Final Flashcards
Community Property
California is a community property state. There is a rebuttable presumption that all property acquired during the marriage is community property, while all property acquired before marriage, or after permanent separation or by gift or inheritance is presumed to be separate property. This presumption may be rebutted by a preponderance of the evidence and the burden is on the separatizer. The characterization of an asset as either community property or separate property depends on the three factors
3 factors
1) the source of the asset, 2) any actions by the parties that may have altered the character of the asset, and 3) any statutory presumptions that apply to the asset.
Separate Property
Separate property is all property acquired before marriage, after entry of judgment, earnings after the date of separation, property acquired by gift, bequest, devise, dissent, as well as rents, issues, and profits of separate property.
At Divorce
All CP is equally divided between the parties unless they have otherwise agreed in writing, orally stipulated to an open court, or an exception applies to the general rule of equal division of CP at divorce. A spouse’s SP remains his or her SP at divorce. With these general principles in mind, each property will be assessed individually.
Fiduciary Duty
Extremely high duty. Act in the interest of the other
Pre-Marital Agreements
- Made in contemplation of marriage 2) regulated by Uniform Premarital Agreement Act 3) May contract over any species of property (not child support) 4) Amended in writing does not require new consideration 4) If its against public policy by promoting divorce, is unconscionable or makes someone a public ward - must be made with adequate knowledge of the wealth of the other party and did not waive rights to disclose
Pre-Marital Agreement Requirements
Enforceable if:
1) independent counsel or express waiver 2) seven days to review except when they have attorneys and multiple drafts 3) fully informed in writing 4) proficient in the language in which it is written 5) no duress, fraud, or undue influence 6) any other factors courts deem relevant
Post-Nuptial Agreements/Transmutations 852(a)
1) must be in writing - statement in a will is not enough to establish valid transmutation 2) contain express declaration acknowledging the change in character of the asset, meaning a present intent to change the character of the asset 3) made, joined in, consented to, or accepted by the spouse whose interest in the property was adversely affected by the transmutation 4) consideration NOT required 5) parole evidence is inadmissible.
Transmutation Questions Flow
1) Was there a valid transmutation? If yes, then, 2) did the other party receive an unfair advantage? (fraud?) If yes, the undue influence (constructive fraud) must be rebutted by the defendant by clear and convincing evidence. If the defendant succeeds, then go to 2640 tracing 3) even if there was a valid transmutation, the AA spouse must have waived their 2640 tracing rights in writing.
Valid Transmutation: Did the other party receive an unfair advantage?
a. Adversely affected spouse must show: parties in confidential relationship which is presumed to exist, spouse benefitted relied on that relationship, benefitted spouse participated in transaction, unfair advantage gained by benefitted spouse
b. Burden shifts to benefitted spouse to show to AA spouse: freely and voluntarily entered into agreement, knew all the facts needed, knew legal effect of transmutation, fair and just, adequate consideration
Transmutations Requirements Exception
Do not need to follow transmutation requirements for “clothing, wearing apparel, jewelry, or other tangible articles of a personal nature that is used entirely or principally by spouse, to whom gift is made and that is not of substantial value, taking into account the circumstances of the marriage.
Quasi Community Property
QCP is property acquired by either spouse that would have been community property had the spouses been domiciled in CA at the time of acquisition. The “quasi community” label typically only becomes significant at divorce, death, or for purposes of creditor rights. Here,
Putative Spouse
A putative spouse is not lawfully married, but has a good faith belief based on objectively reasonable grounds that she is lawfully married. Once she learns that her marriage is invalid, she no longer accrues putative spouse property rights. In CA, a putative spouse is treated as a legal spouse and takes according to quasi-marital property principles. Here,
Quasi Marital Property
All property that would otherwise be CP or QCP under CA law will be labeled QMP. In CA, a putative spouse is treated as a legal spouse and takes according to quasi marital property principles. Under quasi marital property laws, all property accrued during the putative marriage is QMP, while property acquired before the putative marriage or after permanent separation, or by gift or inheritance, is SP.
Bad-Faith Spouse
When one partner is a good faith putative spouse, but the other knows of the defect in the marriage, it is not clear whether the non-good-faith spouse may make any claim to QMP accumulated by the good-faith spouse. The CA supreme court has left this question open, but has suggested that it might treat the spouses equally despite the partner’s lack of good faith. Thus, each partner is entitled to 1/2 of the QMP
Marital Economic Property
CP may only be acquired during the existence of the marital economic community. The marital economic community begins at marriage and ends at one spouse’s death or permanent physical separation. A permanent physical separation occurs when there is an actual physical separation and an intent not to resume the marital relationship. Here,
Transmutation
An oral agreement transmuting property is valid if made before 1/1/85 but must be in writing after that date. Here,
Prenuptial Agreement
A prenuptial agreement made before marriage MUST be in writing. An oral agreement is valid only where 1) the executed promise was fully executed by the promisor or 2) the promisee detrimentally relied upon the agreement. Here,
Personal Injury Award
Before marriage or after permanent separation = SP. If cause of action arose during marriage and award is for economic damages = maybe CP. If cause of action arose during marriage and award is for pain and suffering damages = SP. Beware of co-mingling or using award to pay off CP property
Retirement Benefits
Retirement benefits are CP if earned during the course of marriage. When retirement benefits are earned both during and after and/or before marriage, then the courts will apply the time rule to determine how much of the retirement bens are CP and SP.
Time Rule
The community’s share is calculated by determining the number of years the retirement benefits were earned while married divided by the total number of years the retirement benefits were earned. Here,
Stock Options
Stock options are a form of compensation. To the extent stock options are earned during the course of marriage the community has a right to share in their value. Here,
Community Loan + Separate Funds
When separate property and community bank loan proceedings are used to purchase an untitled asset, the CP and SP acquire a pro rata interest in the asset. The percentage of ownership is determined by the percentage that each contributed to the purchase price. Here,
Bonuses
Bonuses are treated as CP or SP depending on the circumstances. Bonuses are usually CP because they are a form of compensation for the spouse’s labor during marriage. However, in some cases, a bonus is more like a personal gift from an employer to an employee. Thus, the bonus would be the SP of the working spouse. Here,
Rents and Profits from SP
In general, all income, rents, and profits from SP earned during marriage remain the spouse’s SP, unless there has been a transmutation. Here,
Title in H’s Name
The fact that title to a property is only in the name of the husband DOES NOT change the character of the property as CP. However, if there is evidence that the W intended that the property be a gift solely to H, then it would be held by H as SP. Here,
Jointly Title Assets
All property held by the spouses in joint form is presumptively CP for purposes of distribution at divorce or legal separation. The presumption can be overcome with a collateral written agreement or statement of some sort in the documentary evidence of title. Here,
If there is no agreement to the contrary, then contributions to the acquisition of the property are reimbursed to the SP contributor without interest or appreciation. If the spouse deeds SP into jointly titled property, the SP contribution to the acquisition of the property is the fair market value at the time it was deeded into joint title. Here,
SP placed in a joint account
All SP placed in a joint account is not presumed to be changed into CP. The court allows full tracing of separate funds unless the parties have agreed otherwise. Here,
2640 Tracing
There are two methods used to trace funds in a co-mingled account. 1) H could show that the community funds in the account had already been exhausted from the account when he put his SP in the account or 2) H must show that there was sufficient separate funds available at all times and that he intended to keep his SP separate from the community funds. Here,
SP paid down with CP
When CP pays off the purchase price of a spouse’s SP, the community is entitled to a proportional ownership interest in the property to the extent that the payments reduce the principal debt. Here,
Spousal Gifts/Transmutations
Transmutation is the spousal transformation of the character of property. Prior to 1985, oral agreements to transmute property as well as donative acts inferred from one or both parties behavior to transmute property were allowed. However, as of Jan 1 1985, transmutations must be evidenced by an express declaration in writing that is signed be the spouse who owns the SP. Here,
Debts Before The Marriage (child support)
A debt incurred before the marriage may be satisfied by all the CP and the debtor spouse’s SP. The non-debtor spouse’s SP is not liable.
Reimbursement
The community is entitled to reimbursement if, at the time that the CP was applied, SP of the debtor spouse was available, but was not applied to satisfy the obligation. Here,
Unauthorized Gift of CP
A spouse may not make a gift of Community PERSONAL property without the written consent of the other spouse. This is an unauthorized gift of the nonconsenting spouse’s 1/2 interest in the Community Asset and the nonconsenting spouse may recover her 1/2 interest in the property. Here,
Presumptions - CP
All property acquired during marriage is presumed to be CP. Here,
Presumptions - Anti-Lucas
Under Anti-Lucas statutes, a spouse who deeds SP into jointly titled property is entitled to a right of reimbursement for the fair market value of the property at the time it was deeded into joint tenancy. here,
Presumptions - Property: Joint Tenants
The Cal Family Code provides that all property held by the spouses in joint form is presumptively CP for the purposes of distribution at divorce or legal separation. This includes all property held in joint tenancy. This presumption can only be rebutted by a writing which expresses the parties intent to have it held as SP and not CP. Here,
Presumptions - Education
Education and training acquired during marriage is not treated as CP. Instead, upon divorce, the CFC creates an equitable right of reimbursement, including interest, when community funds are used to pay for education or training and the education or training substantially enhances the earning capacity of the spouse. Here,
Equitable Defense: Community benefitted from Spouse’s Education
Reimbursement may be reduced or modified if the community has already substantially benefitted from the education or training. There is a rebuttable presumption that the community has already benefitted if more than 10 years has elapsed between the contributions and the initiation of divorce. Here,
Equitable Defense: Reduced Need for Spousal Support
Reimbursement may also be reduced or modified if the education that the spouse receives lessens the need for spousal support. Here, (W goes to school after raising the kids and H still works)
Equitable Defense: Spouse Also Received an Education
Reimbursement may be reduced or modified if the other spouse has also received a community funded education. Here,
