Community Property Memorization Flashcards
Relationship Status: Married
- Valid marriage in CA
- CA recognizes marriages from other states if the marriage was valid by laws of that state
Domestic Partnership
- Same rights as married couples
- From other states OK if DP was valid under laws of that state
Permanent Separation
- Intent to end marriage communicated, and
- Conduct consistent with intent
Putative Spouse
Treat as married if:
* Good faith belief
* Void/voidable marriage
* Estoppel may apply if spouse knew marriage was invalid
* Qualified Marital Property (QMP)
Premarital Agreements
- Must not promote divorce
- In writing, signed by both
- Can’t waive child support
- Can waive spousal support if ind. counsel obtained and not unconscionable
- Defenses limiting enforcement: Laches and estoppel
Premarital Agreements - Presumed Involuntary
Unless:
* Independent counsel or waived in writing
* Given 7 days before signing
* If no counsel - terms/rights in writing in proficient language, and declares that information received
* No duress/fraud/undue influence
* Any other relevant factors
Premarital Agreement - Unconscionable
Unenforceable if unconscionable when made and:
* full disclosure of party’s property or financial obligations was not made, and right to disclosure not waived in writing, and
* party did not have adequate knowledge of other party’s property or financial circumstances
General Presumptions - CP
California is a community property state. The earnings of each spouse and all property acquired during marriage by the labor of each spouse while domiciled in California is presumptively community property.
General Presumption: Separate Property
- All property acquired before marriage, after premanent separation or divorce is presumptively separate property.
- In addition, property acquired by gift, devise, bequest, or descent is presumptively separate property.
- The rents, issues, and profits derived from separate property, the property acquired with separate property funds, are presumptively separate property.
General Presumption: QCP
Quasi-Community Property (QCP) is all property, real or personal, wherever situated, which would have been classified as CP had the parties been domiciled in California at the time of acquisition.
General Presumption: QMP
Quasi-marital property (QMP) is property acquired during a void or voidable marriage, which would have been CP or QCP if the marriage had not been void or voidable. The property of a putative spouse is classified as QMP. QMP is treated the same as CP or QCP.
Presumptions inferred from title
Form of title can be used to rebut general presumptions.
Jointly titled property benefitted by SP:
* Lucas: At death, jointly held property is presumptively CP, no reimbursement
* Anti-Lucas: At divorce, jointly held title is presumed CP, but DIP reimbursement (down payment, improvements, and principal).
Tracing Commingled Funds - Proving Acquired Property is SP
Two tracing methods:
* Exhaustion method: all CP funds exhausted when property purchased
* Direct tracing: sufficient SP funds at time of purchase, intent to use SP funds
If SP can’t be traced, property is CP
Tracing cannot overcome joint title presumption, except for bank accounts
Transmutations
(agreements to change CP to SP or SP to CP)
Generally writing required:
* real or personal property
* describe change in ownership
* consent of adversely affected spouse
Exceptions to writing requirement:
* personal gifts of insubstantial nature
* transmutations before 1985
* no other exceptions!
Fiduciary Duties
- Full disclosure of material facts
- Good faith and fair dealing
Community Personal Property
- Generally each spouse has power to buy, sell and manage
- One spouse can’t gift or dispose for less than fair value
- One spouse can’t sell family furnishings and things without written consent
Community Businesses
Managing spouse can make all business decisions but must give written notice to sell all or substantially all
Community Real Property
- Both spouses need to sign to sell or lease more than 1 year
- Can’t convey to 3rd party without both spouse consent
- Sale to BFP: nonconsenting spouse can void sale within one year
- Sale to non-BFP - sale can be voided at any time
Contribution of CP to other spouse’s SP
- Gift presumed in some jurisdictions
- Others require reimbursement
Contribution of CP to own SP
- Community will be reimbursed for greater of (a) amount spend on improvement or (b) increase in value
Contribution of SP to other spouse’s SP
- Reimbursed without interest for DIP
Contribution of SP to CP Property
- Check if Lucas or anti-Lucas apply
- Reimbursement for DIP
SP Business - benefited by CP labor
Pereira: favors CP
* Use if spouse’s personal skills is reason for growth
* SP = initial SP + 10% return
* CP = Value of business minus SP
Van Camp: favors SP
* Use if character of business is reason for growth
* CP = FMV salary minus family expenses minus salary taken
* SP = Value of business minus CP
CP business - benefited by SP labor
- A CP business is given to one spouse upon divorce and then that spouse works on it.
- Pereira and Van Camp applied in reverse.
CP Contribution to SP Real Property
(e.g. CP used to pay off mortgage)
CP% = amount CP contribution to principal repayment / total purchase price
Value of CP = CP% x Value of Property
* Payments for interest, tax, and insurance are ignored
Proceeds for Personal Injury by Third Party
Injury happened during marriage, the recovery is CP
* Upon death of injured spouse, recovery is CP
* Upon divorce, the recovery will be entirely rewarded to injured spouse
If injured after separation or divorce: recovery is SP
The CP or SP of the noninjured spouse is entitled to reimbursement from the SP money received by the injured spouse for any expenses incurred on behalf of the injured spouse.
Pension
- Earned during marriage = CP, regardless of when fully vested
- Earned over time both before and during the marriage: Time Rule to apportion
- Wait until spouse retires to divide - other spouse can elect to receive his or her share when spouse is eligible to retire, OR
- Cash out - pension given to employed spouse and other assets of equal value given to other spouse
Stock Options
- Vests during marriage = CP
- If vests after marriage, if options are for past services - Time Rule
- If vests after marriage and options are for future services (i.e., services after divorce) - SP
Disability / Worker’s Comp
SP or DP depending on what compensation it is replacing
* replacing marital earnings = CP
* replacing post-divorce earnings = SP
Severance Pay
CP or SP depending on what compensation it is replacing
* If replacement for retirement benefits earned when married = CP
* If replacing future post-divorce earnings = SP
Bonuses
Based on when it was earned, and what it is intended to reward
* If earned during marriage = CP
* If earned after marriage = SP
Education/ Training
Education/training acquired during marriage is not a community asset/debt, even when the community pays for it.
Education/Training Reimbursement
At divorce, the community is entitled to reimbursement for CP contributions that substantially enhanced the earning capacity, with interest.
Reimbursement may be reduced or denied if:
* community already substantially benefited from the education (presumed after 10 years)
* the education is offset by CP funded education received by the other spouse, or
* The education reduced the need for spousal support for the eduated spouse
Life Insurance
Whole: lifetime coverage & accumulates cash value
* each estate gets % of cash value based on premium paid from each estate
Term: coverage for specified term and no cash value
* SP or CP depending on last estate to pay premium
Acquisitions on Credit
- During marriage = CP debt
- Intent of lender can rebut CP by showing lender relied on SP
- Earning capacity of either spouse is a CP asset
Creditor’s Rights
- Generally a creditor may reach any property over which the debtor has the legal right of management and control
- CP is liable for all debts of either spouse before or during marriage
- Exception for premarital debts: earnings of a nondebtor spouse during marriage that is kept in a separate account over which the debor spouse has no control, and that is not mixed with any other CP
SP debts before marriage can be satisfied with…
- All CP and the debtor’s SP, but not nondebtor’s SP
- Non-debtor can shield earnings in separate account
SP debts during marriage can be satisfied with…
- all CP and debtor’s SP, but not non-debtor’s SP
- Exception: debts for necessaries of life (food, clothing, medical bills) can be satisfied with non-debtor’s SP. This exception applies post separation all the way up to divorce.
Child or Spouse Support Debt
- If related to a prior marriage, then treated as debt incurred before the marriage regardless of when the court order is made or modified
Order of Debt Satisfaction
- If debt is for community interest, use CP first, then SP of either spouse
- If debt is for a separate interest, use SP of debtor spouse first, then CP
Liability for Injury Caused by Spouse
- If act was during marriage for the benefit of the community, liability satisfied first out of CP and then out of the wrongdoer spouse
- If act was during marriage but not for the benefit of the community, then liability satisfied first out of wrongdoer’s SP and then the CP.
Distribution of Assets upon Divorce
- CP and QCP split equally, each spouse keeps SP
Distribution of Assets upon Death
- 1/2 of CP/QCP to surviving spouse, 1/2 to estate
- Will: Can devise 1/2 CP/QCP and all SP
- No will: All CP to spouse (so spouse gets 100% of CP), then 1/3, 1/2 or all SP goes to spouse depending on other issue and survivors
Time Rule
Numberator: years married when pension/stock earned
Denominator: total years over which pension/stock was earned
