Community Property Flashcards
Separate Property
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.
Community Property
Property, other than separate property, acquired by either spouse during marriage.
community presumption
all assets acquired during the marriage are presumptively community property.
When does Economic Community End?
When there is:
- Permanent physical separation an
- intent not to resume the marital relation
Economic Circumstances Exception
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)
Statutory Exceptions to 50/50 division on divorce
- misappropriation of CP funds
- Educational Debts
- Tort liability
- Personal Injury Awards
- Negative community - community liabilities exceed assets.
Widow’s Election Will
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.
Community Credit Presumption
Funds borrowed during marriage, and goods purchased during the marriage are presumptively Community Credit
Transmutation
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.
Premarital Agreement General Rule
Must be in writing signed by both parties.
Premarital Agreement General Rule Exceptions
- Where oral agreement is executed (fully performed) or
2. Estoppel based on detrimental reliance
Defenses to enforcement of premarital agreement
- Not Signed Voluntarily
2. Unconscionability
Premarital Agreement Voluntary requirements
The court must find that the party challenging the agreement:
- was represented by independent legal counsel at time agreement signed and
- was given at least 7 days to sign; and
- 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.
Marital Agreements (Transmutations) before 1985
Oral transmutations were permitted, whether by express agreement or agreement in fact.
Marital Agreements (Transmutations) after 1985
Transmutations must be:
- in writing;
- signed by spouse whose interested is adversely affected;
- must explicitly state that a change in ownership is being made.
Married Woman’s Special Presumption
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.
Marriage of Lucas
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.
Anti Lucas II
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.
SP Reimbursements on Property
Only allowed for expenditures made for down payments, payments for improvements, and payments that reduce the principal of a loan.
Proration Rule
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.
Family Expense Presumption
It is presumed that expenditures for family expenses were made with community funds, even though separate funds were available.
Pereira Approach for Contributions to Businesses
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
Van Camp Approach for Contributions to Businesses
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
Putative Spouses
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
Quasi Community Property
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.
Exhaustion Method of Tracing
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
Direct Tracing Method
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.
Approaches to divide Pensions
- The reservation jurisdiction or
2. the cash out approach
The reservation jurisdiction
the court will reserve jurisdiction over the case until the employed spouse retires and then apportions the retirement between each spouse.
The Cash out approach
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.
Reasons for Reduction for Reimbursement of Educational Contributions
- Community already benefited, presumed after 10 years
- education is offset by the education received by the other spouse or
- the education reduced the need for spousal support
Business Goodwill
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.
Valuation Techniques for Business Goodwill
- Market Sales Valuation or
2. Capitalization of Past excess Earnings
How to calculate Reimbursement of CP Funds used to pay off SP
- Calculate CP Interest=the amount the CP contributed to the principal/total original price
CP Share=CP interest x the amount of capital appreciation
