Community Property

Question 1

Relationship status

Answer 1

1. Married
   - valid in CA
   - ok if valid in another state
   - same-sex couples can marry
2. Nonmarried couples
   - contracts law applies
   - if putative spouse, treat as married
   - a. good faith belief
   - b. estoppel may apply
3. Marriage ends by:
   - dissolution (divorce)
   - annulment (marriage void from beginning)
   - permanent separation
4. Permanent separation
   - physical separation; and
   - intent to separate permanently
   - after permanent separation, property of each party is SP

Question 2

General presumptions

Answer 2

1. CP: all property during marriage, unless SP
2. SP: before or after marriage, or by devise, inheritance or gift, and income from SP
3. QCP: domiciled elsewhere but would be CP in CA
4. Quasi-marital property (QMP): putative spouses

Question 3

Title presumptions

Answer 3

1. MWSP: W’s name alone prior to 1975 is her SP
2. SP to acquire jointly titled property
   - jointly held property is CP
   - Lucas: no right to reimbursement at death ever and divorce before 1984
   - anti-Lucas: divorce 1984 and on, reimbursement for DIP (down payment, improvements, principal) without interest

Question 4

Tracing

Answer 4

1. Commingled accounts
   - can trace SP to source
   - burden of proof on SP proponent
   - two tracing methods:
   - - exhaustion method: all CP funds exhausted when property purchased
   - - direct tracing:
   - – sufficient SP funds at time of purchase; and
   - – intent to use SP funds
   - if SP cannot be traced account is CP
2. Tracing cannot overcome CP presumption where title is taken jointly
   - exception: bank accounts

Question 5

Management and control

Answer 5

1. Community personal property
   - equal power to manage CP
   - one spouse can’t gift or dispose for less than fair value
   - one spouse can’t sell or convey family furnishings without written consent
2. Community businesses
   - managing spouse can make all decisions, but must give written notice to sell
3. Community real property
   - both need to sign
   - can’t convey to 3P without other spouse consent
   - - presumed valid to BFP
   - - if done, spouse has 1 yr to set aside sale
4. Fiduciary duties
   - full disclosure of material facts
   - good faith and fair dealings

Question 6

Agreements

Answer 6

1. Premarital
   - effective upon marriage
   - in writing/signed by both, consideration not required
   - can’t waive child support
   - can waive spousal support if not unconscionable
   - voluntary, not unconscionable
   - need full disclosure of wealth
   - deemed involuntary unless:
   - - independent counsel or waived
   - - 7 days before signing
   - - terms in writing in proficient language
   - - no duress, fraud, undue influence
   - - any other factors court deems relevant
   - laches and estoppel are available defenses
2. Transmutation
   - pre-1985: oral and inferred from conduct ok
   - post-1/1/85 need:
   - - writing: express declaration by adversely effected spouse
   - exception: gifts of insubstantial nature and personal
   - statements in will not admissible as evidence

Question 7

Special classifications

Answer 7

1. Personal injury recovery from 3P
   - cause of action during marriage = CP
   - after marriage, injured spouse gets money as SP
   - CP gets reimbursed for expenses it paid
   - SP of tortfeasor spouse exhausted before CP used to pay 3P
2. Retirement/pension/stock
   - earned during marriage = CP, regardless of when fully vested
   - two approaches to divide
   - - reservation of jurisdiction until spouse retires
   - – other spouse can elect at time when spouse can retire
   - – use time rule: #yrs married w pension/total yrs pension earned = CP
   - - cash out: pension to employed spouse and other assets of = value to other spouse
3. Disability/worker’s comp
   - SP or CP depends on what it replaces (income after separation or retirement income to community)
4. Severance pay
   - if to replace earned benefits accrued when married = CP
   - if to replace lost future earnings after marriage = SP
5. Bonuses
   - if earned during marriage = CP
   - if earned after marriage = SP
   - doesn’t matter when paid
6. Education/training
   - CP reimbursed if
   - - it paid for education, and
   - - earning capacity substantially enhanced
   - reimbursement reduced or modified if:
   - - community substantially benefited (presumed if > 10 yrs)
   - - other spouse received education
   - - reduced need for spousal support
7. Life insurance
   - whole: lifetime coverage and accumulates cash value
   - - each estate gets % they put in
   - term: coverage for specified term and no cash value
   - - SP or CP based on latest estate to pay premium
   - decedent can only devise 1/2 to beneficiary not their spouse, unless written waiver
8. Business goodwill
   - expectation of continued public patronage
   - excess earnings method
   - - deduct fair return on business
   - - take professional’s annual net earnings
   - - capitalize excess earnings over marriage

Question 8

Preemption

Answer 8

Federal law preempts state law

Question 9

Contributions/improvements

Answer 9

1. CP to SP
   - businesses
   - - Pereira: favors CP
   - – use if spouse skills is reason for growth
   - – SP = initial SP + (initial SP * RRR * # yrs); CP = the rest
   - - Van Camp: favors SP
   - – use if character of business reason for growth
   - – CP = (value to spouse services * # yrs) - actual compensation - family expenses; SP = the rest
   - CP to other spouse’s SP: gift presumed under majority of jurisdictions
   - CP to your own SP: CP reimbursed greater of amount spent on improvement or increase in value
   - CP pays off purchase price of SP
   - - CP % = amount CP contributed to principal/total amount of loan
   - - then multiply this by amount of appreciation
   - - payments for interest, tax, and insurance excluded
2. SP to other spouse’s SP
   - reimbursed without interest for DIP
   - - down payment
   - - improvements
   - - principal
3. SP to CP
   - same as SP to SP above
   - reverse Pereira and reverse Van Camp for businesses

Question 10

Credit acquisitions

Answer 10

1. During marriage = CP
2. Intent of lender
   - rebut CP by showing lender relied on SP
   - if credit is based on earning capacity, it is community debt

Question 11

Debts

Answer 11

1. Timing: at time of K, tort, etc.
2. Liability (CP, SP of each)
   - premarital = all CP liable unless nondebtor has separate account without access to debtor for earnings; debtor’s SP
   - marital = all CP and debtor SP liable, nondebtor SP if for necessities
   - if for benefit of community, take from CP first
   - if not for benefit to community, take from SP first

Question 12

Division and distribution

Answer 12

1. Divorce: CP split equally
2. Death
   - no will (intestate): all CP + QCP to spouse, 1/2-1/3 of SP to spouse depending on survivors
   - will (devise): can devise all SP and 1/2 CP and QCP (but not QCP titled in survivor’s name)