Community Property Flashcards
A husband seeks to overcome the community property presumption regarding a beach house he acquired during the marriage. The beach house cost $100,000, and the husband can prove that he paid $50,000 out of separate funds. If the house is sold for $200,000 at the time of divorce, what will the husband’s separate estate receive?
A. $50,000.
B. $100,000.
C. $200,000.
D. $75,000.
B. $100,000.
Because the husband’s separate estate has a 50% interest, the estate receives 50% of the sale price, or $100,000. The husband is able to show that he paid 50% of the purchase price from separate property funds, therefore, he has a 50% ownership interest in the house (so long as title to the house or other evidence does not indicate that the parties agreed to some other form of ownership). The community estate possesses the remaining 50% interest by virtue of the presumption that property acquired during the marriage is community property.
Recommended Activity: Read CA Community Property II.D.1.b. Overcoming Community Presumption When Asset Acquired During Marriage
Which of the following statements is NOT true of community estate personal injury damages at the time of divorce?
A. Community estate personal injury damages are awarded entirely to the injured spouse unless the interests of justice require otherwise.
B. At least one-half of community estate personal injury damages must be awarded to the injured spouse.
C. Community estate personal injury damages are divided equally if both spouses were present when the injury occurred.
D. Community estate personal injury damages are treated as ordinary community property only if irretrievably commingled with other community property.
C. Community estate personal injury damages are divided equally if both spouses were present when the injury occurred.
Community estate personal injury damages are not divided equally merely because both spouses were present when the injury occurred. The presence of both spouses at the time of injury is of no legal significance. At divorce only, community estate personal injury damages are awarded entirely to the injured spouse unless the interests of justice, such as economic need, require otherwise. The injured spouse must always receive at least one-half of the damages. The damages lose their special character and are treated as ordinary community property only if they are irretrievably commingled with other community property.
Recommended Activity: Read CA Community Property II.C.1.b. Important Modification in Case of Divorce
Assume a wife is a renowned plastic surgeon with her own business. Which of the following is true?
A. The wife’s professional goodwill will be valued the same whether the court uses market sales valuation or capitalization of past excess earnings.
B. The wife’s professional goodwill will be valued higher if the court follows the technique of market sales valuation.
C. The wife’s professional goodwill will be valued higher if the court follows the technique of capitalization of past excess earnings.
D. The wife’s professional goodwill cannot be assigned a value until her business is sold.
C. The wife’s professional goodwill will be valued higher if the court follows the technique of capitalization of past excess earnings.
The wife’s professional goodwill will be valued higher if the court follows the capitalization of past excess earnings method. The capitalization method ascertains the present value of the future stream of income that the goodwill developed during the marriage and will generate in the business. Market sales valuation is the price the goodwill would command if the business was sold. Capitalization generally produces a much higher figure than market sales valuation because capitalization values the goodwill in the owner’s hands and much goodwill would not survive a sale as contemplated by market sales valuation. Neither valuation technique requires that the business be sold first.
Recommended Activity: Read CA Community Property II.C.7.a. Valuation
A wife completed an MBA program during her marriage. The program was paid for using community funds, and the parties did not sign any agreement which would alter the community’s equitable right to reimbursement of the funds expended. In which of the following scenarios will the wife be required to reimburse the community by the largest amount?
A. The wife’s program was paid for in full 15 years before the initiation of divorce.
B. Her spouse obtained a doctorate using community funds.
C. The wife’s earning capacity was substantially increased by obtaining an MBA.
D. The wife used her MBA to obtain a job that pays as much as her spouse’s job.
C. The wife’s earning capacity was substantially increased by obtaining an MBA.
The wife would have to reimburse the community by the largest amount if her earning capacity was substantially increased by obtaining her degree. Generally, there is an equitable right of reimbursement, with interest, to the community when community funds are: (i) used to pay for either education or training or are used to repay a loan incurred for education or training, and (ii) the education or training substantially enhances the earning capacity of the educated party. Reimbursement may be reduced or modified when the marital community has already substantially benefited from the education or training. Reimbursement may also be reduced when the education or training enables its recipient to engage in employment that substantially reduces the need the recipient would otherwise have for spousal support.
Recommended Activity: Read CA Community Property II.C.8. Education and Training
Under which of the following circumstances may a court enforce a premarital agreement that does not comply with the Statute of Frauds?
A. None; there are no exceptions to the Statute of Frauds as applied to premarital agreements.
B. If there was an oral agreement for which substantial consideration was exchanged.
C. If the promisor is estopped from asserting the Statute of Frauds.
D. If there is a writing signed by one party that does not disfavor the other party.
C. If the promisor is estopped from asserting the Statute of Frauds.
Premarital agreements must comply with the Statute of Frauds; however, there are exceptions. An oral premarital agreement may be enforced when: (i) the promise has been fully executed by the promisor, or (ii) the promisor is estopped to assert the Statute of Frauds. Note that the marriage itself is not grounds for estoppel. There is no exception for an oral agreement founded on consideration, and consideration is not required for premarital agreements. There is no exception for writings signed by one party.
Recommended Activity: Read CA Community Property II.E.1.b. Statute of Frauds Requirement
Transmutations are changes to the status of property that spouses effect during marriage. Which of the following is NOT a requirement for a valid transmutation?
A. A writing.
B. Consent or acceptance by the spouse whose interest is adversely affected.
C. Extrinsic evidence that indicates the writing contemplated transmutation.
D. An express declaration that a change in the ownership of the property is being made.
C. Extrinsic evidence that indicates the writing contemplated transmutation.
Extrinsic evidence is not a requirement for a valid transmutation. In fact, extrinsic evidence is not admissible to interpret the meaning of a writing in the case of transmutations. To be valid, a transmutation must be made in a written express declaration that is consented to or accepted by the spouse whose interest is adversely affected. The writing must expressly declare that a change in the ownership of property is being made. The common law exceptions to ordinary Statutes of Frauds claims are not available. However, the writing requirement does not extend to personal gifts of relatively insubstantial value (e.g., clothing, jewelry).
Recommended Activity: Read CA Community Property II.E.2.a. Requirements for a Valid Transmutation
Contributions to the acquisition of community property, which are reimbursed to the separate property contributor, include the application of separate property toward:
A. The purchase price of the property and any payments made for maintenance of the property.
B. Reduction of the loan’s principal used to finance the property and any interest payments on the loan.
C. The purchase price of the property and any payments made for taxation.
D. The purchase price of the property and reduction of the principal of a loan used to finance the property.
D. The purchase price of the property and reduction of the principal of a loan used to finance the property.
Contributions to the acquisition of community property include the application of separate property to pay the purchase price or to reduce the principal of a loan used to finance the purchase, but do not include interest payments on the loan or payments made for maintenance, insurance, or taxation of the property.
Recommended Activity: Read CA Community Property II.F.2.a. Reimbursement
Which of the following is a presumption applied to commingled accounts?
A. Separate property paid toward community expenses is reimbursable.
B. Spouses’ gifts to one another were paid with spouses’ separate properties.
C. All separate property was transmuted to community property.
D. Family expenses were paid with community funds.
D. Family expenses were paid with community funds.
Available community funds are presumed to have been used for family expenses (and separate funds are deemed to have been used for family expenses only when community funds are exhausted). When separate property funds are used to pay family expenses, a gift to the community is presumed. These separate expenditures are not reimbursable in the absence of a reimbursement agreement. It is not presumed that spousal gifts were paid from separate property, and it is not presumed that all separate property was transmuted. To the contrary, the owner of separate funds may trace the funds and establish a separate property interest.
Recommended Activity: Read CA Community Property II.G.1.a. Family Expenses Paid by Community Funds
Under what circumstances will Van Camp accounting result in the greatest separate property award for a managing spouse?
A. The prevailing market rate for the manager’s services is high and the amount of family expenses paid from the business’s income is high.
B. The prevailing market rate for the manager’s services is low and the amount of family expenses paid from the business’s income is high.
C. The prevailing market rate for the manager’s services is low and the amount of family expenses paid from the business’s income is low.
D. The prevailing market rate for the manager’s services is high and the amount of family expenses paid from the business’s income is low.
B. The prevailing market rate for the manager’s services is low and the amount of family expenses paid from the business’s income is high.
Van Camp accounting will yield the highest result for the managing spouse’s estate when the prevailing market rate for the manager’s services is low and the amount of family expenses paid from the business’s income is high. The manager’s services are valued at the going market salary for such services. Family expenses that were paid from the business earnings are then subtracted from this figure and the remainder, if any, represents the community property portion of the business. The rest of the property is the managing spouse’s separate property. A low market value minus high family expenses will leave the smallest community property remainder and accordingly the largest separate property award.
Recommended Activity: Read CA Community Property II.H.1.a. Van Camp Accounting
A putative wife learns that her marriage is invalid. Her property rights:
A. Depend on the objective reasonableness of her belief that she was married.
B. Cease to accrue after she discovers her marriage was invalid.
C. Increase if her spouse knew or should have known the marriage was invalid.
D. Decrease if she did not exercise due diligence when obtaining a marriage license.
B. Cease to accrue after she discovers her marriage was invalid.
A putative wife retains all property rights acquired while she maintained her good faith belief that her marriage is valid, but from the point of discovery that it is invalid, she ceases to accrue any new property rights. A putative spouse needs a subjective good faith belief that she is lawfully married; objective reasonableness is not required. The spouse’s knowledge is irrelevant. Due diligence may be relevant to show good faith, but it is not explicitly required.
Recommended Activity: Read CA Community Property VI.C.1. Knowledge of Invalid Marriage Revokes Putative Spouse Status
In which of the following situations will a putative wife’s property rights differ from those of a lawful wife?
A. The decedent spouse’s will is probated.
B. Contractual benefits are awarded to the surviving spouse.
C. Division of property occurs after the intestate death of the spouse.
D. The putative spouse annuls her marriage after learning of a defect.
B. Contractual benefits are awarded to the surviving spouse.
A putative spouse may not be entitled to contractual benefits payable to a surviving spouse or lawful surviving spouse (however, a putative spouse may nevertheless own a quasi-marital interest in the surviving spouse’s benefit). The putative spouse’s interests are synonymous with those of a lawful wife in the other scenarios. All property that would be community or quasi-community property in a lawful marriage is instead labeled quasi-marital property, and a putative spouse has the same rights in quasi-marital property that she would have in community or quasi-community property.
Recommended Activity: Read CA Community Property VI.C.4. Rights of Putative Spouse or Putative Domestic Partner
Under what legal bases may unmarried cohabitants recover from one another?
A. Express contract, implied contract, and community property statutes.
B. Express contract, implied contract, and family law statutes.
C. Express contract, implied contract, and doctrine of quantum meruit.
D. Express contract, community property statutes, and family law statutes.
C. Express contract, implied contract, and doctrine of quantum meruit.
General contract principles are applied in the case of unmarried cohabitants. Courts should enforce express contracts between cohabitants as long as they are not based on consideration of sexual services. Absent an express contract, a party may prove that a contract was implied by the behavior of the parties or an agreement of the partnership or joint venture. Additionally, courts may employ the doctrine of quantum meruit when warranted. Community property or family law statutes are not applied to persons who never evidenced any intention to enter into lawful marriage.
Recommended Activity: Read CA Community Property VI.D.1. Contract Principles Apply Between Cohabitants
How may a nonconsenting spouse void a transfer of real property?
A. By bringing an action to void within one year of the filing of the document of transfer, demonstrating that she did not in any way consent to the transfer, and returning the purchase price.
B. By bringing an action to void within one year of her discovery of the transfer, demonstrating that she did not in any way consent to the transfer, and returning the purchase price.
C. By bringing an action to void within one year of the filing of the document of transfer, demonstrating that she did not understand the transfer when she gave her consent, and returning the purchase price.
D. By bringing an action to void within one year of her discovery of the transfer, demonstrating that the purchaser should have investigated the selling spouse’s marital status, and returning the purchase price.
A. By bringing an action to void within one year of the filing of the document of transfer, demonstrating that she did not in any way consent to the transfer, and returning the purchase price.
The nonconsenting spouse must bring an action to void the transfer within one year of the filing of the document of transfer in the county recorder’s office. The nonconsenting spouse may overcome the presumption that the transfer was valid by demonstrating that she did not in any way consent to or participate in the transfer. Then she must return the transferee’s purchase price so as to avoid unjust enrichment of the marital community.
Recommended Activity: Read CA Community Property VII.B.1. Real Property
Which of the following is NOT a remedy available to a spouse following the breach of a fiduciary duty by a managing spouse?
A. A judicial order for an accounting and determination of the other spouse’s rights to the community property.
B. A claim against the managing spouse for impairment of interest.
C. An order transferring community property into the other spouse’s separate estate.
D. An order adding the other spouse’s name to the title of a community asset.
C. An order transferring community property into the other spouse’s separate estate.
An order transferring community property to the spouse’s separate estate is not an available remedy for a managing spouse’s breach of fiduciary duty. The other spouse may bring a claim against the managing spouse for impairment of interest when the breach has resulted in substantial impairment of the spouse’s one-half interest in the community property. The other spouse may also seek a judicial order for an accounting and determination of her rights in and access to the community property. The other spouse may also seek an order adding her name to the title to reflect the asset’s community character, although this remedy is not available in the case of a community property business.
Recommended Activity: Read CA Community Property VII.B.3.b. Fiduciary Duty and Mismanagement of Community Property
Creditors’ rights are determined by the time a debt is incurred. When is a contract debt incurred?
A. At the time the contract is breached.
B. At the time the contract is made.
C. At the time of the marriage if the contract involves support obligations from one spouse’s prior relationship.
D. At the time the tort occurs if there was a tortious breach.
B. At the time the contract is made.
A contract debt is incurred at the time the contract is made. The debt is not considered incurred at the time of breach. Separately, a tort debt is incurred at the time the tort occurs. This rule is irrelevant to a debt that stems from contract. A spouse’s child support and spousal support obligations from prior relationships are treated as debts incurred before marriage. In all other instances, a debt is incurred at the time the obligation arises.
Recommended Activity: Read CA Community Property VIII.B. When a Debt Is Incurred
