Community Property 31-45 Flashcards
When can Community Property be used to make child support payments from a prior marriage?
When SP is NOT available.
When CP is used to make payments and SP WAS available, then the community is entitled to a reimbursement.
Priority: Medium
When is a spouse entitled to reimbursement when they expend their SP for the other spouse’s medical expenses?
When:
Community Property was available; OR
If the debtor spouse had available Separate Property.
Priority: Medium
Pro-Rata Rule
How are payments made with CP treated when paying a spouse’s SP loan?
The community is entitled to a pro-rata ownership share of the property for amounts that reduced the principal debt on the asset.
Payments for mortgage interest, taxes, and insurance DO NOT count as reducing the principal debt.
Upon divorce: The community is entitled to reimbursement for its pro-rata share of SP.
Priority: Low
What is a Transmutation, and when is it valid?
An agreement between spouses during marriage to change the character of an asset.
It’s valid only if (1985 and later):
It’s in writing;
Signed and consented to by spouse whose interest is adversely affected; AND
It expressly declares a change in ownership.
Priority: HIGH
Transmutations
What is the Gift of Insubstantial Valueexception?
CP will be transmuted into SP by a gift from one spouse to the other, if the gift is:
Tangible property of a personal nature;
Used solely by the recipient spouse; AND
Insubstantial in value (considering the lifestyles of the two parties).
Priority: HIGH
When is an oral Prenuptial Agreement valid?
When:
It’s fully performed; OR
If the party detrimentally relied on the agreement.
Priority: Medium
When is a Prenuptial Agreement valid?
When in writing and signed by both parties.
Priority: Medium
When will a Prenuptial Agreement be deemed Unenforceable?
If it is:
Involuntary;
Unconscionable; OR
Encourages divorce.
Priority: Medium
When will a Prenuptial Agreement be deemed Unconscionable?
If:
The terms are unfair; OR
If a spouse DID NOT know the extent of the other spouse’s property before signing the agreement.
Priority: Medium
When will a Prenuptial Agreement be deemed Involuntary?
It is deemed involuntary UNLESS a court finds all of the following:
The party (against whom enforcement was sought) was represented by independent legal counsel or waived counsel requirement in writing;
The party has not less than 7 days to review the agreement;
If unrepresented: the party (against who enforcement was sought) was fully informed of the terms and is proficient in the language used in the agreement; AND
The agreement was NOT executed under duress, fraud, undue influence, or lack of capacity.
Priority: Medium
Can creditor’s reach CP to satisfy debts incurred before or during the marriage?
Yes, including debts for child and spousal support. But, a non-debtor spouse’s earnings are protected if:
The debt occurred before the marriage; AND
The earnings were held in a separate account to which the debtor didn’t have access and no comingling occurred.
Priority: HIGH
SP can only be reached to satisfy a spouse’s own personal debts.
What are the TWO exceptions where both CP and SP can be reached to satisfy such debts?
Necessities: The community is obligated to pay for a spouse’s necessities during marriage. When separated = only obligated during emergency situations.
Tort Liability: If the debtor was acting to benefit the community when the tort occurred, then CP must be used before reaching SP. If debtor was not acting to benefit community, then SP must be used first.
Priority: HIGH
When can a creditor reach CP awarded to a spouse AFTER divorce?
When the spouse incurred the debt OR was assigned the debt by the court.
*A debt is incurred at the time the obligation to pay arises.
Priority: HIGH
How are assets divided upon divorce?
Each spouse gets ½ of each community asset UNLESS the court determines that the interests of justice require a different division.
Priority: Medium
What exceptions will change the division of assets upon a divorce?
Misappropriation by one spouse;
Separate debt;
Educational debts = assigned to spouse who incurred the education;
Tort liabilities = assigned to tortfeasor spouse if liability was NOT for community benefit;
Family home = awarded to spouse given custody; and
Closely held corporations.
Priority: Medium
