Community Property

Question 1

Community Property General Presumption

Answer 1

CA is a CP state, in a CP state, the marital economy begins at marriage and ends at divorce, death of a spouse or permanent separation. All property, debt, and income acquired during a marriage is presumed CP. Any property acquired before marriage, after divorce or permanent separation is presumed SP. Any property acquired by gift or inheritance during marriage is presumed SP.

Question 2

Quasi-Community Property (presumption)

Answer 2

QCP is property acquired by either spouse while living in a non-CP state that would have been CP had the spouses been domiciled in CA at the time of acquisition. At divorce or death, QCP is treated as thought it were CP.

Question 3

Illusory Transfer of QCP

Question 4

Married Woman’s Special Presumption

Answer 4

before 1/1/75 only that husband has management and control over CP, so property titled in the name of W or the W and third party is presumed as her SP.

Question 5

End of the economic Community

Answer 5

divorce, death or permanent separation

Question 6

Putative Spouse

Answer 6

one who believed in good faith that a void or voidable marriage was valid. Property acquired before notice of the invalid marriage that would be CP or QCP is treated as quasi-marital property and divided as CP or QCP.

Question 7

Unmarried Cohabitants

Answer 7

CP does not apply; apply contract principles (express or implied)

Question 8

Fiduciary Duties of Spouses

Answer 8

a spouse owes a fiduciary duty to disclose, account for and obtain consent from the other spouse in the management and control of CP; remedies for breach include injunctive relief (TRO) pending divorce, the right to accounting, adding a name onto title, getting a greater share of CP and payment of attonery’s fees.

Question 9

Equal Rights of Spouses to Manage Property & Transfers to Third Parties

Question 10

Jointly Titled Property & Anti-Lucas Statute

Answer 10

Jointly titled property acquired during marriage is presumed to be community property upon divorce.

Question 11

Personal Injury Awards & Settlements

Answer 11

Divorce:
injury before marriage: tort recovery is SP; the injured spouse must reimburse the community if CP is used to pay any expenses attributable to the injury.

Injury During Marriage: tort recovery is CP; at divorce, at least 1/2 will be awarded to the injured spouse (more if not commingled with CP and justice requires)

Death: recovery is characterized as CO

Injury between spouses: recovery is SP of the injured spouse

Question 12

Disability & Workers Comp/ Payments

Question 13

Separate Property Business (Van camp & Pereira tests)

Question 14

Goodwill of a business

Answer 14

the reputation and future earning potential of a CP business is a CP asset; valuation is calculated through market sales valuation or comparing the past excess earnings to typical peer businesses

Question 15

life insurance

Answer 15

2 types:

Whole Life: community gets pro rata share based upon the number of CP premium payments; at death, CP gets 1/2 of the proceeds if SP did not contribute to premium payments

Term Life: at divorce there is no cash value but one court gave CP interest in renewal value when spouse became uninsurable; at death, the last premium paid determines the characterization.

Question 16

stock options

Answer 16

stock options that are granted during the marriage but which vest after the date of separation are part CP and part SP; the characterization depends upon the type of compensation they are designed to replace (past services or continued employment)

Question 17

Credit & Acquisitions of Property Using Credit

Question 18

Reimbursement for Property Acquisitions & improvements

Question 19

Professional Degrees & Reimbursements for Education

Question 20

Reimbursement for Child Support & Alimony Payments

Answer 20

CP liable for premarital debt for child or spousal support but can be reimbursed by the debtor spouse’s SO if SP funds existed at the time the payment was made.

Question 21

Reimbursement for Medical Expenses

Question 22

Pro-Rate Rule- CP funds to pay SP Loan

Question 23

Transmutations

Answer 23

an agreement changing the classification of property. before 1986 oral agreement were sufficient;

after 1985 agreement must be in writing with an express declaration by the adversely affect spouse, except for personal gifts (ring, jewelry clothing) of insubstantial value in relation to marriage finances.

statements in a will or true will not work as a transmutation unless clear intent is shown.

Question 24

Prenuptial Agreements

Answer 24

SOF applies; must be in writing and signed by both parties (no consideration required); CA followed the Uniform premarital agreement act.

the parties may reduce or eliminate proper rights and spousal support and opt out of the CP system in whole or in part.

May NOT contract regarding child support-any attempt is void.

Void if agreement was not voluntary or unconscionable.

Question 25

Property Credits may Reach to Satisfy Debts

Question 26

Distribution of Community Assets & debts Upon Divorce

Answer 26

Equal Division Rule: CA is a no-fault satellite the only two grounds for divorce are irreconcilable differences or incurable insanity.

Absent an agreement, CP will be divided equally with each spouse receiving 1/2 of the net community estate (after subtraction of joint obligations)

Exceptions: personal injury damages, debts exceeding assets, debts for education loans, tort liability, civil judgments for domestic violence against spouse.

Division of Liabilities- debt is generally allocated equally to each party.

if debt > assets- excess debt is divided equally considering each party’s ability to pay.

Question 27

Valid marriage

Answer 27

consent, capacity and compliance with legal formalities