Community Property Flashcards
Transmutation
During marriage, the spouses may by transfer or agreement change the status of any or all of their property form separate to community, from community to separate, or from one spouse’s separate to the other spouse’s separate property. To be valid, a transmutation must be made in writing and must expressly declare that a change in ownership is being made. The writing requirement does not extend to gifts between the spouses of items of a personal nature and that are not substantial in value.
Fiduciary Duty
In transactions between themselves, spouses are subject to the fiduciary rules that govern confidential relationships. A rebuttable presumption of undue influence arises when one spouse gains an advantage over the other in a property transaction.
At divorce, unless the parties sign an agreement to the contrary, there is an equitable right of reimbursement with interest to the community when community funds are used for (i) education or used to repay a loan for education and (ii) the education substantially enhanced the earning capacity of the educated party. Reimbursement may be reduced or modified if (i) the education is offset by community-funded education received by the other spouse, (ii) the education enables its recipient to engage in employment that offsets their spousal support, or (iii) 10 years have elapsed.
Premarital agreement
To have a valid premarital agreement, it must be in writing, it must have been entered into voluntarily, and it must not be unconscionable. The agreement will be deemed involuntary if the party against whom enforcement Is sought was not represented by counsel, unless that party was advised to consult an attorney at least 7 days before the agreement was signed, expressly waived that right, and was informed of the basic effects of the agreement in a separate writing.
An agreement is unconscionable if a judge finds that it is unfair and that the objecting party was not fully advised of the financial statute of the other party, did not waive such disclosure, and could not reasonably have obtained the information on their own.
Putative Spouse
In California, a putative spouse is not lawfully married but has a subjective good faith belief that she is lawfully married. The putative spouse has almost the same property rights as a lawful spouse. All property that would be CP or QCP is labeled QMP.
Doctrine of Estoppel
California courts have liberally applied the doctrine of estoppel to deny a lawful marriage when one spouse has assured the other that they are lawfully married or has known the marriage was not lawful and has continued to enjoy the benefits of marriage. If a spouse is estopped to deny that marriage, the other spouse is a lawful spouse rather than a putative spouse.
Management Rights
Under California law, each spouse has equal management and control over community property, unless a specific exception applies: real property, personal belongings, and gifts of community property.
Both spouses must join in executing any instrument by which community real property is sold or conveyed.
CP household furnishings may not be transferred without consent of the other spouse. A spouse who operates a business has primary management rights, but must give prior written notice to the other spouse of any sale or exchange.
Liability for Spouse’s Tort
A person is not liable, and her SP may not be reached, for her spouse’s torts except in cases where he would have been liable if the marriage did not exist. If the liability of the spouse is based on an act or omission that occurred while the married person was performing an activity for the benefit of the community, the liability is satisfied first from CP and second from the SP of the married person. If the liability of the spouse is not based on an act or omission that occurred while the married person was performing an activity for the benefit of the community, the liability is satisfied first from SP of the married person and second from the CP.
Business and Professional Goodwill
Two valuation techniques: market sales valuation or capitalization of past excess earnings.
