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Professional Responsibility > Community Property > Flashcards

Community Property Flashcards

1
Q

Premarital Agreements - general requirements

A

Must be in **writing **

signed by both parties

No consideration is necessary

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2
Q

Premarital Agreements - prohibited

A

cannot include child support payments

should not promote divorce

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3
Q

Premarital Agreements - Defenses to Enforceability

A

Not Voluntarily Executed

Unconscionable when executed

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4
Q

Premarital Agreements: when are oral agreements enforceable?

A

If promise fully executed by promisor or promisee detrimentally relied on oral agreement

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5
Q

Defense to Premarital Agreement: Not Voluntarily Executed

A

Presumed involuntary unless the proponent shows

  1. Separate legal representation, unless waived knowingly when fully infomed at least 7 days before agreement was signed
  2. Not less than 7 days to sign
  3. No fraud, duress, or undue influence
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6
Q

Premarital Agreement- Defense to Enforceability- Unconscionable when Executed

A

Not provided a fair, reasonable, and full disclosure of the property or financial obligations of the other party, lacked adequate knowledge, and did not expressly and voluntarily waive disclosure in writing

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7
Q

What are Transmutations?

A

Transmutations are changing the classification of property by agreement or transfer from CP to SP, or SP to CP.

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8
Q

Transmutation Requirements

A
  1. Must be in writing by express declaration of the adversely affected spouse
  2. Language must expressly state ownership being changed
  3. Documentary Language Controls over extrinsic evidence of spouses intent
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9
Q

Transmutation Exception: Gift

A
  1. The gift is between spouses
  2. The gift is a personal tangible item, used solely by the spouse whom the gift is made
  3. The gift is not substantial in value (taking into account the circumstances of the marriage)
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10
Q

General Presumptions Rebutted by what level of proof?

A

Preponderance of evidence

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11
Q

Special Title Presumptions Rebutted by What Level of Proof?

A

Clear and Convincing Evidence

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12
Q

Special Presumption- Title

A

Applies only at death

Presumption that the title reflects ownership interests of both spouses

Title in one spouses name only (or no title) is SP if purchased with SP funds, and tracing cannot overcome presumption

CP- Jointly held property is CP, contrary intent must be evidenced by clear statement in deed or other writing

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13
Q

Two Types of Tracing for Commingled Bank Accounts

A
  1. Indirect Tracing
  2. Exhaustion Method
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14
Q

Commingled Bank Accounts: Indirect Tracing

A

Sufficient SP funds were available at time of purchase and intent to use them

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15
Q

Commingled Bank Accounts: Exhaustion Method

A

CP funds in account already exhausted by payment of family expenses at the time of purchase

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16
Q

Commingled Bank Accounts- Exhaustion Method- Family Expenses and Presumption

A

Food, clothing, and recreation

Presumption: CP funds used to pay family expenses, SP funds used only when CP funds are exhausted, and SP funds used for family expenses are a gift to the community

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17
Q

Goodwill of CP business

A

Treated like CP if created during marriage

Valuation- determining market sales valuation of goodwill through expert testimony or

  • comparing the past excess earnings of the business to the average earnings of other businesses
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18
Q

Education and Professional Degrees

A

CP reimbursement limited to direct education or training expenses (but not living expenses)

Reimbursed only if educated spouses earning capacity was substantially improved

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19
Q

Defenses to Reimbursing Community for Education/Professional Degree

A

Community benefited from education

Other spouse also got education during marriage

Rebuttable Presumption that community has not substantially benefitted if the community contributions were made less than 10 years ago

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20
Q

Retirement Pensions (vested or unvested) treated as SP or CP?

A

CP

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21
Q

Retirement Pensions- Spouse Eligible for benefits upon divorce

A

Divide years spouse was employed during marriage by the total number of years participating in the retirement plan (time rule)

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22
Q

Retirement Pension- Spouse Not eligible for benefits upon divorce

A

Division in Kind- when spouse retires, other spouse received CP percentage using “time rule”

or

Cash out- non-participant spouse is cashed out upon divorce and awarded assets equal to value to pension benefits

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23
Q

Stock Options- CP or SP if granted and vest during marriage?

A

CP

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24
Q

Stock Options: If granted during marriage but vest after date of separation

A

Part CP part SP

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25
Q

Stock Options: Share Formula based on whether options were what?

A

Granted as either a reward for past service or incentive for future service

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26
Q

Stock option: Formula used for Past Service reward

A

Hug Formula (compensation for past service)

CP= (Date of Hire - Date of Separation) / (Date of Hire - Date of Vesting) x # of shares; SP= # of shares - CP

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27
Q

Stock Option: formula used when stock is to incentivize future employment

A

Nelson Formula

CP= (Date of grant - Date of Separation) / (Date of Grant - Date of Vesting) x # of share; SP = # of shares - CP

28
Q

Disability Pay

A

CP - if intended to replace marital earnings/retirement benefits

SP- if intended to replace earnings after dissolution

29
Q

Severance Pay

A

CP if structured like retirement benefits

SP if meant to replace lost earnings after divorce/separation

30
Q

Insurance- Whole life- definition and characterization at divorce

A

Insurance and Investment Components

Divorce- CP in proportion to number of premium payments made with CP

31
Q

Insurance- Whole Life- Death

A

Mixed Funds- CP in proportion to number of premium payments made with CP

Community funds- 1/2 of proceeds to surviving spouse and other 1/2 to third party beneficiary

32
Q

Insurance- Term Life – Definition plus Death and Divorce

A

Only covers risk of death

Divorce- policy holds no value

Death- apportion community interest or trace where the last premium payment came from (CP or SP)

33
Q

Formula Names for SP businesses

A

Pereira

Van Camp

34
Q

Businesses: Pereira Formula and when is it used?

A

Used when the increase in value attributed to personal skills of the managing spouse

Formula

SP= Value of SP business at time of marriage + (value at time of marriage x fair rate of return (assume 10%) x years of marriage

CP= FMV of business at divorce - SP

35
Q

Businesses: Van Camp Formula and when is it used?

A

Primary reason for increase in value is character of SP business rather than spouses labor

Favors SP portion of estate

Formula
CP= (reasonable value of services - annual family expenses) x years of marriage

SP= FMV of business at divorce - CP

36
Q

When to use Reverse Van Camp and Pereira?

A

When CP businesses appreciate during separation

37
Q

Reverse Pereira Formula

A

CP= Value of CP business at time of separation + value at time of separation x fair rate of return x years of separation

SP= FMV of business at divorce - CP

38
Q

Reverse Van Camp Formula

A

SP= reasonable value of services during separation - SP expenses paid during separation

CP= FMV of business at divorce - SP

39
Q

Credit purchases and loan proceeds

A

Presumed to be CP

Focus on lenders intent, when the lender does not rely “solely” on the purchasers SP in extending credit

40
Q

Capital Improvements for Real Property when SP is used to improve other spouses SP

A

A spouse is entitled to reimbursement, without interest, for contribution unless transmutation occurs

Excludes: loan interests, maintenance, insurances or taxes

41
Q

Capital Improvements for Real Property when SP is used to improve CP

A

Reimbursement is available since 1984

42
Q

Capital Improvements for Real Property when CP is used to improve either spouses SP (after 1975)

A

The community is entitled to reimbursement or enhanced value of property (whichever is greater)

43
Q

Personal Injury Recovery at Divorce when injury is before marriage

A

Tort recovery is SP and injured spouse must reimburse the community and other spouses SP for any injury related expensesP

44
Q

Personal Injury recovery- Injury during marriage by 3rd party tortfeaser at Divorce

A

Tort recovery is CP during marriage, but awarded to the injured spouse at divorce (unless spent or commingled with CP funds)

Some Recovery may be awarded to non-injured spouse in interest of justice, but no more than half

45
Q

Personal Injury Recovery: At death

A

CP at death of either spouse

46
Q

Liability for Debt Generally: Liability of Community Estate

A

Liable for debts incurred by either spouse before or during marriage; upon divorce, the community has right to reimbursement

47
Q

Liability of spouses SP debts incurred before/during marriage

A

Liable for debts incurred before/during marriage (not for other spouses debts)

48
Q

Liability for Debt: Necessaries of Life- living together vs living apart

A

Food, clothing, shelter and medical expenses

Living Together- married person is personally liable for “necessaries of life”

Living apart
- Only personally liable for “common necessaries of life” - debts required to sustain life
- if debtor spouse had SP or CP funds at time debt was paid, non-debtor spouse can be reimbursed for SP funds

49
Q

Pre-existing child and spousal support

A

Treated like a debt incurred before marriage, so community is liable unless the non-debtor spouse shields their earnings

50
Q

Tort Obligations, acting for benefit of community vs not

A

Acting for benefit of community- liability is first satisfied from CP, then tortfeasors SP

Not acting for benefit of community- Liability is first satisfied from tortfeasors SP, then from community

51
Q

Right of reimbursement for payments for necessities of life, pre-existing child or spousal support, and tort obligations

A

There is a right of reimbursement that exists, unless waived

Either spouse must exercise right in divorce proceedings or death of a spouse

52
Q

Gifts to third parties (What must spouse get from other spouse)

A

Written Consent

Non-consenting spouse can ratify gift or revoke gift and sue to recover property

53
Q

Household goods

A

Spouse may not sell or give the family dwelling, household furniture, clothing without written consent of the other spouse

54
Q

Power and Control: Community Business

A

Managing spouse has primary management and control

Managing spouse must give prior written notice to other spouse for major actions

55
Q

Fiduciary Duty of Spouses

A
  1. Highest duty of good faith in management/control of CP (duty to disclose, to account and obtain consent)
  2. Breach requires deliberate misappropriation, gross negligence, or reckless conduct
56
Q

Joint Deeds and Titles: CP with right of survivorship - when is it permitted and how is it treated at death and divorce?

A

Permitted if express in deed, treated as CP during marriage and at divorce

ROS applies if spouse dies before marriage ends

57
Q

Property purchased with CP and SP funds: Lucas and Anti Lucas

A

Lucas (before 1984)- property is presumptively CP (rebuttable by C and C evidence) SP funds presumed to be a gift to community, no right to reimbursement

Anti-Lucas (after 1984) - CP presumption expanded to include all jointly held property held by married couples

58
Q

How to rebut Anti-Lucas (CP presumption on JT held property)

A

Rebuttable by express statement in deed or other writing that property is SP, and spouse making SP contribution has a right of reimbursement

59
Q

Apportioning Interest of CP and SP (property purchased with CP and SP funds)

A

If SP used as a downpayment or contribution to acquire CP, the presumption of CP controls- rebuttable by writing

Use Aufmuth Formula

60
Q

Aufmuth formula (rebutting that SP used as downpayment or contribution to acquire CP is CP)

A

If presumption is rebutted, the pro rata SP share = SP contribution / Purchase price

61
Q

Exceptions to Equal Division at Divorce:

A
  1. Deliberate misappropriation of CP by one party;
  2. Personal injury damages (at least ½ assigned to the injured party);
  3. If community debts exceed assets, excess debt may be assigned in an equitable manner;
  4. Debts for education loans may be assigned to the spouse who received the education;
  5. Court may assign sole or joint ownership of a CP pet animal;
  6. Tort judgments not incurred for benefit of community may be assigned to tortfeasor; and
  7. A civil judgment to pay domestic violence damages may be enforced against an
    abusive spouse’s CP share
62
Q

Division of Liabilities at Divorce– incurred during marriage

A

Divided equally or assigned to one of the spouses if the debt incurred during marriage but after separation

63
Q

Division of Liabilities: Incurred Before Marriage

A

Assigned to the spouse who incurred the debt

64
Q

Division of Property at death

A

Character of property is presumptively as expressed in the title

Surviving Spouse takes 1/2 of each item of decedent’s CP

65
Q

Division of Property At death- Intestate

A

CP- Surviving spouse entitled to 1/2 of CP as well other 1/2 that deceased spouse owned

SP- surviving spouse entitled to entire SP of spouse if no heirs, 1/2 if there is one heir, and 1/3 if there are more than one heir

66
Q

Testate: How much can testator bequest of CP?

A

1/2 of CP

67
Q

Surviving Spouses Election clause

A

When testator includes election clause in a will or attempts to pass the surviving will’s 1/2 interest in CP, surviving spouse must choose between CP rights or rights under the will (otherwise surviving spouse can assert both CP rights and rights under the will)

Professional Responsibility (2 decks)

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