community property Flashcards
joint and equal title presumption
if title is taken in joint and equal form (H &W; H&W, husband and wife; H& W, community property; joint tenancy) it is presumed community property.
to trace: rebut presumption by writing or statement in deed showing one party is to keep a SP interest
to seek reimbursement: need not having any agreement, just need to show SP used for improvements, downpayment, or principal
at death: no ownership interest or reimbursement w/o proof of writing
dividing untitled property
- presumed community property
- SP proponent may trace to source of funds to purchase and divide accordingly
dividing property titled in one spouse’s name (incl. W post 1975)
- presumed community property.
- can argue taking title in that form shows a gift, but if it’s done without the other spouse’s knowledge it doesn’t overcome the presumption.
- if the other spouse does know title in the other spouse’s name alone and doesn’t object, that would work to overcome the presumption.
- SP proponent may trace to source of funds to purchase and divide accordingly
installment purchase pre-marriage (SP); principal paid with CP
(if loan is completely paid off)
the community estate takes a pro rata portion of the property, measured by the amount of principal debt reduction paid by CP estate
formula: (Principal reduction by CP) / (Purchase Price)
installment purchase pre-marriage (SP); principal paid with CP
(loan not completely paid off at divorce)
look at amount paid by CP
formula: amt paid by CP/ purchase price
tort liability of a spouse
-community property is subject to the tort liability of either spouse.
if for benefit of community, liability satisfied first from CP and then SP (ex: car accident on way to work)
if not for benefit of community, liability first from SP and then from CP
a judgment creditor cannot reach the other spouse’s SP.
classifying judgment from tort by one spouse that injures the other
it is SP or else the negligent spouse will benefit from their own wrong
judgment from tort by 3rd party
CP, but is awarded entirely to the injured party upon divorce. only exception is if interest of justice requires otherwise (ex: other spouse very economically needy)
real property conveyance w/o consent
nonconsenting spouse can set aside conveyance in entirety. but must return the purchase price. and if purchaser is a BFP, must sue within 1 year and also has burden to prove no consent to transfer.
if purchaser not a BFP, no SOL
Can community property be reached to satisfy one spouse’s debt incurred before marriage?
Yes. The only way to avoid this is for the non-debtor spouse to put his/her earnings in a separate account not commingled with other CP.
Can a non-debtor spouse’s SP be reached to satisfy debtor spouse’s debt before marriage?
No.
Can community property be reached to satisfy one spouse’s debt DURING marriage?
Yes.
The bank account exception doesn’t apply- only works for pre-marital debt.
Can the non-debtor spouse’s SP be reached to satisfy debtor spouse’s debt DURING marriage?
No.
However, if the debt is for necessaries (medical expenses, living expenses appropriate for station in life) then the other spouse is liable because of his/her duty of support.
Is a non-debtor spouse’s SP liable during separation for debtor spouse’s debt?
No.
Unless the debt is for COMMON necessaries. Liability for common necessaries= basic necessaries. medical bills count.
If, during marriage, a spouse incurs a debt for necessaries and the other spouse’s SP is reached, can the spouse be reimbursed?
Yes, if there is C/P available.
quasi community property
property acquired while the parties are domiciled in a non-community property state that would have been classified as community property had it been acquired under the same circumstances in CA
can a court divide out of state realty that is QCP on divorce?
Yes, because the court has jurisdiction over the parties. The court can order the parties to execute any conveyances necessary or award other assets of equal value to avoid ordering conveyances
If one spouse dies, leaving the other spouse and a child, and leaves out of state QCP real property to the child, can the spouse elect to take her intestate share of QCP?
No because the CA court does not have jurisdiction over the land in another state. The court also does not have jurisdiction over the decedent. The property is probated in the other state and will pass as stated under the will if that state’s law is applied (b/c SP there), but if CA law is applied it is QCP
Can a spouse convey QCP by will?
Only if it his/her SP that would be characterized as QCP. The non-acquiring spouse has no rights in QCP until she survives the acquiring spouse.
what law governs unmarried cohabitants?
contract law. absent a contract, neither party has any right to the other’s earnings/property.
putative spouse
someone who has an objectively reasonable and good faith belief that he/she is lawfully married to a person.
quasi marital property
property earned by people who are putative spouses. divided 50/50 on divorce or death.
characterizing a whole life insurance policy
the cash value is characterized according to the proportion of premiums paid by community property, and the proportion of premiums paid by separate property.
if CP is used to improve one spouse’s own SP, is there a right to reimbursement in the community?
Yes. The reimbursement is the greater of the amount of CP expended or the increase in value of the SP.
If CP is used to improve the other spouse’s SP, is there a right to reimbursement in the community?
Some courts treat it as a gift and do not allow reimbursement.
Other courts do not presume a gift and do allow reimbursement.
If SP is used to improve CP, is there a right of reimbursement?
At divorce, yes.
At death, no, unless there is an agreement.
Tracing funds to a commingled bank account
SP proponent can use either:
a) the exhaustion method- prove that CP funds were exhausted at the time the asset was purchased, so it must have been purchased with SP. (CP funds are presumed to be taken for family expenses, so can prove fam expenses had exhausted CP)
b) direct tracing method- there was SP available at the time the asset was purchased, and the spouse intended to use SP when he purchased the asset.
when do you use Pereira and Van Camp?
only when there is an SP business that has appreciated during marriage.
Pereira is used when the personal skill of one spouse is responsible for the appreciation- creative ideas, worked long hours, drew modest salary.
Van Camp is used when the capital is the reason for the success. The spouse drew a large salary, and large bonuses.
Pereira and Van Camp formulas
Pereira: SP = interest x value of business x years married. rest CP.
Van Camp: CP= (average salary for that position x years married)- family expenses. rest SP.
pensions- pre-eligible to retire
treated as community property because they are deferred compensation.
formula: years employed to date economic community ends / years employed to retirement.
court will award either a percentage on an “if and when earned” basis, or cash the other spouse out for an asset of equal value.
pensions- spouse eligible to retire
a spouse may choose not to retire, but if he/she does, then he/she has to pay value of his/her interest in the pension
pensions- election between disability and retirement
if the spouse has a choice and chooses disability, the other spouse will be awarded the value of the retirement benefit (court must determine that value).
severance pay
some courts treat it as replacing income, and characterize according to when it was earned.
other courts treat it as community property because it was part of a collective bargaining agreement, and thus was earned during by employment during marriage.
stock options- Marriage of Hug
used if the employer intended to reward the employee for past services.
years from date of employment to end of economic community / years from date of employment to date exercisable
stock options- Marriage of Nelson
used if the employer intended to encourage the employee to remain with the company.
years from date option granted to date economic community ends/ years from date option granted to date exercisable
stock options
stock options giving an employee an option of buying the company’s stock at a certain date in the future usually require the employee to still be employed when they become exercisable. (i.e., they are unvested until that date)
treated as community property if it vests (becomes exercisable) during marriage.
if it does not vest during marriage, it must be apportioned between community and separate property. the formula used depends on the intent of the employer.
goodwill
those qualities in a business that generate income other than the professional’s labor, and reasonable return on capital and physical assets.
it is community property subject to division upon divorce to the extent it is acquired during marriage.
market sales valuation
form of calculating goodwill.
the price that goodwill would command in a sale of the business or professional practice. goodwill often does not survive the sale contemplated.
capitalization of past excess earnings
form of calculating goodwill.
looks to the present value of the future stream of income that the goodwill developed during the marriage will generate. it values the goodwill in the earner’s hand and is often higher.
educational expenses
student loans are assigned entirely to the spouse receiving the education.
community may be reimbursed if:
- spouse’s earning capacity enhanced
- CP used to repay a loan or pay educational expenses (for tuition/books only)
educational degree
not community property subject to division upon divorce or death
management- personal belongings
neither spouse can sell the other spouse’s personal belongings or belongings of minor children without the other spouse’s written consent
the other spouse can totally void the transaction at any time
exceptions to reimbursement for education
- community has substantially benefited (presumed to substantially benefit if parties married 10 years after completion, otherwise must prove by showing high salary, etc)
- reduces that spouse’s need for spousal support
- other spouse received community funded education
transmutation
agreement to change the character of property made by spouses during marriage
- pre 1985: oral agreement permitted
- post 1985: must be in writing, signed by spouse whose interest is adversely affected, explicitly state a change in ownership is being made
NO SOF exceptions
premarital agreement
agreement between spouses before marriage to avoid the community property system and hold their property as separate property.
- must be in writing
- must be voluntary (spouse must have 7 days to sign; must be represented by independent counsel, or if not must receive disclosure in writing of terms and effect of agreement in a language the party is proficient in)
- must not promote divorce
- must not be unconscionable when made; spouse must have disclosure of other spouse’s finances (unless waived in writing and party challenging had adequate knowledge of the other’s finances)
SOF exceptions for premarital agreement
oral agreement executed (spouse making the promise does something to perform it)
estoppel based on detrimental reliance
premarital agreements for spousal support
may agree to limit spousal support but unenforceable if:
- party challenging it was not represented by independent counsel
- provision is unconscionable at the time of enforcement
premarital agreements to limit child support
unenforceable by statute
credit extended during marriage
funds borrowed during marriage are presumptively community property.
however, borrowed funds are classified according to the intent of the lender- what property the lender would look to to satisfy the debt.
if relying on standing, creditworthiness, or good reputation, community property. if relying on separate property as collateral, SP.
gifts of community property during life
neither spouse can make a gift of community property without the other spouse’s written consent.
nonconsenting spouse may void the transaction in entirety while the gifting spouse is alive.
nonconsenting spouse may only void as to her 1/2 after the gifting spouse dies.
US savings bonds and gifts of CP
a party can name someone other than the spouse as a beneficiary of federal savings bond because federal law requires payment to the beneficiary
gift of other spouse’s 1/2 interest of CP by will
the other spouse must elect to take under the will or his/her 1/2 of CP.
survivor’s duty to elect
the survivor must elect when the will attempts to pass his/her 1/2 interest in community property.
if it wouldn’t upset the testator’s plan, can assert both CP rights and right to take under the will
division of community property on divorce
community assets will be divided equally in kind unless a special rule requires deviation from the equal division requirement
quasi marital property
in putative spouse cases, property that would be community or quasi community property if the marriage were lawful
if CP is used to pay a child support debt, can the community be reimbursed?
Yes, if separate income was available but not applied to satisfy the obligation. The community may be reimbursed to the extent of the separate income then available.
ways to value goodwill
capitalized excess earnings
market sales valuation
