Community Property Flashcards
Preamble
California is a CP state. All prop acquired during the course of marriage is presumed to be CP. All prop. acquired before or after permanent separation is presumed to be SP. In addition, any prop acquired by gift, devise, or bequest is presumed to be SP.
The Analysis
The characterization of an asset as CP or SP depends on three factors: (1) the source of the item; (2) actions of the parties that may have altered the character of the item; and (3) any statutory presumptions affecting the item.
Quasi-Community Property
(1) Property acquired by married couple,
(2) outside of California,
(3) which would have been CP if acquired in California.
During life of titled spouse => SP of titled spouse
Titled spouse dies first => 50% SP estate; 50% surviving spouse
Quasi-Marital Property
Rule: Upon dissolution of putative marriage, court will treat QMP as CP or QCP.
QMP = Property acquired during marriage, which would have been CP or QCP if marriage was valid.
Putative Marriage = Exists when one spouse has good-faith belief in the existence of a marriage.
Source of the Item - Tracing
There is a rebuttable presumption that all property acquired during marriage is CP. This presumption can be rebutted by tracing.
Tracing determines the source of a property’s acquisition to determine the property’s character. Any property acquired during marriage by CP or either spouse’s labor or earnings is presumed CP. Any property acquired during marriage through the exclusive use of SP is considered SP.
Source of the Item - Professional Degrees and Educational Debt
Degree or license is SP of educated spouse.
Community entitled to reimbursement for education (NOT LIVING) costs, if:
(1) community paid for education costs;
(2) the earning capacity of educated spouse was substantially improved;
(3) and no contractual waiver of educational expense reimbursement.
Defenses
(1) Community has substantially benefited(presumption of substantial benefit after 10 years of marriage after education);
(2) Offset by education/training expenses of other spouse; or
(3) Education substantially reduces need for spousal support post-divorce.
Source of the Item - Life Insurance Proceeds
Policy takes on character of payment for last term (if last payment is SP, policy is SP).
If "cash value" (not "term" life insurance), CP gets pro rata share based on contribution or interest.
Source of the Item - Severance, Disability, and Workers’ Comp.
Takes on character of what it replaces.
If it replaces labor during marriage, CP; if it replaces labor after separation, SP.
Source of the Item - Torts Recovery
If tortfeasor is spouse, SP of prevailing spouse.
If date of accident was during marriage, CP while married, SP of injured spouse upon divorce, unless justice requires otherwise. If date of accident was outside marriage, injured party's SP.
Source of the Item - Marital Debts and Credit
Debts acquired during marriage presumed CP.
Presumption can be rebutted if intent of lender was to hold SP liable (look to who and what guarantees the debt).
Source of the Item - Pensions and Other Long-Held Benefits
Allocated according to the “time rule”.
Pension
CP = (Present Value of Pension) * (Years Worked During Marriage / Total Years Worked)
SP = (Present Value of Pension) - CP
Stock Options
CP = (Present Value of Stock Options) * (Years Employed During Marriage / Years Before Stock Option Can Be Exercised)
SP = (Present Value of Stock Options) - CP
Source of the Item - Goodwill
Increase in goodwill (intangible value based on expected future business or reputation) during a marriage is community property.
Courts can calculate goodwill either through: (1) Market sales valuation (2) Capitalization of past excess earnings
Source of the Item - Common Necessaries of Life
Even while living apart, a married person is still personally liable (both CP and SP collectable) for debt his or her spouse incurred for the “common necessaries of life” (i.e., expenses required to sustain life).
Married person has no personal liability for spouse's debt incurred for expenses that are not common necessaries of life.
This type of debt can still collect non-debter's CP after exhausting debtor's CP and SP.
Non-debtor spouse can be reimbursed for SP paid for debtor's necessaries if debtor spouse had SP or CP at time debt was paid by non-debtor.
Actions Taken - Bigamy
Divorce
Legal spouse gets 1/2 CP, and court has discretion to award 1/2 of bigamist spouse's QMP to legal spouse.
Putative spouse gets 1/2 of QMP.
Death and Will
By devise, if bigamist spouse leaves a will, can devise 1/2 of CP and 1/2 of QMP
Intestate
All CP to legal spouse
All QMP to putative spouse
Actions Taken - Premarital Agreement
Agreement after 1/1/2002 must:
(1) be in writing
(2) be signed by both parties
(3) be voluntary, and party against whom enforce was sought:
(a) had independent legal counsel or was advised of right to independent counsel and expressly waived it;
(b) at least 7 calendar days between date presented w/ agreement and date signed.
(c) did not execute under duress, fraud, or undue influence, and had capacity; and
(d) was informed of rights and obligations.
Actions Taken - Separation / Ending of Marital Economic Community
The marital economic community begins upon marriage. It can be ended at (1) divorce, (2), death of a spouse, or (3) permanent physical separation.
Permanent physical separation requires:
(1) Actual separation and
(2) Communication by one spouse to the other that
(3) There is no intent to resume the marital relationship.
All earnings during temporary separation are CP.
