Community Property Flashcards
California Community Property
CA is a community property state. In CA the general rules is all property acquired by a married person during marriage is presumed to be CP.
Equal Division Rule
In CA upon the dissolution of a marriage if there is no marriage settlement agreement the court will divide the couple’s community estate equally unless a spouse conceals or misappropriates CP.
Separate Property Rule
Any property acquired by a person before marriage is the SP of that person. Any property acquired during marriage by gift, bequest, devise or descent is also SP.
Premarital Agreements
The basic presumptions and rules of CP can be modified through a premarital agreement or valid transmutation. If there is a premarital agreement that agreement will typically control the characterization of the property.
Community Economic Estate
In CA the community economic estate begins upon marriage and terminates on the date of a complete and final separation where one spouse communicates their intent to end the marriage and acts in accordance with that communication and intent.
Transmutation
Parties to a marriage can change the characterization of their property from CP to SP, or vice versa through transmutation. Transmutation requires a clear intent and a signed writing. No consideration is required. [Prior to 1985, transmutations did not require a writing and could be made orally].
Gift Exception to Transmutation
The requirements for transmutation do not apply to gifts between spouses consisting of clothing jewelry, or other personal articles used principally by the recipient spouse and that are insubstantial in value taking into account the circumstances of the marriage.
Long Marriage Presumption
Property possessed in a long marriage, typically ten years or longer, is presumed to have been acquired during marriage and thus is CP. This presumption may be rebutted through tracing.
SP and Commingling
SP of a spouse may become CP if the SP is commingled with community assets. The CP presumption may be overcome by using either direct or exhaustion tracing methods.
Direct Tracing
The party asserting SP rights must prove that sufficient SP funds were in the account when the property was purchased and that they intended to use SP funds to make the purchase.
Exhaustion Method
The party asserting SP must prove there were no CP funds left in the account when the property was purchased. All CP funds were exhausted and thus there was only SP in the account to make the purchase.
Fiduciary Duty among Spouses
The nature of the marriage contract involves obligations of mutual respect, fidelity, and support. Each spouse must act in good faith in management and control of the CP. A presumption of undue influence arises when one spouse obtains an advantage over the other in a community transaction, and may justify unequal property distribution upon divorce.
Separate Property Business
Generally, the rents, issues, and profits of SP remain SP. A business that is SP may become partly CP as a result of an increase in the value of the business due to the labors of either or both spouses. The community is entitled to compensation for a spouse’s labor spent improving SP.
SP Business - Community Share Calculation
In CA, two approaches can be used to calculate community contribution to a SP business—Pereira and VanCamp. Courts may select the formula that will achieve substantial justice between the parties depending whether separate capital or community labor was the chief contributing factor to the increase in value.
Pereira
The Pereira rule reimburses the separate estate for a lawful rate of return on the separate capital and treats the remaining profits as CP. Pereira is used where management by the spouses was the primary cause of the growth of the business.
VanCamp
Under VanCamp, the court will award the community the value of the working spouse’s reasonable salary and then treat all remaining profits as SP.
Community Right to Reimbursement
A right of reimbursement arises when CP is used to satisfy SP debt. The amount of the reimbursement is measured by the value of the property or interest at the time the right to reimbursement arises.
Assets Acquired on Credit During Marriage
Assets acquired on credit during the marriage are presumed to be CP unless the creditor relied solely on SP when extending credit. If the earning capacity of one or both spouses was relied on then the asset acquired is CP.
Quasi Community Property
In CA all real or personal property, wherever situated, acquired by either spouse which would have been CP had the spouse been living in CA at the time of acquisition is characterized as quasi-community property. CP and Quasi-CP are treated the same when a marriage ends.
Married Woman’s Presumption
Property which a married woman acquired PRIOR to January 1, 1975 through an instrument in writing is presumed to be the woman’s SP. This presumption cannot be rebutted through tracing alone but requires tracing plus additional evidence.
Lucas
Look up a better rule statement and edit this card
Family Expenses
Payment of family expenses is presumed to be from CP funds if there are enough CP funds in the account. A spouse who uses SP funds to pay family expenses has NO right to reimbursement, unless the spouses agreed otherwise. [If this is a transmutation, would a writing be required?????]
Real Property Owned by One Spouse Before Marriage
A home owned prior to marriage is the SP of the spouse who was the owner before marriage.
Moore/Marsden Approach
Moore/Marsden is applied when one spouse owns the house as SP at time of marriage which is encumbered by a mortgage, and during marriage CP funds pay off some portion of the mortgage. [See Community Share & Separate Share]
