community property basics

Question 1

First thing to write

Answer 1

CA is a community property state. There is a presumption of CP for all assets acquired during marriage. Areas of separate property: 1) prop owned before marriage 2) prop acquired by gift, will, or inheritance 3) prop acquired with separate funds 4) the rents, issue, and profits derived from separate property

Question 2

When does the economic community end?

Answer 2

1. intent ( by 1+ party) not to resume the marital relationship and 2. conduct consistent with that intent

Question 3

how is community property handled on divorce?

Answer 3

each and every asset must be divided 50/50

Question 4

Can 1 spouse make CP gift?

Answer 4

no, neither spouse can make a gift of CP w/o written consent

Question 5

what is the exception to US government savings bonds

Answer 5

parties can give it away without consent

Question 6

community credit presumption

Answer 6

funds borrowed during the marriage, and goods purchased during the marriage, are presumptively community credit

Question 7

borrowed funds are classified according to the

Answer 7

primary intent of the lender

Question 8

what relationship are spouses subject to

Answer 8

fiduciary duties, imposing a duty of the highest good faith and fair dealing with each other. if one spouse gains an advantage from a transaction, a presumption of undue influence arises. spouse has the burden to show she did not breach her fiduciary duty.

Question 9

transmutation

Answer 9

when, by agreement, during the marriage, the character of an asset is changed; can be made by gift or agreement

Question 10

premarital agreements must be in writing, signed by both parties unless:

Answer 10

1) where oral agreement is fully performed 2) estoppel based on detrimental reliance

Question 11

what is the one thing parties can’t agree to before marriage?

Answer 11

to limit either party’s contribution to furnish child support

Question 12

defenses to enforcement of premarital agreement

Answer 12

1) not signed voluntarily 2) unconscionability

Question 13

what is the rule around the not signed voluntarily defense to a premarital agreement

Answer 13

a premarital agreement shall be deemed not voluntary unless court finds that party challenging agreement: was represented by independent counselor waived ind counsel in separate writing, was given at least 7 days to sign, AND if not represented by ind counsel, was fully informed in writing of the terms and basic effect of agreement

Question 14

After 1985, marital agreements / transmutations:

Answer 14

(1) must be in writing (2) signed by spouse whose interest is adversely affected (3) must explicitly state that a change in ownership is being made

Question 15

when does marriage of lucas apply

Answer 15

applies in cases involving death of one party: taking title jointly raises a CP presumption, subjective intent not relevant

Question 16

Anti Lucas statute on ownership

Answer 16

fur purposes of division on divorce, property acquired during marriage in joint and equal form is presumptively CP, can be rebutted by: 1) express statement in the deed of other instrument of title that the property is SP 2) written agreement

Question 17

anti lucas statute on reimbursement

Answer 17

for purposes of division on divorce, spouse who made contributions of SP to acquisition or improvement of CP is entitled to reimbursement w/o interest for contributions to DIP 1) down payment, improvements, principal payments on mortgage

Question 18

how is CP measured if there is an installment purchase pre-marriage, but debt is paid down with CP during marriage

Answer 18

community property takes a pro rata portion of the property, measured by amount of principal debt reduction attributable to community funds

Question 19

how do you calculate whole life insurance policies

Answer 19

proration rule

Question 20

how do you calculate term life insurance policies

Answer 20

last premium determines character

Question 21

do expenditures for improvements from CP to a SP house give the community a proportionate share of ownership? (when person doing the spending is the same)

Answer 21

no, fixtures. improvements become part of the property. but, get get reimbursed for expenditure of increase in value

Question 22

do expenditures for improvements from CP to a SP house give the community a proportionate share of ownership? (when person spending CP for improvements to other spouse’s SP?

Answer 22

split of authority:

1) no reimbursement: presumption of gift
2) reimbursement: rejection of presumption of gift

Question 23

if funds are co-mingled, are SP funds transmuted into CP funds?

Answer 23

No, but the burden of proof is on person that each asset was purchased with SP funds

Question 24

two accounting methods to show that assets bought with funds in a co-mingled account were bought by SP

Answer 24

1) Exhaustion method 2) direct tracing method

Question 25

direct tracing method

Answer 25

quick in quick out. requires that 1) sufficient separate funds available and b) H intended to use SP funds to buy asset

Question 26

Pereira test for SP business that grows substantially during marriage

Answer 26

use where spouse’s time, skill, and effort are major factors in growth of business. Pay interest on value of business at the time of marriage (10%)

Question 27

Van Camp test for SP business that grows substantially during marriage

Answer 27

use where capital investment was the major factor in business’s growth, and spouse’s skills and efforts were less of a factor. look for instances where spouse was paid substantial salary and large bonuses

value of spouse’s service at market rate (yearly compensation for similar execs x number of years) MINUS family expenses made from community funds. balance is SP

Question 28

are pension benefits accumulated during marriage CP or SP?

Answer 28

CP, proration rule

Question 29

when can spouse receive CP share of pension?

Answer 29

if spouse is not eligible for retirement: 1) if and when he receives it, gets her share 2) cash out by awarding other assets of equal value

if spouse is eligible for retirement: 1) can receive present payment of share

Question 30

how is disability and workers comp treated?

Answer 30

wage replacement, classified according to when received, not when earned

Question 31

how is severance pay classified

Answer 31

SPLIT

1) SP b/c it replaced lost earnings, which after divorce would be H’s SP
2) CP b/c arose from a collective bargaining agreement and was thus earned by employment during marriage

Question 32

marriage of hug

Answer 32

used when stock options were awarded primarily to reward hank for past services

years of economic community since option awarded / years from date of employment to date option becomes exercisable

Question 33

marriage of nelson

Answer 33

stock options were awarded to encourage person to remain with the company

Question 34

goodwill

Answer 34

qualities that generate income beyond that derived from the professional’s labor and the reasonable return on capital and physical assets

Question 35

is goodwill community property

Answer 35

yes, to the extent acquired during the marriage, goodwill is CP subject to division on divorce

Question 36

is education considered property?

Answer 36

No, but the community is entitled to reimbursement for the cost of education if education enhanced earning capacity UNLESS 1) community has already substantially benefited from earnings of educated spouse (10 ears) OR 2) other spouse also received a CP-funded education

Question 37

when other spouse os tortfeasor, tort recovery is

Answer 37

SP

Question 38

where tort damages are recovered from a third party, tort recovery is

Answer 38

CP; but on divorce or legal separation, will be awarded entirely to injured spouse (on death treated as CP

Question 39

if spouse is subject to judgment from tort liability, what assets can the creditor reach?

Answer 39

if tortfeasing spouse was performing act for the benefit of the community: liability first satisfied from CP, then from SP

If tortfeasing spouse was not performing act on behalf of the community: liability first satisfied from SP, then CP

Question 40

personal belongings exception

Answer 40

one spouse cannot sell or encumber personal property used in family dwelling (furniture, clothing) w/o written consent of other spouse

Question 41

Can spouse’s SP be reached to satisfy other spouse’s medical bills?

Answer 41

yes, until divorce

Question 42

can a creditor reach CP awarded to a spouse after divorce?

Answer 42

no, unless that spouse incurred the debt or was assigned the debt by the court

Question 43

quasi community property rule

Answer 43

property acquired while couple was domiciled in a non-community property state, which would have been classified as community property had it been acquired under the same circumstances in CA

Question 44

real property land acquired in another state

Answer 44

for purposes of division on death, foreign real property of acquiring spouse controlled by state acquired in

Question 45

putative spouse test

Answer 45

was there a subjective belief that there was a lawful marriage

Question 46

what are putative spouses property rights

Answer 46

quasi community property