Community Property

Question 1

relationship status

m p s

Answer 1

marriage - a marriage is valid in Ca if there is a consensual civil contract between a man and a woman followed by a license from a county, solemnization, and authentication. ca recognizes marriages between a man and a woman from other states if the marriage was valid in the other state

putative spouse - if a marriage is void or voidable, and the court finds that either party believed in good faith that the marriage was valid, the court will treat the party as a putative spouse. the property of putative spouses is treated as cp or qcp. the party making the assertion that the marriage was voidable will be estopped from making that assertion if they knew that the marriage was invalid or acted as it was valid

permanent separation - arises when the couple physically separates and at least one party has the intent for the separation to be permanent

Question 2

general presumptions

Answer 2

California is a community property state, this means that all property acquired by a married person while domiciled in Ca is considered CP. Any property owned by either spouse before or after marriage or any property acquired by gift, bequest or devise or rents or profits derived therefrom is considered SP. Quasi-community property is all property acquired by a married person while domiciled elsewhere and would be considered CP if they were in Ca. QMP is property acquired during a void or voidable marriage and would have been CP if the marriage had been valid.

Question 3

presumptions inferred by title

mwsp lucal-anti-lucas

Answer 3

mwsp
property acquired by a married woman in writing prior to 1975 is presumed to be her SP

lucas - antilucas
lucas - at death and prior to 1984, all jointly held title between the H and W is presumed to be CP with no right to reimbursement to SP without an agreement to the contrary, a gift from the SP to the CP is presumed
anti-lucas 1 - at divorce from 84 - 86 property title as JT is CP unless written statement to contrary (deed)
anti-lucas 2 - from 87 on any jointly held title is presumed CP unless there is a written statement in the deed or written statement to the contrary with reimbursement
reimbursements only for dip - down pymnt, improvements, principal
only applies to titled property, death and divorce

Question 4

commingled funds

Answer 4

commingling of funds does not necessarily transmute the property from SP to CP. Proponent spouse has the burden of proof to show that each asset was acquired by SP

Question 5

tracing methods

Answer 5

exhaustion - all CP in a commingled acct were exhausted paying for CP expenses and therefore only SP could have purchased the property
direct tracing - direct link from the SP to the purchase such that there were sufficient SP funds in the acct at the time of the purchase and the purpose was to use SP funds to make the purchase.
tracing may not be used to overcome the presumption where the property was taken jointly except for bank accounts and if you can’t trace then its CP

Question 6

management and control

comm personal property
comm business
comm real prop
fiduciary

Answer 6

the CP personal property belongs to either spouse with absolute power of disposition other than testamentary and may not make a gift for less than FMV without the written consent of the spouse
spouse may not sell, convey or encumber personal comm prop without written consent of spouse in the family dwelling

Question 7

comm business

Answer 7

a spouse in charge of the business can make all business decisions alone BUT must give written notice of a sale of all or substantially all of the personal property used in business ops

Question 8

comm real prop

Answer 8

sale or lease- both spouses must execute an agreement to convey or sell comm real prop or for leases more than a year
conveyance - to a third person by a spouse to a BFP is presumed valid but the other spouse can void within one year of filing

Question 9

fiduciary duties

Answer 9

each spouse has a fiduciary duty to fully disclose all material facts about community assets and debts as well as provide equal access to info upon request, also has a the highest duty of good faith and fair dealing and never take unfair advantage of each other

Question 10

agreements

prenup child supp transmute

Answer 10

prenuptual - an agreement before marriage to become effective upon marriage. req’s
writing , signed, no consideration necessary
enforceable if not involuntary, unconscionable, or lack disclosure
prenup’s are presumed unconscionable if not:
rep’d by independent counsel or waived in writing
wait 7 days and advised to get independent counsel
fully informed in writing of rights given up
not under duress, fraud etc

Question 11

child support

Answer 11

child support cant be waived, spousal support can be waived if independent counsel and not unconscionable

Question 12

transmutation

Answer 12

an agreement between the spouses to change the character of an asset
before 85 - could be oral, written or intent
after - must be in writing by an express declaration that is made by spouse adversely affected
gifts - do not apply to gifts that are personal in nature and are not substantial when taking into acct marital circumstances. does not apply to statements in will.

Question 13

Special classifications

p p d s b e l bg

Answer 13

personal injury
during marriage - any money received as a result of the injury is CP
after marriage or separation - any money is assigned to the injured spouse unless interests of justice
after legal separation, dissolution or while spouses are living separately - money is SP
CP entitled to reimbursement from SP received by spouse for any expenses incurred
liability - SP of tortfeasor must be exhausted before CP can be used to discharge liability for an injury to one spouse by the other

Question 14

pension

Answer 14

earned during marriage are CP regardless of when vested. 2 approaches
reservation of jurisdiction - wait until retires, then
election - the nonemployed spouse can elect to receive their share at the earliest time that the employed spouse could retire
time rule - CP percentage is calculated by dividing the number of years when married by total number of years spouse earned the pension
cash-out - assigns the entire pension to the employed spouse and uses CP assets equal in value to “cash out the other spouse

Question 15

disability

Answer 15

classification of disability as CP or SP depends on what it is going to replace
SP - intended to replace spouse’s income after separation or dissolution it is SP
CP - if purchased with CP funds, and intended at the time the premium was paid as retirement income then CP and treated the same as retirement benefits

Question 16

severance pay

Answer 16

is treated similarly to disability pay and a court will look at when the severance pay was accrued and what it is intended to replace
SP - intended to compensate lost, future earning after separation then SP
CP - if replaces earned retirement benefits or enhances retirement benefits from when the couple was married, then CP

Question 17

bonuses

Answer 17

when they were earned, not paid

Question 18

education/training

Answer 18

not a comm asset unless in writing
- reimbursement - community is entitled to reimbursement for comm contributions if substantially enhanced earnings capacity with interest accruing from end of calendar year which contributions were made
can be reduced if : comm already benefitted from earnings or offset by education of other spouse

Question 19

life insurance

Answer 19

whole life insurance provides lifetime death benefit coverage and accumulates cash value
estate paying premium controls and each estate has an interest based on what they contributed
term life insurance - estate paying premium controls, whoever paid the latest term

Question 20

business goodwill

Answer 20

is the expectation of continued public patronage that stems from the built up value of one’s business beyond the value of the stock, property or assets
professional practice built during marriage CP
excess earnings method to determine goodwill. can look at an average professional during time and compare with how much spouse made. this amount cna be capitalized over the life of the marriage

Question 21

contributions and improvements

Answer 21

CP contributions to SP - Perriera/Van Camp

Perriera favors the CP and is used by courts when the spouse’s management skills are the primary reason for growth
SP = initial capital contribution + initial capital contribution x reas rate of return(10%) x number of years married
CP= value of business - SP value

Van Camp favors the SP estate and is used by courts when the character of the business is the reason for growth

CP interest = (value of mgr spouse services x # of years) - actual compensation - (family expenses paid from business earnings x yrs married) - CP interest, the remainder is the value of CP

Question 22

CP used to improve other spouses SP -

Answer 22

maj rule - a gift is presumed unless there is an agreement to reimburse
min. rule - a gift is not presumed and reimbursement is granted

Question 23

CP used to improve spouse’s own SP

Answer 23

when a spouse uses CP to improve their own SP then the CP is entitled to reimbursement or the increase in value of the property, whichever is greater

Question 24

CP used to pay off purchase price (Moore/Marsden)

Answer 24

CP interest= the amount CP contributed to the principal divided by total original amount of loan balance
CP share = the CP interest is multiplied by the amount of capital appreciation
exclude interest, taxes and insurance

Question 25

SP contributions to other spouse’s SP

Answer 25

a party will be reimbursed without interest for contributions/ improvements that can be traced from their SP to the other spouses SP for down payment, improvements and principal payments unless written waiver or transmutation

Question 26

SP contributions to CP

Answer 26

reimbursement - a party will be reimbursed without interest for contributions that can be traced from their SP to CP for down payments, improvements, and principal payments

Question 27

reverse perriera/van camp

Answer 27

any SP contribution to a CP business will be subject to the reverse P/VC after separation or dissolution
reverse P = CP interest = initial value of CP at separation + initial value of CP + reas. rate of return x initial value x yrs worked while separated
reverse VC - SP interest = fair salary - any salary taken during years of separation - CP expenses

Question 28

Credit acquisition

Answer 28

there is a rebuttable presumption that property acquired on credit during marriage is a comm prop debt. rebut by showing lender relied solely on SP of when extending credit. if based on earning capacity, CP debt

Question 29

debts

timing and liability

Answer 29

timing - all debts are incurred at the time the K was made or tort committed. child/spousal support for another marriage exists as a debt incurred before marriage

Question 30

liability

Answer 30

CP is liable for all debts incurred before and during marriage by either spouse
exceptions: the earnings of the nondebtor spouse are not liable for the premarital debts of the other spouse if the debtor spouse has no access to the account and allows the nondebtor spouse to sheild his earnings

SP is liable for own debts but not other spouse unless for necessities unless incurred during marriage for necessities of spouse or child

injury/damage - a married person is not liable for the injury or damage caused by the other spouse unless the other spouse would be liable if they were not married BUT»>
benefit of the community - if the act or the omission occurred during the marriage for the benefit of the community the liability should be satisfied from the community estate and then from the debtor’s SP
not for benefit - if the act occurred during the marriage and was not for the benefit of the community then liability should be satisfied from the debtors SP first and the community estate second
reimbursements are available if the debt should have been settled from another estate

Question 31

at divorce

Answer 31

the community assets will be equally divided unless a special situation requires deviation from this requirement
real prop outside of state -if court cannot divide prop outside of state that court can require the parties to convey the real property or award the party that would have benefited from the conveyance the equivalent money value

Question 32

death

Answer 32

upon death, half of the CP and QCP belongs to the surviving spouse and on-half belongs to the decedant’s estate. decedant may devise all of his SP and half of the CP and QCP
QCP exception- the decedant does not have a one-half interest in the QCP titled in surviving spouse’s name

Question 33

election

Answer 33

if the decedant died with a will and tried to dispose of more