Community Property Flashcards
Quasi-Community Property
is property acquired
while living in a non-CP state that would be considered CP
if the spouse(s) had been living in California when the
property was acquired
During marriage QCP is…
SP in nature
Meaning it can be transferred
and will be governed by the laws of the other state
How/when does QCP change
When: at divorce or death OF TITLED SPOUSE
At divorce, QCP is treated as CP.
At death, the surviving spouse has 1/2 interest in QCP titled in decedent’s name (if titled dies–> 1/2 to
if titled spouse lives—> keeps all of it.
Inherits decedents ½ of the CP and ½ of the quasi-CP
Survivor already owned ½ of CP and QCP; thus, gets 100% of CP, and 100% of the QCP as well
Married Woman’s Special Presumption
The married woman’s special presumption gives the wife a
presumption of SP if: (1) title is taken in her name alone;
AND (2) the property was acquired before 1975.
CP ends
death, divorce, perm separation
perm separation
After 2017,
a) one spouse expresses intent to end Marital community
and
B) acts in manner consistent with that intent
Putative Spouse
A putative spouse is one that has a good faith reasonable
belief that he/she is married but is not
h/t
“all property that would have been CP or QCP had the marriage been valid is QMP. QMP is treated as QCP or CP
h/t”
The right to QMP ends once the person
learns he/she is not lawfully married, BUT the person retains
rights to previous QMP acquired while the person had the
good faith belief.
Will share 1/2 community property with legal spouse
Unmarried Cohabitants
K principles govern property distribution acquired
- an express K will be enforced unless the underlying consideration for the K is sexual services
if no express K a court examines the partie’s acts to determine whether they had an implied K
- quantum meruit principles of unjust enrichment apply.
Tracing
to rebut a presumption regarding an asset, a party can trace the SOURCE of the funds used to acquire the asset to claim a different classification of the asset
why: a change in the form of an asset does not change teh characterization of an asset***
common law marriages
abolished in CA, under full faith and credit, CA will recognize a common law marriage made in another jurisdiction
avoiding community property law
heading: K-ing out of CP law
can do so via
-premarital agreement
-transmutation
can alter
- property rights
- ownership rights
- spousal support
can’t alter:
- child support
- nor promote divorce
Requirements for a valid prenup since Jan 1, 1986
- in writing
- signed by both parties
(s. o.f) - must be enforceable without consideration
even tho s.o.f. verbal agreements will be enforced through promissory estoppel or detrimental reliance
Defenses to prenups and transmutations
all K defenses
- involuntary
- unconscionable
- some spousal support provision stuff (another card
spousal support provisions
are not enforceable if:
the party against whom enforcement is sought was not represented by indep counsel at time of signing
or
at time of enforcement the provision is unconscionable
unconscionable prenups v unconscionable spousal support provision
if pre-nup–> unconscionability analyzed at time of execution
if spousal support provision –> unconsc at time of enforcement
involuntary
to be voluntary (bop on proponent)
ALL of following:
- adversary spouse was represented by indep counsel OR waived in writing (separate writing)
- if no counsel then were fully informed of terms and basic effects
can’t be a product of duresss, fraud, undue influence, or incapacity
any other relevant facts
unconscionable
ALL of the following:
- spouse lacked full fair and rsble disclosure of property and obligations of other spouse
- spouse didn’t waive the disclosure in writing
- spouse didn’t have nor reasonably could have had adequate knowledge of the other spouse’s property or obligations
TRANSMUTATIONS**
as of 1985:
- in writing
- contain an express declaration by the adversly affected spouse that teh characterization or ownership of asset is being changed
exceptions:
- gifts
before 1985
oral (express and implied) and written
transmutations were valid.
general presumptions
regard the when
rebutted by a preponderance of the evidence
special presumptions
regard the how
rebutted by clear and convincing evidence of contrary intent
facts vague on when agreement was made?
two headings:
Premarital agreement in the event the agreement made before marriage
transmutation in the event agreement made during marriage
if property jointly held
then presumed CP
Distribution of Community Assets & Debts Upon Divorce exceptions
apply that will change the division of assets, including: (1)
misappropriation by one spouse; (2) separate debt (debt
incurred before or after marriage, or incurred not for the
community’s benefit); (3) educational debts are assigned to the spouse who received the education; (4) tort liabilities are
assigned to the tortfeasor spouse if the liability was not for
the benefit of the community; (5) the family home may be
awarded to the person who is given custody of the minor
children; and (6) closely held corporations.
Property Creditors May Reach to Satisfy Debt
• Generally, creditors MAY reach CP to satisfy debts
incurred before or during the marriage, including debts
for child and spousal support. BUT, a non-debtor spouse’s
earnings (generally CP) are protected if: (1) the debt
occurred before the marriage; AND (2) the earnings were
held in a separate account to which the debtor did not have
access and no comingling occurred.
A debt is incurred at the time the obligation to pay arises.
when both cp and sp can b reached to satisfy debts
Necessities: The community is obligated to pay for a
spouse’s necessities (food, shelter, and medical
expenses) during marriage. When separated, the
community is ONLY obligated to pay for a spouse’s
necessities in emergency situations.
o Tort Liability: If the debtor was acting to benefit
the community when the tort occurred, then CP must
be used before reaching SP. If debtor was not acting
to benefit the community, then SP must be used
before reaching CP.
Gift of Insubstantial Value Exception
no signed writing needed (transmutation)
after 1985:
CP can be transmuted into SP by gift from one spouse
to another if the gift is: (1) tangible property of a
personal nature; (2) used solely by the recipient
spouse; AND (3) insubstantial in value considering
the lifestyle of the parties.
installment purchase before marriage
any debt reduction made on the equity of the purchase (i.e. home)
by CP
–> that reduction/purchase price
= the CP share
spending CP on own SP
no right to ownership
can get reimbursed:
greater of improvements or enhanced value of sp
Spending CP on other spouse’s SP
option 1: gift to SP unless argeement to reimburse CP
option 2: reimbursement okay
Spending SP on CP
death: no claim unless proof of agreement to reimburse
divorce: anti-lucas so reimbursement w/o interest for
down payment, improvements, principal (equity)
taking assets in joint title
death:
lucas applies
therefore, gift to Sp unless oral or written agreement to the contrary
at divorce:
anti-lucas applies
after 1984:title taken in joint tenancy
after 1987: title taken in any joint form
presumptively cp
SP gets no ownership but reimbursed for equity
Credit & Acquisitions of Property Using Credit
The personal credit of a spouse belongs to the Community
during the marriage. Thus, a loan taken out during the
marriage is a community debt UNLESS the lender’s
primary intent for giving the loan was the spouse’s SP used
as collateral.
• Similarly, property purchased with credit from a lender is
presumptively CP UNLESS the lender’s primary intent for
giving the loan was the spouse’s SP used as collateral.
Cause of Action Against Third-Parties:
If the cause of
action arose during marriage, personal injury awards and
settlements are CP. At divorce, they are assigned entirely
to the injured spouse, UNLESS (a) the funds were
comingled, (b) or there is economic hardship to the other
spouse. If the cause of action arose either before marriage,
after marriage, or after permanent separation, then the
award is SP of the injured spouse.
at death: award iscp
Cause of Action Against Spouse:
Cause of Action Against Spouse:
Inter Vivos Gifts of CP
require written consent.
Where one spouse gifts CP to a third-party without
consent, the other spouse may void the gift during the
donor’s lifetime, or may void half of the gift after the
death of the donor.
Transfers of Community Real Property
y require both
spouses to join the transaction – if one spouse sells or
encumbers community real estate without consent, the
non-consenting spouse may void the transaction (must
be voided within one year if sold to a bona-fide
purchaser, otherwise it is avoidable at any time)
Personal property transfers of CP
for less than fair
and reasonable value (written consent is required)
If one spouse is managing a business
he/she is
given primary management and control over the
business. But, that spouse is obligated to provide prior
written notice to the other spouse of any sale, lease,
exchange, encumbrance, or other disposition of all or
substantially all of the property used in the operation
of the business.
Each spouse has equal rights to manage and control CP.
Thus, a spouse MAY sell, encumber, or otherwise dispose
of CP without the other’s consent.
Property Acquired with Comingled Funds (The Moore
Principle)
low
When property is acquired with commingled funds (both
CP and SP) AND there is no title presumption, courts will
apply the Moore principle.
• Under Moore, CP and SP are apportioned based on their
respective contributions. If tracing is not possible, the entire
asset will be treated as CP.
Professional Degrees & Reimbursement for Education Expenses
Professional degrees acquired during marriage are SP of the
acquiring spouse. However, the community is entitled to
reimbursement when: (1) CP funds are used to pay
educational expenses (including loans); AND (2) the
education enhanced the spouse’s earning capacity.
• However, reimbursement is NOT REQUIRED where: (a)
the community has substantially benefited from the education
(after 10 years a benefit is presumed); (b) the other spouse
received community funded education; OR (c) the education
lessens the need for spousal support.
Reimbursement for Child Support & Alimony Payments
CP should NOT be used to make child support payments
from a prior marriage unless SP is not available. When CP
was used to make payments, and SP was available, the
community is entitled to a reimbursement upon divorce.
community business
a business started during marriage or with CP funds
Community business at separation
HEADING: COMMUNITY BUSINESS
SUB-H: APPRECIATION DURING SEPARATION
if a community business increases in value during separation
–> community will receive a portion of that increase
To determine the CP and SP share the court will employ either the reverse periera or the reverse vancamp formulas
Reverse Periera
CP =
FMV at sep + (FMV at sep. x fair rate of return x # of years sep.)
SP=
FMV at divorce - CP
USE. WHEN. ITS. A. COMMUNITY. BUSINESS
USE WHEN BS VALUE INCREASE CAN BE ATTRIBUTED TO A SPOUSE’S PERSONAL TIME, SKILLS, AND EFFORT
reverse Van Camp
SP=
family expenses paid during sep
CP=
FMV at divorce- SP
USE WHEN ITS A COMMUNITY BUSINESS
USE WHEN BS VALUE INCREASE CAN BE ATTRIBUTED TO: market forces inherent value of business or business has already compensated the EMC
Periera
SP=
fair market value of SB at marriage
+
(FMV at marriage x fair rate of return x # of years married)
CP=
FMV at divorce/sep - SP
USE WHEN SP BS VALUE INCREASE CAN BE ATTRIBUTED TO A SPOUSE’S PERSONAL TIME, SKILLS, AND EFFORT
Van Camp
CP=
(Reasonable value of spouse’s services - annual family expenses paid)
x
of years married
SP=
FMV at divorce- CP
USE WHEN BS VALUE INCREASE CAN BE ATTRIBUTED TO: market forces inherent value of business or business has already compensated the EMC
A SP business
HEADING: SEPARATE PROPERTY
before/after marriage or SP funds - generally income from SP is SP
h/t
SUB-H: Spouse contributes labor
however, if Spouse contributes labor
to enhance SP business value
then the EMC is entitled to a share.
A court uses either the periera or the vancamp formula to calculate the business value
=
GOODWILL
to the extent a business develops goodwill during marriage, there is a CP interest in the goodwill.
two valuation techniques: market sales valuation and capitalization of past excess earnings.
