Community Property

Question 1

community property schematic

Answer 1

• Context of action
• When was asset acquired?
• How was asset acquired?
• Domicile & marital status at acquisition
• Source/Tracing/Change in Character Limitations
• Agreements/Actions
• Proof: Presumptions
• Limitations:
  
  • Domicile
  • Marital status at acquisitions
  • Not property
  • Constitutional

Question 2

Opening

Answer 2

California is a community property state.

In order to determine the rights and liabilities of the parties with respect to assets and obligations, the property must be classified (characterized) as separate, community, or quasi-community property.

Question 3

Definitions: Community Property (CP)

Answer 3

Community Property (CP) is all property acquired during marriage by the efforts of either spouse, including property located outside of the state. [also RDPs]

Community property is property, wherever situated, acquired during marriage by a married person domiciled in California.

Question 4

§ 760. Community property defined

Answer 4

§ 760. Community property defined

Except as otherwise provided by statute, all property, real or personal, wherever situated, acquired by a married person during the marriage while domiciled in this state is community property.

In the absence of proof of purchase, a court can presume that the asset was acquired during the marriage, but only if the marriage was one of long duration.

Personal property includes the labor of either spouse, which means that salary, wages, and other compensation for work performed by either spouse during marriage falls within the definition of community property.

By application of the tracing principle, the definition of community property includes the “fruits” of community property assets, namely rents, issues, proceeds, profits, other income derived from community property, rights to exploit community property, and so forth.

Separate property that has been converted to community property enters into the community estate on the date of transmutation. By extension of the equality principle, either spouse has the legal right to manage and control community property, however acquired and however titled, with some qualifications and exceptions set by statute.

Question 5

Definitions:Separate Property (SP)

Answer 5

Separate Property (SP) is property owned prior to marriage; that received by gift or inheritance; and rents, issues, and profits of separate property.

Question 6

§ 771. Earnings and accumulations during period of separation (SEPARATION)

Answer 6

§ 771. Earnings and accumulations during period of separation

(a) The earnings and accumulations of a spouse and the minor children living with, or in the custody of, the spouse, while living separate and apart from the other spouse, are the separate property of the spouse.*

*“living separate and apart” refers to a situation in which spouses are living in separate residences and at least one of them has the subjective intent to end the marital relationship, which intent is objectively evidenced by words or conduct reflecting that there is a complete and final break in the marriage relationship.

(b) Notwithstanding subdivision (a), the earnings and accumulations of an emancipated minor child related to a contract of the type specified in Section 6750 shall remain the sole legal property of the minor child.

Question 7

§ 772. Earnings or accumulations after entry of judgment of legal separation

Answer 7

§ 772. Earnings or accumulations after entry of judgment of legal separation

After entry of a judgment of legal separation of the parties, the earnings or accumulations of each party are the separate property of the party acquiring the earnings or accumulations.

Question 8

Definitions: Quasi-Community Property (QCP)

Answer 8

Quasi-Community Property (QCP) is real or personal property, wherever situated, acquired by a spouse while domiciled outside of California, which would have been community property if domiciled in California at the time of acquisition. In a probate proceeding real property must be located in California (personal property may be located anywhere) to be considered quasi-community property.

Question 9

Definitions: Quasi-Marital Property (QMP)

Answer 9

Quasi-Marital Property (QMP) is property acquired during a putative marriage which would have been community property or quasi-community property if the union had been valid, an equitable division of which may be made by the court.

Question 10

California Family Code § 2251: Putative

Answer 10

(a)  If a determination is made that a marriage is void or voidable and the court finds that either party or both parties believed in good faith that the marriage was valid, the court shall:
(1)  Declare the party or parties to have the status of a putative spouse.
(2)  If the division of property is in issue, divide, in accordance with Division 7 (commencing with Section 2500), that property acquired during the union which would have been community property or quasi-community property if the union had not been void or voidable.  This property is known as “quasi-marital property”.
(b)  If the court expressly reserves jurisdiction, it may make the property division at a time after the judgment.

Question 11

General Community Property Presumption

Answer 11

Assets acquired during marriage (from date of marriage to date living separately with intent not to resume relationship) are presumed to be community property. By a preponderance of the evidence, the presumption may be rebutted by tracing to a separate property source or by an agreement to hold the asset as separate property.

• acquisitions using comingled funds presumed to be community property
• prior to 1983, family expenses paid from SP funds are presumed to be gifts to the community

Question 12

§ 2581. Community property presumption for property held in joint form

Answer 12

2581. Community property presumption for property held in joint form

For the purpose of division of property on dissolution of marriage or legal separation of the parties, property acquired by the parties during marriage in joint form, including property held in tenancy in common, jOint tenancy, or tenancy by the entirety, or as community property, is presumed to be community property. This presumption is a presumption affecting the burden of proof and may be rebutted by either of the following:

a) A clear statement in the deed or other documentary evidence of title by which the property is acquired that the property is separate property and not community property.
(b) Proof that the parties have made a written agreement that the property is separate property.

Question 13

Form of Title Presumption

Answer 13

There is a presumption that the characterization of the property is consistent with the form of title. The presumption may be rebutted by clear and convincing evidence of an agreement to the contrary. (oral, written, inferred by conduct of parties)

Question 14

§ 750. Methods of holding property

Answer 14

§ 750. Methods of holding property

A husband and wife may hold property as joint tenants or tenants in common, or as community property, or as community property with a right of survivorship.

Question 15

Married Women’s Presumption

Answer 15

An acquisition prior to 1/1/1975 in the name of a married woman**, which is **memorialized in a writing**, is presumed to be her separate property. The presumption may be rebutted by **clear and convincing evidence of no valid written or oral agreement, lack of intent to make a gift, use of CP funds without husband’s knowledge.

Question 16

Conflicting Presumptions

Answer 16

When there are conflicting presumptions, the one that is more specific controls.

Question 17

Contractual Modification

Answer 17

The character of property may be altered by agreement between the spouses. Agreements may be made during or prior to marriage.

Question 18

Premarital Agreements

Answer 18

Premarital Agreements are made in contemplation of marriage (RDP) and intended to take effect upon marriage. Parties do not have a confidential relationship based on an impending marriage. The agreement must be in writing (prior to 1986 could be oral; detrimental reliance and partial performance may remedy), signed by both parties, and concern appropriate subject matter.

Question 19

Defenses to Premarital Agreement

Answer 19

Defenses to Premarital Agreement

• involuntariness presumed unless
  
  • representation by independent counsel or expressly waived in separate writing
  • 7 days from presentation and advisement to seek counsel until signing
  • if no independent counsel, full informed of legal effects in separate writing
  • no duress, fraud, undue influence, lack of capacity
  • other factors the court deems relevant
• unconscionable
• no actual or constructive knowledge of assets and obligations of other party
• against public policy (adversely affects child support, promotes dissolution, interferes with family unity)
• void marriage – only enforceable to the extent necessary to avoid inequitable result equitable defenses limiting time of enforcement (laches, estoppel)

Question 20

Transmutation

Answer 20

Transmutation agreements are entered into during the marriage, and must be effected by an express declaration in writing of intent to change the classification of property which is signed by the party(s) adversely affected.

Question 21

Transmutation:Exceptions to transmutation writing requirement

Answer 21

Exceptions to transmutation writing requirement

• fully executed oral contract made prior to 1985 g
• ift between spouses of a personal nature used principally by donee spouse and not of substantial value in light of the circumstances of the marriage

Question 22

Transmutation: Defenses to Transmutation Agreement

Answer 22

Defenses to Transmutation Agreement

• Presumption of Undue Influence – Where one spouse obtains an unfair advantage from an interspousal transaction a presumption arises that the advantaged spouse exercised undue influence.
  
  • The presumption may be rebutted** by showing that the disadvantaged spouse entered into the agreement **voluntarily, with full knowledge of all relevant facts, that the party understood the legal effect of the agreement and had time to consider before executing it.
• Fraud / Illegality

Question 23

Limitations on Classification: Property

Answer 23

Property

Tangible real and personal property, as well as intangible property (such as business goodwill) that is traceable and can be valued, is subject to classification. Education is not property, though expenditures are reimbursable if paid from community funds and the education substantially enhances the spouse’s earning capacity. Quasi-community property may also be classified, though in a probate proceeding, real property must be located in California.

Question 24

Limitations on Classification: Persons

Answer 24

Persons

Unless there has been a valid marriage or registered domestic partnership, community property cannot be acquired. However, if there was a good faith belief [whose? objective/subjective standard?] in the validity of the marriage, putative spouse status may be granted so that property can be classified as quasi-marital property and equitably divided by the court. If the parties are merely cohabitants, they may seek equitable remedy in a civil action. [If analyzing putative marriage, always continue to cohabitants & analyze under different/applicable presumptions.]

Question 25

Limitations on Classification:Jurisdiction Domicile

Answer 25

Jurisdiction

Domicile

Property acquired during marriage while both spouses are domiciled in California is community property. Property that would have been community property had it been acquired in California will be characterized as quasi-community property upon the filing of an action in California (not upon change of domicile so Due Process/P&I not abridged). For the court to have jurisdiction to classify quasi-community property, both spouses must have changed domicile to California, unless the out-of-state party consents to jurisdiction.

Question 26

Limitations on Classification:Jurisdiction Probate

Answer 26

Probate

The probate court only has jurisdiction over the decedent’s property.

Question 27

Limitations on Classification:Jurisdiction Constitutional Limitations – Preemption

Answer 27

Constitutional Limitations – Preemption

State legislation affecting classification of property may be preempted under the Supremacy Clause of the US Constitution. (Military and federal civil service pension benefits are not subject to classification as CP. Bankruptcy proceedings preempt CA classification.) Upon division of property, California courts may adjust distributions to account for differences.

Question 28

Limitations on Classification:Jurisdiction Constitutional Limitations – Retroactivity

Answer 28

Constitutional Limitations – Retroactivity

There is a presumption that legislation is prospective, such that the law at the time of judgment controls. If it is express or implied in the law, it will be necessary to determine the constitutionality of retroactive application. Courts will consider whether the legislation is a change to or clarification of existing law, whether it would impair a vested property right, whether such impairment is justified by a substantial state interest, and whether the parties legitimately and detrimentally relied on the prior law.

Question 29

Classification Problems - Comingled Funds

Answer 29

Classification Problems - Comingled Funds

When community and separate property funds (fungible assets) are comingled during marriage, they are presumed to be community property unless rebutted by a contrary agreement or tracing. [always analyze presumptions characterize before going to tracing – title & general usually]

Question 30

Classification Problems: Comingled funds: Direct Tracing

Answer 30

Comingled funds: Direct Tracing

Direct tracing will be effective if the separate property proponent can show that separate property funds were available at a particular point in time, that those funds were withdrawn, and that there was intent to use them to acquire separate property.

Question 31

Classification Problems: Comingled Funds: Indirect Tracing (money coming out/ whats left and what came out)

Answer 31

Comingled Funds: Indirect Tracing (money coming out/ whats left and what came out)

Indirect Tracing If there are inadequate records for direct tracing, the separate property proponent may show that all community property funds were exhausted by community expenses (expenses in excess of available funds), such that only separate property funds were available at the time of acquisition.

CP exhausted by spending on CP (Family Expenses) expenses

1. Family expenses presumed paid first with CP available
2. CP funds available and expenses equalled CP funds
3. Balance must be SP

Question 32

Apportionment of Separate Property Business Profits

Answer 32

Apportionment Apportionment of Separate Property - Business Profits When spousal effort is dedicated to a separate property business during marriage, upon dissolution/death the community may acquire a share of the increase in its value. The court has discretion to choose any method of apportionment that will achieve substantial justice between the parties. The Pereira and Van Camp methods of apportionment are most widely used.

Question 33

Apportionment: Apportionment of Separate Property Business Profits: *Pereira*

Answer 33

Pereira

When spousal efforts are more likely to be the chief contributing factor to the increase in value, courts will use a Pereira approach. This method applies a fair rate of return on the separate property investment (as valued at the date of marriage), and characterizes the difference between the increase in value during the marriage, and the calculated SP increase plus the initial SP interest, as community property.

Question 34

Apportionment: Apportionment of Separate Property Business Profits: *Van Camp*

Answer 34

Van Camp

When the valuable character of the company is likely to be the chief contributing factor to the increase in value, courts will use a Van Camp approach. This method assigns a reasonable value to the spousal labor and deducts community expenses paid from business income to determine the CP interest. The difference between the value of the business at separation and the CP interest is the SP interest. (got reasonable amount of his services, nothing left for cp)

Question 35

Apportionment: Reverse Apportionment

Answer 35

Reverse Apportionment

Where there is a community business at which one spouse continues to work after separation, thereby appreciating its value, that increase may be apportioned using the Pereira approach to calculate a rate of return on the CP investment or the Van Camp approach to calculate the reasonable value of SP services.

Question 36

Apportionment: Apportionment of CP Contributions to Acquisition of SP

Answer 36

Apportionment of CP Contributions to Acquisition of SP

Using community funds to acquire a separate property asset creates a pro tanto ownership interest in the community. Under the Moore/Marsden approach, the CP interest is equal to the amount of principal paid down by the community, plus a pro rata share of the increase in the value of the property during marriage, determined by dividing the amount of principle paid down by the purchase price of the asset.

Question 37

Reimbursement

Reimbursement for CP Contributions to SP

Answer 37

Reimbursement for CP Contributions to SP

Where a spouse makes a contribution from CP funds for improvement to his/her own SP, upon dissolution, the community will be reimbursed for the amount contributed or the amount by which the improvement increases the value of the property. Where a spouse makes a contribution from CP funds for improvement to the other spouse’s SP, it is presumed to be a gift unless rebutted by evidence of an agreement to reimburse. The community will be reimbursed for unauthorized gifts made by one spouse, and for CP contributions to education expense that substantially enhances the earning capacity of a spouse.

Question 38

Reimbursement: Reimbursement for SP Contributions to Community

Answer 38

Reimbursement for SP Contributions to Community

Prior to 1983, SP contributions to the community were presumed to be a gift, rebuttable by a contrary agreement or tracing. As of 1/1/83, there is a statutory right of reimbursement for such contributions up to the net value of the asset, unless the right is waived in writing.

• education not a community asset, so no right of reimbursement for SP contributions

Question 39

Borrowed Funds / Installment Purchases

Answer 39

Borrowed Funds / Installment Purchases

If a loan is acquired during marriage, the general presumption of community property is raised. The presumption may be rebutted by showing that the lender intended to rely solely on separate property income or assets to secure the loan or on one spouse’s credit exclusively.

When there is an installment acquisition, the character of the asset will be apportioned between community property and separate property in proportion to the contributions made to each.

Question 40

Personal Injury Awards §780

Answer 40

Personal Injury Awards

Personal injury damages are community property if the cause of action arose during the marriage. However, upon dissolution, the court must award the damages to the injured spouse unless equity requires otherwise.

Question 41

Personal Injury Awards: Interspousal Tort

Answer 41

Interspousal Tort

Where a personal injury award has been made as the outcome of an interspousal tort action, the award is the separate property of the injured spouse. Community property funds may not be used to pay the award unless the separate property of the tortfeasor is exhausted.

Question 42

Employment Benefits

Answer 42

Employment benefits- earned during marriage are usually considered deferred compensation and, as such, are classified as community property. However, there are some exceptions to this general rule.

Question 43

Employment Benefits
 Defined Contribution Plans

Answer 43

Defined Contribution Plans

Defined contribution plans [401K, IRA] may be apportioned between SP and CP based on contributions made during and outside of marriage. However, because the contributions are often inconsistent over time, courts often use the time rule to achieve rough justice unless doing so would produce an inequitable result.

Question 44

Employment Benefits
 Defined Benefit Plans

Answer 44

Defined Benefit Plans


Defined benefit plans [pension, annuity] generally receive relatively consistent contributions over time, so courts will apportion the asset between SP and CP according to the time rule. If benefits are calculated based on something other than time, courts will apportion in another equitable manner.

Question 45

Employment Benefits Voluntary Termination Incentives

Answer 45

Voluntary Termination Incentives

Incentive benefits will be classified based on the intent of the employer**. If the payment is intended as a retirement benefit, it is considered **deferred compensation and that portion earned during marriage will be classified as community property. If it is intended as a severance payment, it is usually considered compensation for loss of future earnings and so will be apportioned based on whether it is actually received during or outside of the marriage.

Question 46

Employment Benefits
 Stock Options

Answer 46

Stock Options

Classification of stock options is calculated by the time rule, based on the intent of employer in offering the options. If options are intended to attract an employee, the court will likely use the date of hire to calculate the accrual of benefits. If options are intended to retain an existing employee or as additional compensation the court will likely use the date of grant to calculate the accrual of benefits.

Question 47

Employment Benefits
 Disability/Worker’s Compensation

Answer 47

Disability/Worker’s Compensation

Disability and worker’s compensation benefits are a replacement for current earnings, so it is classified based on when it is actually received, regardless of when the right to receive the benefits accrued. When a spouse is disabled after separation and before retirement, benefits paid from the date of disability to the date of retirement eligibility are SP. Upon retirement eligibility, benefits are apportioned according to the time rule.

• military benefit rules preempt CA classification rules; retirement disability is SP

Question 48

Employment Benefits
 Time Rule

Answer 48

Time Rule

Benefits are classified as CP if earned during marriage, as calculated by dividing the time the spouse participated in the plan during the marriage by the total plan participation time.

• ERISA/Gillmore payment – non-employee spouse may receive direct payment of his/her share at the retirement eligibility date even
• if employee spouse chooses not to retire if employee spouse dies first, non-employee spouse receives pension related death benefits
• if non-employee spouse dies first, retirement benefits are probably not devisable per case law and ERISA (Employee Retirement Income Security Act) preemption

enhancement: if you have a repurchase of years actually worked, you are looking at separate property, and any funds (community property) used must be reimbursed.

add on fictive years to an already existing benefit, you have an enhancement.

Question 49

Spousal Management

Answer 49

Spousal Management

Equal Management and Control of assets

Both spouses have equal rights to management and control of all community property though they may devise only their own half of the community property. Subject to their fiduciary duty to one another, either may act unilaterally as to community property with certain exceptions.

Question 50

Fiduciary Duty

Answer 50

Fiduciary Duty

The fiduciary duty between spouses is based in the confidential marital relationship. Spouses must act with highest good faith and fair dealing. Each has an affirmative duty to disclose information material to proper the exercise of rights and a duty to disclose other information upon demand. The duty continues until the date of dissolution. [standard of care – gross negligence]

Question 51

Remedies for Breach of Fiduciary Duty

Answer 51

Remedies for Breach of Fiduciary Duty

For transactions constituting a breach of fiduciary duty after 1/1/1987, or in connection with a probate or family law proceeding, the court may order:

• accounting
• award of 50% of property to spouse, or monetary equivalent
• addition of spouse to title held in breaching spouse’s name, unless
  
  • interest in general partnership or professional corporation/association
  • asset of incorporated business operated solely by breaching spouse
  • other that would adversely affect rights of third party

SOL – 3 years of actual knowledge of transaction, unless action upon death or family law proceeding Defense – laches

Question 52

Exceptions to Unilateral Action
Personal Community Property

Answer 52

Personal Community Property

Transfer of personal community property that is the family dwelling (motor home), furniture, or clothing of the other spouse or minor children requires written consent of the other spouse.

Question 53

Exceptions to Unilateral Action
Community Property Business

Answer 53

Community Property Business

If one spouse operates a community property business, he/she must give prior written notice to the other spouse of the sale, lease, exchange, encumbrance, or disposition of all or substantially all of the personal property used in the operation of the business.

Question 54

Community Liabilities 
Premarital Support Obligations

Answer 54

Community Liabilities

Premarital Support Obligations

The community may be held liable for separate pre-marital support obligations, but upon division of property, may be reimbursed if SP income was available at the time the obligation was paid.

Question 55

Community Liabilities
 Other Debt

Answer 55

Other Debt

The community can be held liable for debts incurred at any time by either spouse (before or during marriage). However, CP earnings deposited to a segregated account may not be reached by creditors as to pre-marital debt.

Question 56

Community Liabilities
 Tort Claims

Answer 56

Tort Claims

If the activity that resulted in injury was for the benefit of community, the claim will be satisfied first from community property then from the tortfeasor’s separate property.

If the activity that resulted in injury was not for the benefit of community, the claim will be satisfied first from the tortfeasor’s separate property, then from the community estate.

Question 57

Community Liabilities: During Separation

Answer 57

During Separation

During separation, prior to dissolution, each spouse’s debts are separate property liabilities; creditors will not have access to CP except for expenses of either spouse or children for “necessaries of life.”

Question 58

Division and Distribution of Property Division on Dissolution

Answer 58

Division and Distribution of Property

Division on Dissolution

In a family law proceeding, the court must classify the property (unless there is a written marital settlement agreement or a stipulation in open court); value the community assets, liabilities, and offsetting reimbursements; and divide the community estate equally.

Question 59

Division and Distribution of Property 
Jurisdiction

Answer 59

Jurisdiction

In order to divide and distribute property, the court must have in rem jurisdiction over the property being divided (CP, QCP, QMP), in personam jurisdiction [domicile, service, consent, minimum contacts] over both parties, and subject matter jurisdiction (in dissolution – the marriage).

• valid settlement agreements are binding; not subject to modification by court
• quasi-community property divisible if both parties are in state or party consents

Question 60

Division and Distribution of Property
 Valuation

Answer 60

Valuation

Absent a stipulation or marital settlement agreement, the court must base its valuation on the evidence presented, and will set values as close as practicable to time of trial, unless there is good cause to value at some time between separation and trial. (spousal efforts during separation, waste, market changes)

Question 61

Division and Distribution of Property
 Division

Answer 61

Division

The court must equally divide the community estate, but may select whatever method is most appropriate. Where it is possible to divide an asset, the court will award half of the asset to each spouse (division in kind). Where there is a major item of community property that is not reasonably subject to division the court might award certain items to each spouse such that each receives an equivalent aggregate value (single asset proviso). This method of division often requires equalizing payments. The court might also order a sale and division of proceeds or conversion to tenancy in common with a deferral of sale (usually of a family home).

Question 62

Division and Distribution of Property 
Exceptions to Equal Division Rule

Answer 62

Exceptions to Equal Division Rule

• Written agreement of the spouses or oral stipulation in open court removes valuation and division from the court’s jurisdiction.
• For the benefit of a minor child, the court may order deferral of the sale of a family home, resulting in deferral of the receipt by parties of their CP share of the asset. The court will consider economic feasibility (resident parent income, availability of child/spousal support, other sources of income, likelihood of default, adequate insurance coverage, adequate maintenance of property) and the impact on the child (length of residency, grade in school, proximity to school/services, modifications made to home for special needs of child or custodial parent, emotional detriment to child of moving, location’s affect on parent’s employment, financial ability of each parent to obtain housing, tax consequences to parents, economic impact on nonresident parent).
• A personal injury award for a cause of action accruing during the marriage is CP, but will be assigned exclusively to the injured spouse (without offset) upon dissolution unless the court, in the interest of justice, determines another disposition. In that case, no less than half must be assigned to the injured spouse.
• The court must make a division that won’t affect title of out of state property insofar as is possible.
• If the CP estate is less than $5,000 and other spouse cannot be located, all property may be awarded to one spouse.
• The court may order recovery without offset of deliberately misappropriated assets.

Question 63

Division of Community Debt

Answer 63

Division of Community Debt

• Debts incurred during marriage are divided equally. However, if community debt exceeds community assets, the court has discretion to divide the net liability according to the respective ability of the parties to pay.
• Debts incurred during marriage but not for “benefit of community,” are not subject to equal division.
• The court has discretion to divide post-separation community debt according to need and may order reimbursement.

Question 64

Reimbursements
 For actions taken during marriage

Answer 64

Reimbursements

Reimbursements may be required prior to the division of property.

For actions taken during marriage

• SP contributions to acquisition or improvement of CP during marriage
• SP contribution to acquisition or improvement of SP of other spouse
• CP contribution to education that substantially enhances earning capacity
• CP misappropriation
• CP transfer w/out consent violation of fiduciary duty
• violation of fiduciary duty

Question 65

Reimbursements
 For post-separation actions

Answer 65

For post-separation actions

• SP contribution to community obligation (mortgage, etc) – discretionary Epstein reimbursement, unless
  
  • contrary agreement
  • intent to make gift
  • asset used exclusively by paying spouse
  • discharge of support duty
• Watts Credit – spouse receiving benefit (living in house rent free, but not paying the mortgage) owes community full fair rental value (community then reimburses paying spouse the difference between the mortgage and the fair rental value – Epstein reimbursement)

Question 66

Retirement Benefits
 In-Kind Division / Cash-Out Division

Answer 66

Retirement Benefits

In-Kind Division – Each party receives their portion when benefit pays out. This requires court to retain jurisdiction. If the employee spouse chooses not to stop working, the plan may pay out directly to the ex-spouse under a Qualified Domestic Relations Order – QDRO.

Cash-Out Division – based on a present value calculation of the future benefit

Question 67

Tax Consequences

Answer 67

Tax Consequences

The court may take tax consequences into consideration in making a division of assets if they are immediate and specific, such as those related to a court ordered sale of property. The court will not consider tax consequences if they are speculative or attenuated.

Question 68

Distribution on Death
: Jurisdiction

Answer 68

Distribution on Death

Jurisdiction

The probate court has jurisdiction to distribute decedent’s 1/2 of CP and decedent’s separate property. The court has jurisdiction over all personal property and over real property located in the state, including quasi-community property. Joint tenancy interests, retirement benefits, policies with beneficiaries, and other non-probate transfers are not subject to the court’s jurisdiction.

Question 69

Distribution on Death 
Presumptions

Answer 69

Distribution on Death

Presumptions

• General Presumption (does not apply to property held at time of death if marriage ended more than four years prior)
• Form of Title Presumption
• Married Woman’s Presumption

Question 70

Distribution on Death 
Intestate Succession

Answer 70

Intestate Succession

Community Property

100% of decedent’s half of CP goes to surviving spouse Separate Property of Decedent

• 100% to surviving spouse if no children / parents / issue of parents
• 50% to surviving spouse; 50% to single child / issue
• 1/3 to surviving spouse; 2/3 to issue (more than one child)

Question 71

Distribution on Death:

Creditor Claims Against Estate Property

Answer 71

Distribution on Death

Creditor Claims Against Estate Property

Creditors filing claims against estate property must do so within the one year statute of limitations. The statute of limitations may be tolled if the non-debtor spouse knew of the debt and didn’t notice the creditor of the probate proceeding. Absent an agreement, between the surviving spouse and the executor or administrator, debts will be allocated by the court according to marital dissolution rules.

Question 72

Setting aside Judgement/Statute of Limitations

Answer 72

Setting aside Judgement/Statute of Limitations:

• duress: 2 years after entry of judgment
• Mental Incapacity: 2 years after entry of judgement
• Mistake of law or fact: 1 year after entry of judgment
• Failure to comply disclosure rights: 1 year from discovery
• perjury in disclosure: 1 year after discovery
• Actual Fraud: 1 year after discovery or should have discovered

Question 73

CONSEQUENCES ARISING FROM FAILURE TO COMPLY WITH FIDUCIARY DUTIES

Answer 73

Family Code section 1101: failure to disclose

• an award of at least one-half the value of the undisclosed asset,
• or in cases where the evidence is clear and convincing that a party has been guilty of “oppression, fraud, or malice” within the meaning of Civil Code section 3294 in concealing an asset, 100% of that ball - and in either case reasonable attorneys fees.
• Set-aside (void) a court order or judgment that was entered as the result of a party’s failure to comply with the disclosure statutes.

Question 74

Family Code §721 (b): fiduciary duty

Answer 74

Family Code §721 (b):

Spouses are under fiduciary disclosure duties “including, but not limited, to the following:

(1) Providing each spouse access at all times to any books kept regarding a transaction for the purposes of inspection and copying.
(2) Rendering upon request, true and full information of all things affecting any transaction which concerns the community property. Nothing in this section is intended to impose a duty for either spouse to keep detailed books and records of community property transaction.
(3) Accounting to the spouse, and holding as a trustee, any benefit or profit derived from any transaction by one spouse without the consent of the other spouse which concern the community property.”

They are also obligated to provide the other spouse with:

(1) Without demand, any information concerning the partnership’s business and affairs reasonably required for the proper exercise of the partner’s rights and duties under the partnership agreement or this chapter; and
(2) On demand, any other information concerning the partnership’s business and affairs, except to the extent the demand or the information demanded is unreasonable or otherwise improper under the circumstances.”