Community Property Flashcards
marital economic community
begins upon marriage and ends at divorce, death of spouse or separation
community property
all property, earnings or debts acquired during marriage
separate property
all property acquired by either spouse before marriage, by gift or by inheritance
quasi community property
property acquired while living in different state that would be characterized as community property if it were acquired in CA
valid marriage
requires consent + legal capacity + compliance with legal formalities (license, solemnization, authentication)
common law marriage
not valid in CA but valid elsewhere will be given full faith + credit as required by U.S. Constitution
void marriage
never legally existed. Incest, bigamy, or not lawfully contracted
voidable marriage
may be invalid. Can be annulled if party is under under 18, pre-existing marriage, unsound mind, consent obtained by fraud/force, or physical incapacity.
putative spouses
occurs when one or both spouses believe in good faith that marriage was valid but its NOT. Putative spouses right stops when they discover marriage isn’t valid.
pre-marital agreement (general rule after 1986)
writing, signed by both parties, enforceable w/o consideration. Oral agreement may be enforceable if promise is fully executed.
Defenses to enforceability - Premarital agreements
(1) not voluntarily executed (2) unconscionable when executed
pre-marital agreements (2002 amendments)
after 2002 provisions regarding spousal support in premarital agreement is not enforceable against (i) parties not represented by independent counsel when signed or (ii) if provision is unconscionable
permanent separation
complete and final break of the marital relationship. (i) at least one spouse expressed intent to end marriage (ii) spouses conduct is consistent with intent to end marriage
special cp presumption
applies only at divorce + presumes jointly held property is CP
- Lucas (prior to 1984)
- Anti Lucas (post 1984)
Lucas (prior to 1984)
property purchased w/cp or sp, deemed gift to community. Could be rebutted by clear and convincing evidence that both spouses didn’t intend to hold as cp. (oral or implied agreement = ok)
Anti-Lucas (post 1984)
property held in joint title is assumed to be cp. Could only be rebutted by express statement evidencing statements intent to hold as sp. Spouse making “contribution” by sp has right to reimbursement of contribution but w/o interest.
transmutations (after 1985)
change in nature of property must be in writing + expressly declaring change in ownership + consented by spouses who’s interest is adversely affected
Exception: gifts made between spouses, used solely by spouse and not substantial in value
title in one spouses name
if spouse takes title to an asset in her name alone, this wont change nature of property if source was CP
married woman’s presumption
Before 1975: If wife’s name only on title, presumed SP but can be rebutted w/evidence of husband’s lack of donative intent/waiver.
After 1975: Equal management and control over CP; presumption no longer applies
presumption of title
(applies only at death) Presumption that title reflects ownership interest of spouse.
commingled bank accounts
burden of proof on SP proponent to show SP funds were used to purchase assets.
- Direct tracing
- Exhaustion method
direct tracing
sufficient SP funds available at time of purchase and intent to use them
exhaustion method
CP funds were already exhausted for family expenses at time of purchase
goodwill of CP business
intangible value most businesses have based upon expectation of future business + established name/reputation. 2 methods of calculating value
- Determine market sale valuation of goodwill through expert testimony
- Comparing past excess earnings of business to average earnings of peer business
education/professional license
not treated like CP. Upon divorce, may have right to reimbursement if:
CP funds used to pay for education, earning capacity of educated spouse substantially increased, parties didn’t waive right to reimbursement in writing
Defenses: (1) divorce occurred more than 10 years after receiving education, (2) other spouse also received education paid for by cp during marriage or (3) education reduced need for spousal support upon divorce
retirement pension - time rule
CP % calculated by dividing # of years spouses employed during marriage by # of years spouse participated in retirement plan
retirement pension - division in kind
court orders when spouse retires, other receives % of each pension check
retirement plan - cash out
nonparticipant spouse is cashed out upon divorce + awarded assets upon divorce equal to pensions benefits
stock options - Hug Formula
(Compensation for past services)
CP = (DOH – DOS) /(DOH – DOV) x # of shares
SP = # of shares - CP
stock options - Nelson formula
(incentive for future employment)
CP = (DOG – DOS)/(DOG – DOV) x # of shares
SP = # of shares – CP
disability benefits
characterized as cp if received during marriage and sp if received before or after marriage
personal injury award/settlement
CP if cause of action arose during marriage, injured spouse will receive at least ½ of recovery.. SP of injured spouse if accident occurred before marriage or after separation.
child support payments
payments from prior marriages are treated as debts before marriage thus liability falls on SP of spouse who incurred debt.
May seek reimbursement if (1) cp applied to satisfy child support payments and (2) debtor spouse has sp funds available to pay debt at the time
insurance - whole life
death/divorce, court characterizes proceeds as CP in proportion to # of premium payments made w/community funds
insurance - term life
court holds that policy has no value. Court will either look at final premium payment to determine if proceeds are CP or SP or apportion community interest in policy
SP Business
Pereira vs. Van Camp
Pereira (Favors CP)
Increase in value primarily due to managing spouses skills and labor
SP = value of SP Business at marriage + (value of business marriage x fair rate of return x years married)
CP = FMV at divorce – SP
Van Camp (favors SP)
CP = (reasonable value of services – annual family expenses) x years married
SP = FMV at divorce – CP
Reverse Pereira & Van Camp
when one spouse continues operating and it appreciates in value
Reverse Pereira
CP = value of business at separation + (value at separation x fair rate of return x years separated)
SP = FMV at divorce – CP
Reverse Van Camp
SP = (reasonable value of services at separation – annual family expenses during separation)
CP = FMV at divorce - SP
credit & loan proceeds/purchases
during marriage, presumed CP. presumption can be rebutted w/proof of lenders intent to rely on SP as collateral. 2 viewpoints:
- Must show lender relied primarily on SP as collateral
- Must show lender relied solely on SP as collateral
property rights
each spouse has equal management and control of property
fiduciary duties
spouses owe each other fiduciary duties (disclose, account for and obtain consent from other spouse in management and control of CP)
