Community Property

Question 1

Burden of Proof

Answer 1

C&C Evidence—degree of proof which will produce in the mind of a trier of fact a firm belief or conviction as to the truth of the allegations sought to be est

Question 2

SP

Answer 2

Prop acquired before marriage (inception of title rule—can claim reimbursement for CP expended to discharge secured debt); acquired during marriage by gift, devise, or descent; acquired during marriage but purchased w/SP funds (tracing)—C&C evidence

Spouses are the only ones who can convert SP to CP via a written agreement (not gift giver): If give to both then their SP.

Question 3

CP

Answer 3

Property other than SP acquired by either spouse during marriage presumed CP unless (i) asset acquired by gift, devise, or descent or (ii) acquired w/SP

CP presumption; must provide C&C evidence prop is SP

Spouse can make a reasonable gift of CP without other’s approval. Courts consider: donee’s relation; amount of gift relative to community estate; whether surviving spouse receives that much in other CP; and whether gift was donor’s sole management property (e.g., life insurance beneficiary)

Divide in a JUST AND RIGHT MANNER (maybe not 50/50: especially if homemaker with lower earning potential. Abuse of discretion review and can consider many factors)

Question 4

Title and inception of Title Rules

Answer 4

Title: Name listed on the title is not relevant to the asset’s characterization. Exception: title relevant to whether 1 party intended to make a gift of asset
—IF CP funds used to purchase property in which title is taken in only 1 spouse’s name as their “sole and separate property” then deemed SP only if the other spouse participates in the transaction

Inception of Title Rules: SP or CP designation determined at time it is acquired. Exceptions: pensions and stock options.
—Thus, if use SP to pay down a house then get proportional interest in that house as SP and rest is CP

Question 5

Tracing, Commingling, and Bank Accounts

Answer 5

CP out of bank account first presumption. Overcome if deposit and withdrawal were (1) close in time and (2) close in amount

SP is lowest balance last in SP account (before CP mingling)

Question 6

Income from SP is CP Exceptions

Answer 6

Interspousal gift; partition and exchange agree (partition and exchange CP for SP all inc from it is SP); minerals/ONG royalty

Question 7

Appreciation in Value

Answer 7

Appreciation in Value of SP is SP (stock div is SP)

Question 8

Tort Recovery

Answer 8

Pre-marriage injury = SP

During Marriage = lost wages/lost earning capacity/medical exp (CP); pain and suffering/lost consortium/disfigurement (SP)

IF settlement does not mention what portion of recovery for each then the entire recovery = CP

Question 9

Adverse Possession

Answer 9

AP entered land under a claim of right, eventual title related back to original entry, inception of title occurs at this date (first entry)

If AP entered land as naked trespasser, obtains title only when AP completed. Inception relates back to this date (after AP SoL)

Question 10

Life Insurance Policy

Answer 10

Inception of title rules.

If name spouse as beneficiary; divorce terminates unless:
• Divorce decree names spouse as beneficiary
• Renamed as beneficiary post-divorce
• Originally named beneficiary in trust
• Insurance plan part of RISA, fed law preempts

Question 11

Stock Options

Answer 11

Inception of title N/A. Pro rata, earned during marriage

Question 12

Employee Retirement Benefits

Answer 12

Inception of title n/a, Retirement benefits akin to wages. If earned partially pre-marriage and during then part SP and CP, regardless of when vested. CP frozen at time of divorce

If participation began before parties married = SP. If during = CP.

If “qualified” ERISA and non-participating spouse predeceases participant then fed law preempts state law and CP int ceases = SP

Question 13

Disability Benefits and Worker’s Compensation

Answer 13

Characterized the same way as the wages they intend to replace. Exception: military benefits SP because fed preempts

Question 14

Business Interests

Answer 14

Incorps: based on capitalization of SP vs. CP (tracing)

Pr: inception of title but proceeds = CP

Goodwill
• Business: earned during marriage = CP before is SP
• Professional: not property (not CP or SP)

ONG: royalty payments from ONG interests in land held as SP = SP unless community money or effort of spouse was expended in producing it since = to piecemeal sale of underlying separate realty

Question 15

Advanced Degrees

Answer 15

Not property (not subject to characterization)

Question 16

Debt

Answer 16

during marriage=CP unless creditor looks only to borrowing spouse’s SP for repayment. “community debt” just means some CP liable for debt (not JSL)

Buying on Credit: Amount of proceeds secured from CP = that portion of asset is CP.

Community credit presumption is that all funds borrowed and all goods purchased on credit during marriage are presumptively community debt

Question 17

Property Acquired in Another State

Answer 17

Divorce: Quasi Community Property: Property that would have been CP had the spouses acquired it while domiciled in TX. Divide in a just and right manner. Don’t divide quasi SP.

Death: Non-CP states salary is SP; title determines ownership; property rights don’t change when move to TX

Question 18

Dividing the Marital Estate

Answer 18

“just and right” division of CP. Cannot divide SP. Only overturned if manifestly unjust and constitutes an abuse of discretion.

Question 19

Premarital Agreement

Answer 19

Premarital Agreement unenforceable if unconscionable when signed and 3 part test shows disclosure problem:

(1) not provided a fair and reasonable disclosure of the property and financial obligations of spouse;
(2) not given a written waiver of right to disclosure; and
(3) did not have adequate knowledge of spouse’s property or financial obligations

Burden on contestant to show (1) did not voluntarily sign or (2) unconscionable and did not receive proper disclosure property/liabilities

May not include provisions converting future SP into CP—only currently married couples may do this

Question 20

Spousal Maintenance (Reqs; Durational Limits; Termination;

Answer 20

Must lack sufficient property to provide for the spouse’s minimum reasonable needs.

10+ marriage; family violence; spousal disability; child disability

Limited to shortest reasonable period that allows the spouse seeking maintenance to earn sufficient income to provide for minimum reasonable needs unless the spouse’s ability to do so is substantially or totally diminished because of
o Spouse’s disability
o Duties as custodian of young child OR
o Another compelling impediment to earning sufficient income

Terminates upon:
o Death of either ex-spouse
o Remarriage of oblige
o Obligee’s cohabitation with a romantic partner

Question 21

Statutory Limits on Spousal Maintenance

Answer 21

Lesser of $5K/month or 20% of the obligor’s gross income

Question 22

Spousal Maintenance Considerations

Answer 22

Court can give unequal divisions of CP if “just and right” and held at abuse of discretion standard of review
• Fault in the breakup
• Each spouse’s ability to provide for their minimum reasonable needs independently
• Each spouse’s employment skills, incl time necessary to acquire additional edu or training
• Duration of marriage
• Age, employment history, education
• Effect of child support obligations
• Excessive or abnormal expenditures or destruction of CP
• Contributions by 1 spouse to other’s edu, training, or earning cap
• Property brought into marriage
• Contributions as homemaker
• Marital misconduct
• History or pattern of family violence

Question 23

Spousal Maintenance: 10+ Year Requirement

Answer 23

(1) lack sufficient property to provide for min. reasonable needs; (2) married to other spouse for 10+ and (3) lacks ability to earn sufficient income to provide for reasonable needs (must have exercised diligence in seeking suitable employment or in developing necessary skills to become self-supporting)

Rebuttable presumption that maintenance is not warranted unless spouse seeking maintenance has exercised diligence in earning sufficient income or developing skills to provide for min reasonable needs

10-20 marriage: up to 5 years of maintenance

20-30 marriage up to 7 years of maintenance

30+ up to 10 years of maintenance

Modification of Spousal Award: DOWN not up after showing material and substantial change

Question 24

Alimony

Answer 24

Tx courts will not award “alimony” but can enforce Kual alimony; can give temporary payments; can award future payments

Question 25

Family Violence

Answer 25

Convicted of or received deferred adjudication for a criminal offense constituting an act of famly violence against spouse or spouse’s child AND

Offense occurred within 2 years before date on which a suit for dissolution of marriage is filed or while suit was pending.

Statutory limits on payment duration: less than 10 year of marriage then 5 year limit if family violence.

Question 26

Spousal Disability

Answer 26

phys or mental preventing from earning sufficient income to provide for min reasonable needs. Maintenance as long as eligibility exists

Question 27

Child Disability

Answer 27

• Marital child suffers from phys or mental disability
• Requiring substantial care and personal supervision
• Preventing caretaking spouse from earning enough to provide for their min reasonable needs
• Duration as long as eligibility exists

Question 28

Reimbursement

Answer 28

SP to pay off unsecured debts;

SP to pay off principal (interest not reimbursable)

Capital improvements measured by enhanced value

For repayment of secured debts reimbursement claims limited to reduction of principle (not int or enhanced value)

Life insurance: SP used to pay premiums

Time, toil and effort of running SP business minus any salary or other payments received for the efforts

Can deny or reduce reimbursement claim (offsets) at court’s discretion if contributing estate received offsetting benefits.

No reimbursement for: payment of child support/alimony/maintenance; living expenses of spouse or child; nominal contributions of property; nominal payments toward liability; payments toward a student loan; spousal gifts.

Question 29

Fraud on the Spouse

Answer 29

Reasonable CP gifts to 3rd allowed, excessive or capricious may constitute fraud: who gets the gift? Size of the gift in relation to entire estate? Can the spouse be made whole?

Remedies:
• Set aside/challenge gift after donor dies but will be set aside only to wronged spouse’s ½
• Reconstitute estate as if fraud didn’t happen and then split in a just and right manner

Question 30

Acceptance of Benefits

Answer 30

Litigant is estopped from appealing or otherwise attacking a judgment after voluntarily accepting its benefits. Fact-dependent focused on preventing unfair prejudice and irremediable disadvantage to opposing party.

Question 31

Later Discovered CP (SoL?)

Answer 31

Can bring a suit for partition and court will divide CP in just and right manner
• SoL: must be brought within 2 years after 1 former spouse unequivocally repudiates the existence of the ownership interest of the other former spouse and communicates repudiation to other former spouse

Question 32

Enforcing Judgments (SoL?)

Answer 32

Generally a 10 year SoL applies. Exception 2 year when enforcing division of tangible personal property in existence at time of divorce or future property

Question 33

Prenuptial Agreements

Answer 33

Premarital Agreement unenforceable if unconscionable when signed and 3 part test shows disclosure problem:

(1) not provided a fair and reasonable disclosure of the property and financial obligations of spouse;
(2) not given a written waiver of right to disclosure; and
(3) did not have adequate knowledge of spouse’s property or financial obligations

Burden on contestant to show (1) did not voluntarily sign or (2) unconscionable and did not receive proper disclosure property/liabilities

can not K wrt child custody or limiting child support

Question 34

Partition and Exchange Agreements

Answer 34

Current or future CP into SP. Require: signed, writing but consideration not required. Void to creditor whose rights intended to be defrauded by it.

Question 35

Conversion Agreement

Answer 35

Convert SP into CP

Must be in writing, signed by both spouses (consideration not required);ID property being converted and specifying its being converted into CP.

Must be made during marriage wrt existing SP/must alter characterization immediately/does not effect preexisting creditor’s rights

Spouse challenging must prove: did not sign voluntarily; no fair and reasonable disclosure of conversion (cannot be waived)

Question 36

CP Survivorship Agreement

Answer 36

CP will become property of surviving spouse

In writing, signed by both spouses. Must have “right of survivorship”

Question 37

Cohabitation Agreements

Answer 37

Not between spouses

Property rights of unmarried cohabitants. Written, signed by both parties.

Standard K limits (fraud, duress, etc.)

Question 38

Putative Marriage

Answer 38

Get ½ CP and other ½ between married and other spouse as long as acting in good faith and without knowledge of impediment to marriage.

If impediment is removed, then CP division as usual

Question 39

Management Rights / SMCP / Jt Mgmt

Answer 39

Spouse has sole management over her SP

If title to CP in only spouse’s name then presumed the asset is sole mgmt. community property (SMCP), which gives that spouse the power to manage, control, transfer, encumber, dispose w/out other’s consent. Exception: homestead

Joint management over property purchased with CP and comingled SMCP. If CP taken out in both names, assume JMCP

Question 40

Creditor’s Rights

Answer 40

Incurred before marriage—can collect from property the debtor spouse has mgmt. rights over (SP and SMCP and all JMCP)

Incurred during marriage—non-tortious debts incurred during marriage, creditors can collect from
—Prop debtor spouse has mgmt. rights over (SP, SMCP, JMCP)
—Exceptions: 1 spouse acted as the other’s agent; both spouses personally liable for necessaries; tortious debt