Community Property 16-23 Flashcards
Personal Injury Awards – Against 3rdParties
During marriage/divorce
vs.
Before or after marriage
During marriage: personal injury awards/settlements are CP.
At divorce: assigned entirely to the injured spouse (unless funds were comingled or there is economic hardship).
Before/after marriage: award is SP of injured spouse.
Priority: HIGH
Personal Injury Awards – Against Spouse
Who receives a personal injury award when the cause of action is against the spouse?
Personal injury awards/settlements against a tortfeasor spouse are ALWAYS the SP of the injured spouse.
Priority: HIGH
When will courts use the Pereira Method to determine CP/SP business interests at divorce?
When business growth is mostly due to the spouse’s labor and abilities.
Owning spouse receives original principal value, plus a 10% annual rate of return. Remaining value of business is CP.
Priority: HIGH
When will courts use the Van Camp Method to determine CP/SP business interests at divorce?
When business growth is mostly due to the character and nature of the business itself.
The community receives a reasonable salary REDUCED by expenses, and remaining value of the business is the SP of the owning spouse.
Priority: HIGH
How is the “Goodwill” of a
business defined?
The intangible value of the business reputation beyond personal skill or value of assets.
*When goodwill is generated by community labor it is deemed CP.
Priority: Medium
How is Goodwill valued?
By either:
The Market Value Method – price in sale of business; OR
Capitalization of Excess Earnings Method – present value of the future stream of income that the goodwill developed during marriage.
Priority: Medium
How do courts determine the CP interest in a Whole Life Insurance Policy that was paid for with CP and SP funds?
They use the Buy-in-Rule, which states that CP value is apportioned using the formula below:
of premium payments made with CP
÷
total number of premium payments
Priority: Low
Is Term Life Insurance designated as CP or SP?
Under the Final Payment Rule, it is designated as CP or SP according to the characterization of the last payment made.
Priority: Low
