Community Property

Question 1

Community property is the idea of property between:

Answer 1

married persons

Question 2

A “community,” as referred to within community property law, begins when

Answer 2

spouses marry

Question 3

When people marry in Louisiana, as a general matter, all of the property that is created and acquired after the marriage is classified as

Answer 3

community property.

Question 4

In Louisiana, the ownership interest of each spouse in community property is:

Answer 4

one-half undivided interest

Question 5

A spouse wanting to assert that property acquired during the marriage is separate property must prove the property is separate property by:

Answer 5

a preponderance of the evidence

Question 6

Any property earned by the effort, skill, or industry of one spouse during the marriage is classified as

Answer 6

community property. The classic example of property earned by the effort, skill, or industry of one spouse is his or her salary.

Question 7

Earnings can be part community and part separate property if they are earned partially due to effort, skill, or labor exerted during the marriage and partially due to effort, skill, or labor exerted outside of the marriage.

Answer 7

For example, Hans worked for ABC Corporation where he was paid $1,000 on the last day of every month. On April 15, 2014, Hans married Whitney. On April 30, 2014, Hans received his monthly paycheck of $1,000. $500 of Hans’s paycheck would be community property.

Question 8

Fruits are property produced by other property without causing:

Answer 8

the diminution in the value of the underlying property.

Question 9

Specific items that are fruits

Answer 9

cash dividends, distributed trust income

Question 10

Specific items that are not fruits

Answer 10

stock dividends, stock split, non-distributed trust

Question 11

Products that are treated like fruits for the purposes of community property

Answer 11

Oil and gas, and the revenues that flow from oil and gas (such as bonuses, royalties, etc.).

Question 12

Products are…

Answer 12

property produced by other property that lead to the diminution in value of the underlying property.

Question 13

Fruits produced by community property are classified as

Answer 13

community property

Question 14

Fruits produced by separate property in a community property regime are classified as

Answer 14

community property

Question 15

Donations from third parties are community property if they were given to the community; donations from third parties are separate property if they were given to an individual spouse. How to determine what kind of property it is:

Answer 15

Donative intent—what did the donor intend?

Question 16

To donate separate property or community property to one spouse’s separate property:

Answer 16

the regular form requirements for donations apply, so a donation of immovable property requires an authentic act and a donation of movable property requires manual delivery. To donate separate property to the community, there must be an authentic act for both movable and immovable property.

Question 17

Inheritance (i.e., that property received from someone who died without a will) is always

Answer 17

separate property

Question 18

Property acquired with separate property is

Answer 18

separate property

Question 19

Property acquired with community property is

Answer 19

community property

Question 20

Property acquired with community property and separate property is community property, unless

Answer 20

the value of the common property used is inconsequential (up to 33%)

Question 21

when community property and separate property are co-mingled, do the properties retain their community property or separate property classification?

Answer 21

Yes.

Question 22

May goodwill be classified as community property?

Answer 22

Yes. However, any goodwill attributable to the personal quality of the spouse awarded the business shall not be included in the valuation of the business.

Question 23

Matrimonial agreements cannot include

Answer 23

Anything against public policy; Renounce or alter the marital portion; Renounce or alter the order of succession; Alter equal or sole management schemes, though joint management schemes may be altered.

Question 24

Contracting out of the community property regime before entering the community:

Answer 24

(1) A matrimonial agreement may be executed at any time by the spouses before marriage.
(2) The agreement must be an act under private signature or an authentic act.

Question 25

Contracting out of the community property regime during the community

Answer 25

(1) To enter into matrimonial agreement during marriage, spouses must receive court approval.
(a) Spouses must file a joint petition to the court under private signature or an authentic act.
(2) The court will determine if:
(a) entering into a separate property regime is in the best interest of the couple, and
(b) that the parties understand the governing rules and principles.

To have effect against third parties, any matrimonial agreement entered into by the spouses (regardless of when the agreement is entered) must be recorded.

Question 26

Sole management is the idea that

Answer 26

one spouse has sole managerial authority over a piece of community property.

a. Both spouses have an ownership interest in the community property, but only one spouse can manage the property.
b. The Civil Code usually talks about management in terms of alienating, encumbering, and leasing.
c. That means, if community property is subject to sole management, only the sole managing spouse has the authority to decide whether to sell that community property.

Question 27

When does a sole management regime apply?

Answer 27

The spouse who is the sole manager of a community enterprise has sole management of the movables of the community enterprise.

A community enterprise is an enterprise otherwise not registered by law (not LLC, just a small business)

The spouse who has a movable registered in his/her name as required by law is the sole manager of that movable property (usually a car).

Note that sole management applies only for movable property.

Question 28

Management scheme over immovable property

Answer 28

Joint management

Question 29

Joint management means

Answer 29

that both spouses must concur in any managerial decisions regarding that community property, though spouses may renounce their right to concur.

Question 30

Joint management is required for selling, leasing, or encumbering:

Answer 30

(1) Immovables that are community property (e.g., house)
(2) Timber (standing or falling)
(3) Furniture and furnishings that are community property
(4) Movables registered to the spouses jointly (e.g., bank account in the name of Mr. and Mrs.)

Question 31

Joint management is always required for donating property, unless

Answer 31

the donation is usual and customary commensurate with the economic position of the spouses at the time of the donation.

Question 32

Equal management is

Answer 32

the general principle of community property management.

Question 33

When does equal management apply?

Answer 33

If sole or dual management do not apply, equal management applies. It is the catchall category.

Equal management means that either spouse, acting individually, can manage the community property.

Question 34

Spouses can agree to how they want to divide the community property—if they agree outside of court, it is called an

Answer 34

extra-judicial partition.

Question 35

A judicial partition is

Answer 35

a process through which the court divides up community property.

Question 36

How to implement a judicial partition

Answer 36

a. Step 1: Value all of the community property assets and liabilities.
b. Step 2: Divide all of the community property assets and liabilities between the spouses.
(1) This division is based on the nature and source of the asset, the economic position of the spouses, and any circumstances the court deems relevant.
c. Step 3: Make equalizing payments such that each spouse receives an equal amount of community property.

Question 37

Degrees and licenses may create a right of reimbursement if

Answer 37

community property was expended to acquire the degree or license.

Question 38

Reimbursement for a degree or license is:

Answer 38

discretionary, not mandatory

The community must have provided financial contributions for the degree in order to receive reimbursement.

Reimbursement can be received only if the community was not compensated for the degree during the marriage.

Question 39

There are three factors courts use to determine whether the community should be reimbursed:

Answer 39

a. supporting spouses expectations in sharing the degree
b. detriment suffered by supporting spouse;
c. magnitude of benefit received by the educated spouse.

Question 40

If the separate property of one spouse increases in value due to the uncompensated or under-compensated labor of that spouse

Answer 40

then the other spouse is entitled to one-half of the increase in value attributable to community labor.

This means that if one spouse has separate property (e.g., a business acquired before marriage), and that property increases in value during the marriage, the other spouse (who doesn’t own the separate property) will have a right to one-half of the increase in value of the separate property that is attributable to uncompensated or undercompensated labor of the spouse who owns the separate property.

Question 41

The burden of proof originally rests on the spouse claiming reimbursement (i.e., the spouse who does not own the separate property), who must show

Answer 41

(1) the property in question is separate property;
(2) that the separate property has increased in value
(3) the increase in value is due to uncompensated labor or under-compensated labor.

At that point, the non-separate property-owning spouse is going to receive one-half of the increase in value of the separate property, unless the separate property owning spouse can show that some of the increase in value was not attributable to his/her labor.

If separate property-owning spouse can prove that some of the increase was not due to his/her labor (e.g., the increase was natural), then the non-separate property-owning spouse will receive one-half of only that increase due to the labor of the separate property-owning spouse.