Community Property

Question 1

Community Property Issues Checklist/Essay Approach

Answer 1

1. General Presumptions (CP, SP, QCP)
2. Preliminary Issues
   
   • Relationship Status
   • Premarital Agreement
3. Characterize Property
   
   • Original General Presumption - source of funds at time of acquisition
   • Does anything change the characterization?
4. Creditor Rights
5. Debts
6. Distribution/order of debt satisfaction

Question 2

Community Property

What changes a property’s characterization?

Answer 2

1. Title presumptions
2. Tracing
3. Transmutations
4. Management and control
5. Contributions/improvements
   
   • CP to SP business
   • CP to SP (other spouse or own)
   • CP to SP rela prop
   • SP to SP
   • SP to CP
6. Special Rules
   
   • Personal injury
   • Pension/retirement/stock options
   • Disability/workers’ comp
   • Severance pay
   • Bonuses
   • Education/traning
   • Life insurance
   • Business & prof. good will
   • Federal preemption

Question 3

Permanent Separation

Answer 3

1. Intent to end marriage communicated, and
2. Conduct consistent

Question 4

Nonmarried Couples

Answer 4

• Putative Spouse
  
  1. Good faith belief
  2. Void/voidable marriage
  3. Estoppel may apply if knew
  4. QMP is property classification
• Unmarried - contracts law applies

Question 5

Premarital Agreement

Answer 5

1. Not promote divorce
2. In writing/signed by
3. Deemed involuntary unless:
   
   • independent counsel or waived in writing
   • 7 days before signing
   • terms/rights in writing in proficient language
   • no duress, fraud, undue influence
   • any other factors court deems relevant
4. Not unconscionable and lacking disclosure
   
   • not unconscionable at execution, and
   • no knowledge wealth or waive disclosure
5. Can’t waive child support
6. Can waive spousal support w/ ind. counsel
7. Laches and estoppel are available defenses

Question 6

Community Property General Presumptions

Answer 6

1. Source of funds and timing
2. CP = during the marriage by labor
3. SP = before or after marriage, or by devise or inheritance or gift
4. QCP = domiciled elsewhere but would be CP if in CA
5. QMP = putative spouses

Question 7

Community Property presumptions inferred by title

Answer 7

1. Form of title used to rebut presumption
2. Jointly titled prop benefitted by SP
   
   • Lucas: at death jointly held title is presumed CP
     
     • No reimbursement
   • Anti-Lucas: at divorce jointly held title is presumed CP
     
     • DP reimbursement
       
       • Down payment
       • Improvements
       • Principal
3. MWSP = W’s name alone prior to 1975 is her SP

Question 8

Tracing Commingled Funds

Answer 8

1. Can trace SP to source
2. Burden of proof on SP proponent
3. Two tracing methods
   
   • Exhaustion method: all CP funds exhausted when prop purchased
   • Direct tracing
     
     • Sufficient SP funds at time of purchase, and
     • Intent to use SP funds
   • If SP cannot be traced, prop is CP
4. Tracing cannot overcome joint title presumption
   
   • Exception: bank accounts

Question 9

Transmutations

Answer 9

• Writing required
  
  • real or personal prop
  • describe change in ownership
  • consent of adversely affected spouse
• Exception
  
  • personal gifts of insubstantial nature
  • no other exceptions to writing req
• Pre-1985: oral and inferred from conduct

Question 10

Community Property Management and Control

Answer 10

1. Fiduciary duties
   
   • full disclosure of material facts
   • good faith and fair dealing
2. 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
3. Community business
   
   • managing spouse can make all decisions, but must give written notice to sell
4. Community real prop
   
   • both need to sign to sell or lease for more than one year
   • can’t convey to 3d party w/o other spouse consent
     
     • presumed valid to BFP
     • if done, souse has 1 yr to void sale
   • Non BFP can be voided any time