CP interest = fair market value of the business at the time of divorce – SP interest
* SP interest = value of SP business at the time of marriage + (value at time of marriage x 10% fair rate of return x # of years SP business was operating during marriage)
VanCamp = favors SP, where the very character of the business is the primary reason for growth
* SP interest = fair market value of the business at the time of divorce – CP interest
* CP interest = annual fair market value salary during marriage – annual family expenses paid with business earnings - salary actuall paid out each year x # of years SP business was operating during marriage
o Real Property bought with SP then CP used to pay it off
Under Moore, when CP funds are used to pay down the mortgage on a spouses SP property that was bought before the marriage with title taken in only that spouses name, the Community is entitled to a dollar for dollar reimbursement for the money that was spent towards the mortgage AND they will obtain a pro-rata share in the appreciation value increase of the property.
o CP to other SP
Split courts: presumed a gift, unless agreement OR community is entitled to reimbursement
o CP to your own SP
value increase or cost of improvement
o Using your SP for CP or the other spouses SP
DIP only
Down Payment
Inprovements
Principal reduction only
o Joint Title end in Divorce:
o Joint Title end in Death:
Anti-Lucas
reimburse SP for DIP, unless contrary writing [not joint bank account]
Lucas SP used is presumed a gift to the community, unless otherwise agreed
o Personal Injury
- arise during marriage + by 3rd party = CP,
- upon divorce it is SP, unless interest of justice not to
- If a cause of action is against a spouse, it is separate property.
o Pension/ Retire/Bond/Stocks
earned before and during marriage = time rule for CP interest; rest is SP
CP interest % = # of years married while pension earned / total # of years pension was earned for
CP interest % = # of years employed during marriage / total # of years employed till option vests
Henry purchased shares of stock before his marriage to Wilma and kept these shares in a brokerage account. These shares were thus Henry’s separate property b/c he acquired them before marriage. The shares in the account paid him an annual cash
dividend of $3,000, which he deposited into a savings account in his name alone. The cash dividends are also Henry’s separate property b/c all rents and profits garnered from separate property are separate property as well
If a stock option is awarded during the marriage, then the community has an interest in it. This is b/c stock options are considered incentive compensation, meaning that they
reward work currently going on. Therefore, if a stock option is awarded during marriage it is based at least in part upon past and present work in the hope that the employee will keep
up the good job. Where the spouse is awarded the stock option during the marriage but exercisability occurs after the date of separation, a special formula must be used to extract
the community’s interest.
o Severance
CP = replaces retirement benefits earned during the marriage OR SP = future lost compensation
