Community Property Flashcards
Basic Community Property Presumption
All property acquired during marriage is presumed to be community property, unless acquired by gift or inheritance, in which case it is presumptively separate property
Putative Spouses
One that has a good faith belief that he or she is lawfully married, even though he or she isn’t
Quasi-Marital Property
All property acquired during a putative marriage is labeled as quasi-marital property, regardless of it being CP or QCP, but treat it under normal CP and QCP rules
SP is still discussed as SP
Unmarried Cohabtiants
Apply K principles and, if applicable, restitutionary remedies (unjust enrichment, constructive or resulting trust)
Consideration may not include sexual services
Quasi-Community Property
Property acquired during marriage by the spouses that would’ve been CP had the spouses been domiciled in a CP state at the time of the acquisition
Under QCP, if the spouses move to CA, until divorce or death, the QCP…
Remains SP of the acquiring spouse
Under QCP, property acquired in a non-CP state by spouses while domiciled in a CP state is
CP
Under QCP, at divorce, or on the death of the acquiring spouse, as well as for the purposes of creditors’ rights, QCP is treated
The same as CP
If the non-acquiring spouse dies first, QCP remains the SP of the acquiring spouse
Pension, Stock Bonuses, and Options
If acquired in part during marriage and in part outside of marriage, use the pension time rule
CP Interest = (total assets earned) x (years of marriage in which asset is earned/total number of years in which asset is earned until payable)
Personal Injury Damages - Characterized based on when the injury occurred
CP if the personal injury cause of action arises during marriage
SP if before marriage or post-separation
SP if injury is due to tort of other spouse
Life Insurance - Term Life
Character of proceeds is character of last premium paid (if made from CP, then entire proceeds are CP)
Life Insurance - Whole Life
Cash value allocated based on proportion of premiums paid by SP and proportion paid by CP; term amount based on character of last premium paid
Disability Pay
If it replaces earnings during marriage, CP
If it replaces earnings before or after marriage, SP
If a business is developed entirely during a marriage, it is
CP
Van Camp/Pereira rules apply if
Spouse brings SP business into marriage, or spouse inherits SP business; and
Either spouse works in the business and business value increases at least in part due to efforts of either spouse
Van Camp
Use when increase in value primarily due to character of business
CP = (Market salary – actual salary – family expenses paid from salary)*years married
SP = FMV of business at dissolution – CP portion
Pereira
Use when increase in value primarily due to management efforts of the spouse
SP = value of managing spouse’s SP business at time of marriage + [fair rate of return (0.1)value at time of marriageyears married]
CP = Value at dissolution – SP
Business Goodwill Calculation
Goodwill is treated like CP if created during marriage (the difference between a business’ total value and the value of its assembled physical assets)
Two valuation methods: 1) market sales valuation (expert opinion) and 2) capitalization (past excess earnings attributable to good will)
Education and Training - Right to Reimbursement
Community has an equitable right of reimbursement, with interest, if community funds are:
Used either to pay for education or training, or are used to repay a loan used for education or training; and
The education or training substantially enhances the educated spouse’s earning capacity
Education and Training - Reimbursement Exceptions
Community already substantially benefited from the education or training (10 years since degree earned means no reimbursement); or
If the education reduced the educated spouse’s need for spousal support
Joint Title Rules (anti-Lucas)
All jointly held property acquired during marriage is presumed CP at divorce and legal separation. Applies to joint tenancy from and after 1/1/85, and to tenancy in common from and after 1/1/88
At death, use joint tenancy rule – all to survivor
SP contributions to the purchase of the property are reimbursed to the SP contributor without interest or appreciation (increased property value is CP)
Tracing Funds - Two Presumptions
Family expenses are presumed to be paid first from community funds
If SP funds are used to pay family expenses, presume a gift of the SP to community
Tracing Funds - Two Methods
Exhaustion - Community funds exhausted by payment of family expenses, so only SP left
Sufficient Funds - If CP balance never fell below SP amount, presume all family expenses paid from CP
Community Payments on Purchase Price of Separate Property (Moore Formula)
Used for property purchased before marriage but uses CP to make payments after marriage
Moore Formula: CP = (principal paydown during marriage/total purchase price)*value at divorce
Community Payments to Improve Separate Property
When a spouse makes community payments to improve their own SP, the community is entitled to the greater of reimbursement or the amount by which the improvement increases the value of the asset
When a spouse makes community payments to improve the other spouse’s SP, presumed to be a gift (traditional) or right to reimbursement (modern)
Sale of Community Property without Spouse’s Consent
A transfer to a BFP without knowledge of the marital relationship is presumed valid
The non-consenting spouse can overcome this presumption only if she 1) brings an action to void the transaction within 1 year of recording the transfer; and 2) demonstrates she didn’t in any way consent to or participate in the transfer
If successful, she may void the conveyance, but must first return the purchase price
Contract debts arise…
At the time the K is made
Tort/Criminal liabilities arise…
When the tort/crime is committed
Debts Before Marriage
All CP and debtor’s SP are liable for a K debt incurred by debtor spouse pre-marriage
The SP of a non-debtor spouse is never liable
Prior marriage spousal support and child support payments, if paid from CP when SP available, must be reimbursed to the community on divorce
Debts During Marriage
All the CP, and the debtor spouse’s SP, are liable
The SP of a non-debtor spouse is only liable if the debt is a contractual debt for necessaries
Non-tortfeasor spouse’s SP not liable, unless that spouse would be liable for the tort
Order of Debt Satisfaction - Contract Liability
No order of satisfaction for K liability
Order of Debt Satisfaction - Tort/Criminal Liability for Torts Arising During a Community-Benefitting Activity
Debt is first satisfied from the CP, then, if necessary, from the debtor spouse’s SP
Order of Debt Satisfaction - Tort/Criminal Liability for Torts Arising During a Non-Community-Benefitting Activity
Debt is first satisfied from debtor spouse’s SP; and then, if necessary, from the CP
Bad Faith Debt Exception
If spouse expended CP in bad faith, or acted with recklessness or gross negligence, the community is entitled to offset or reimbursement. Mere negligence is insufficient
Child Support Debt Exception
Child support from a prior marriage is prior debt, and payable from CP. But if, at the time of payment, SP was available to pay the support, community is entitled to reimbursement
Also, if the non-indebted spouse puts their CP earnings into a separate bank account in that spouse’s sole name to which debtor spouse had no access, those funds can’t be reached to pay past child support
Widow’s Election
Applies if testator-spouse attempts to bequeath surviving spouse’s CP
Survivor may elect either to take benefits under the will OR their ½ of CP
Federal Preemption (deemed to be SP)
U.S. savings bonds
