Community Property

Question 1

Separate Property

Answer 1

Property owned by either spouse before marriage; or property acquired during the marriage by gift, will or inheritance; or property acquired during the marriage with expenditure of separate funds.

Question 2

Community Property

Answer 2

Property, other than separate property, acquired by either spouse during marriage.

Question 3

community presumption

Answer 3

all assets acquired during the marriage are presumptively community property.

Question 4

When does Economic Community End?

Answer 4

When there is:

1. Permanent physical separation an
2. intent not to resume the marital relation

Question 5

Economic Circumstances Exception

Answer 5

Can have a non-pro rata division, giving particular asset wholly to one spouse and “cash out” the other spouse with other assets (with each spouse getting 50% of total value)

Question 6

Statutory Exceptions to 50/50 division on divorce

Answer 6

1. misappropriation of CP funds
2. Educational Debts
3. Tort liability
4. Personal Injury Awards
5. Negative community - community liabilities exceed assets.

Question 7

Widow’s Election Will

Answer 7

if the decedent died with a a will and tried to dispose of more than his half of the CP, the surviving spouse will need to make an election between their CP rights without the will or take under the will in lieu of their CP rights.

Question 8

Community Credit Presumption

Answer 8

Funds borrowed during marriage, and goods purchased during the marriage are presumptively Community Credit

Question 9

Transmutation

Answer 9

When by agreement during the marriage the character of an asset has changed this results in a transmutation. Transmutation can be by gift or agreement.

Question 10

Premarital Agreement General Rule

Answer 10

Must be in writing signed by both parties.

Question 11

Premarital Agreement General Rule Exceptions

Answer 11

1. Where oral agreement is executed (fully performed) or

2. Estoppel based on detrimental reliance

Question 12

Defenses to enforcement of premarital agreement

Answer 12

1. Not Signed Voluntarily

2. Unconscionability

Question 13

Premarital Agreement Voluntary requirements

Answer 13

The court must find that the party challenging the agreement:

1. was represented by independent legal counsel at time agreement signed and
2. was given at least 7 days to sign; and
3. if not represented by independent counsel, was fully informed in writing of terms and basic effect of agreement. Party must execute document declaring that they got information and identifying who provided it.

Question 14

Marital Agreements (Transmutations) before 1985

Answer 14

Oral transmutations were permitted, whether by express agreement or agreement in fact.

Question 15

Marital Agreements (Transmutations) after 1985

Answer 15

Transmutations must be:

1. in writing;
2. signed by spouse whose interested is adversely affected;
3. must explicitly state that a change in ownership is being made.

Question 16

Married Woman’s Special Presumption

Answer 16

Where CP was used to take written title in a married woman’s name before 1975, and the title did not indicate CP or Joint tenancy was intended, the property is presumptively wife’s SP.

Question 17

Marriage of Lucas

Answer 17

At death and prior to 1984, all jointly held title by H and W is presumed to be CP with no right to reimbursement to SP without an agreement to the contrary. In other words a gift from SP to the CP is presumed.

Question 18

Anti Lucas II

Answer 18

At divorce from 1/1/87 on, any jointly held title by H and W is presumed to be CP, unless there is clear statement in the deed or a written agreement that the property is separate property with reimbursement.

Question 19

SP Reimbursements on Property

Answer 19

Only allowed for expenditures made for down payments, payments for improvements, and payments that reduce the principal of a loan.

Question 20

Proration Rule

Answer 20

Installment purchase before marriage, payment with CP funds after marriage, the community estate takes a pro rata portion of the property, of principal debt reduction attributable to the expenditure of community funds.

Question 21

Family Expense Presumption

Answer 21

It is presumed that expenditures for family expenses were made with community funds, even though separate funds were available.

Question 22

Pereira Approach for Contributions to Businesses

Answer 22

The Pereira approach favors the CP estate and is used by courts when the spouse’s management skills are the primary reason for the business growth.

SP Interest=initial capital contribution to SP business + [initial capital contribution to SP business x reasonable rate of return (10%) x (# of years married with business)]

CP interest=value of business - SP interest

Question 23

Van Camp Approach for Contributions to Businesses

Answer 23

The Van Camp approach favors the SP estate and is used by courts when the character of the business is the primary reason for the business growth.

CP interest=(value of manager’s spouse’s services x # of years married) - family expenses

SP = Balance

Question 24

Putative Spouses

Answer 24

if a marriage is void or voidable and the court finds that either party or both parties believed in good faith that the marriage was valid, the court will treat the party or parties as putative spouses

Question 25

Quasi Community Property

Answer 25

all property, real or personal, wherever situated, acquired by either spouse while domiciled elsewhere, which would have been CP if it had been acquired while domiciled in CA.

Question 26

Exhaustion Method of Tracing

Answer 26

Requires showing that at the time the property was purchased, all community funds in a commingled account had been exhausted by the community expenses, and thus only SP fund were available for the purchase

Question 27

Direct Tracing Method

Answer 27

Requires showing a direct link from the SP funds to the purchase such that there were sufficient SP funds in the account at the time of the purchase and that the intent was to use SP funds to make the purchase.

Question 28

Approaches to divide Pensions

Answer 28

1. The reservation jurisdiction or

2. the cash out approach

Question 29

The reservation jurisdiction

Answer 29

the court will reserve jurisdiction over the case until the employed spouse retires and then apportions the retirement between each spouse.

Question 30

The Cash out approach

Answer 30

where the court assigns the entire pension to the employed spouse and awards other community assets, equal in value to the community interest in the retirement benefits to the nonemployed spouse.

Question 31

Reasons for Reduction for Reimbursement of Educational Contributions

Answer 31

1. Community already benefited, presumed after 10 years
2. education is offset by the education received by the other spouse or
3. the education reduced the need for spousal support

Question 32

Business Goodwill

Answer 32

the expectation of continued public patronage that stems from the built up value of one’s business beyond the value of the capital stock, funds or property.

Question 33

Valuation Techniques for Business Goodwill

Answer 33

1. Market Sales Valuation or

2. Capitalization of Past excess Earnings

Question 34

How to calculate Reimbursement of CP Funds used to pay off SP

Answer 34

1. Calculate CP Interest=the amount the CP contributed to the principal/total original price
   CP Share=CP interest x the amount of capital appreciation