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Community Property > Final exam > Flashcards

Final exam Flashcards

1
Q

General Rules

A

-California is a CP state
-CP system will apply automatically to married couples and domestic partners domiciled in California, unless couple makes a valid agreement to the contrary

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2
Q

Community property

A

All property, real or personal, wherever situated, acquired by either spouse during the marriage while domiciled in CA is presumed CP. The burden is on the proponent to demonstrate property is SP. including labor or effort of either spouse during marriage. CP is divided in kind, and equally at divorce unless otherwise indicated.

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3
Q

Burden - CP/SP

A

The burden is on the proponent to demonstrate that property at issue is separate property

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4
Q

Separate property

A

Separate property is all property acquired before marriage, after permanent separation or divorce, or at any time by gift, devise, or bequest. All rents and income from separate property remain separate property. All SP is confirmed to the SP owner upon divorce.

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5
Q

Quasi community property

A

QCP is property acquired while the couple was domiciled in a non-CP state, which would have been classified as CP had it been acquired under the same circumstances in California. QCP will be treated like CP.

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6
Q

Tracing Rule

A

To determine whether an asset is CP or SP, a court will trace back to the source of funds used to acquire the asset. Joint title trumps tracing for real and personal property, but tracing is always allowed for jointly held bank accounts.

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7
Q

Putative spouse/domestic partner

A

Putative spouse is not legally married because the marriage is void or voidable, but one or both parties believe in good faith that the parties are legally married. Property acquired by putative spouse is quasi marital property

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8
Q

Quasi marital property

A

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. QMP will be treated like CP.

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9
Q

Dividing business profits: If CP labor contributed to SP business–>

A

CP is entitled to a share of the increase in value of business

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10
Q

Formulas for dividing business profits

A

Pereira Formula AND van camp formula

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11
Q

Pereira/Van camp fact triggers

A

-Business started before marriage
-Business inherited during marriage
-Business started with SP funds during marriage
-Business started during marriage with CP labor—explain why
Pereira/Van Camp don’t apply

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12
Q

Pereira formula

A

Use when growth of the business asset is attributed to the work/management skills of the spouse. (Favors CP)
-SP: initial SP contribution (the value of SP business at the time of the marriage or the SP funds used to capitalize the business during marriage) + RRR (10% of SP contribution for each year family had SP business during marriage)
-CP: Value of biz - SP interest calculated above

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13
Q

Van camp formula

A

Use when character of business is reason for growth (Favors SP)
-CP: fair market value salary (FMV of spouse’s managerial services for each year family had SP business during marriage) - family expenses (paid with business earnings for each year family had SP business during marriage) - salary taken (actual salary taken by managing spouse for each year family had SP business during marriage)
-SP: value of biz-CP calculated above
CONCLUDE W/ WHICH FORMULA COURT WILL USE

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14
Q

When SP and CP contribute jointly to the purchase of property, and the property is titled in one spouse’s name

A

Each estate shares proportionally in value of estate, use Marriage of Moore!

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15
Q

Marriage of Moore

A

When SP and CP contribute jointly to the purchase of property, and property is titled in one spouse’s name, the SP and CP share in proportion to their contributions to the purchase price.
-SP% = SP down payment + (SP loan - CP payments on loan) / purchase price
-CP% = CP contributions toward purchase price / purchase price

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16
Q

Married Woman’s Special Presumption (MWSP)

A

Property acquired by a married woman in a writing, prior to 1975, is presumed to be her SP.

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17
Q

Property purchased w community funds and title is in wife’s name

A

When property is purchased with community funds and title is taken in wife’s name alone, it is presumed that husband made a gift of his interest to wife

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18
Q

Property taken as tenancy in common

A

If a married woman took title with her husband, her interest was presumed a tenancy in common unless a different intention was specified. Wife’s tenancy in common interest is presumptively SP under the MWSP

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19
Q

Overcoming MWSP presumption

A

-MWSP is rebutted by evidence that the wife controlled how title is taken
-Where title is taken in wife’s name, husband’s testimony that he did not intend to make a gift of his SP or his interest in the community is sufficient, if believed by the court, to overcome the MWSP.

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20
Q

MWSP amended

A

GR: When property is acquired by husband and wife in a written instrument in which the parties are described as husband and wife, the property is presumed CP.
GR: MWSP is inapplicable when property is acquired in joint tenancy form.

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21
Q

Jointly titled property where there is a SP contribution

A

LUCAS AND ANTI LUCAS

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22
Q

Lucas rule

A

Pre 1984: Jointly titled property is entirely community in nature in the absence of any evidence of an ORAL or WRITTEN agreement

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23
Q

Anti Lucas II

A

Any jointly-titled property taken AFTER 1987 is presumed CP for purposes of divorce. -SP can get share of ownership only if there is a WRITTEN agreement reserving it. -SP gets automatic reimbursement for down payments, payments for improvements, and payments that reduce the principal of a loan. -Rest is CP and will be divided.

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24
Q

Improvements

A

When SP used to improve CP or SP of other spouse, reimbursement is required, unless right to reimbursement waived in writing by SP contributor

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25
Q

Bank account GR

A

bank account should be characterized based on the source of funds deposited in the account

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26
Q

Separate account

A

Generally, all assets acquired during marriage, including any income earned, is presumptively community property. The fact that the funds are placed in a separate account, not a joint account, does not change the characterization of the property.

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27
Q

If spouse hid separate account

A

H will argue that W breached her fiduciary duty by both opening the account and by failing to disclose the account in the divorce proceedings.
Spouses are allowed to have a bank account in their name only. This by itself would not violate a spouse’s fiduciary duty. But the failure to disclose the bank account in the divorce proceeding is a clear violation of the fiduciary duty that is imposed on spouses. Spouses are required to disclose all of their assets and liabilities in a divorce action. H may be entitled to all funds if failure to disclose was willful wanton and malicious

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28
Q

Commingling GR

A

Commingling of SP funds with CP funds does not necessarily transform or transmute property from SP to CP. When CP and SP funds are commingled, the spouse claiming that property acquired with funds from that account is SP must show that SP funds were used to acquire the property.

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29
Q

Commingling methods of accounting

A

direct tracing and exhaustion method

30
Q

Direct tracing

A

requires proving a direct link from SP funds to the purchase:
1. SP funds in the account were AVAILABLE at the time of the purchase AND
2. SP owner INTENDED to use SP funds to make the purchase

31
Q

exhaustion method

A

Requires showing that at the time the property was purchased, all CP funds in a commingled account had been exhausted by community expenses, and thus only SP funds were available to purchase the property

32
Q

Family expense presumption

A

Expenditures for community items, such as living, rent, food, etc. are presumptively made from CP
-If SP funds used for family expenses: presumed the SP funds used for family expenses are a gift to the community.

33
Q

Loans

A

A loan obtained during marriage is presumed a CP contribution to the purchase of any asset acquired by the loan unless the intent of the lender was to rely on SP in making the loan.
A spouse’s good credit during marriage is CP, so if relied on, doesn’t make it SP.

34
Q

Transmutation

A

-A transmutation is an agreement between spouses
made during marriage to alter the ownership characterization of property (ex. CP to SP)
-Before 1985, liberally allowed by oral agreement or inferred by parties’ behaviors
-Beginning in 1985, A valid transmutation of real or personal property requires (1) In writing;
(2) Signed by the spouse whose interest is adversely affected; AND
(3) Contain an express declaration that the characterization of ownership of the property is being changed.
**EXCEPT: No writing is required for gifts of a personal nature between spouses, which are relatively insubstantial in value (considering the circumstance of the marriage) used solely or principally by the spouse to whom the gift is made.

35
Q

Pension plans GR

A

Retirement is CP to extent earned while married. When earned both before marriage and during marriage, the time rule applies to apportion between the CP and SP estates.

36
Q

Time rule

A

The Time Rule is used to apportion
pensions, retirement, and stock options earned both before and during the marriage.
-CP share of the pension = total pension x # years married while pension earned / total # years pension earned
-SP is remaining %

37
Q

Court’s approaches to divide pension:

A

Court can:
1. reserve JDX (wait and see)
2. Assign pension to working spouse and CP asset of equal value to other spouse (cash out method) OR
3. Determine respective shares and order pension administrator to pay percentages when working spouse retires MOST COMMON

38
Q

Stocks tracing

A

-Trace back to the source of funds. Change in form from cash to stock/vice versa does NOT change character of the asset.
-If SP used to purchase stock, even if stock sold and then another stock purchased with that money, STILL traces back to SP and is SP.

39
Q

Stock option that vests during marriage

A

If the stock options vest during the
marriage, it is CP.

40
Q

Stock option exercisable after marriage ends

A

If the stock option is
awarded during marriage but is not exercisable until after the marriage has ended, the following guidelines apply depending on the purpose of the stock option:
1. CP if compensation for past services: The portion earned during the marriage is CP and the CP interest will be
calculated using the Time Rule (above).
2. SP if compensation for future services: The stock option will be SP when awarded to compensate for services performed after the divorce.

41
Q

Personal injury settlements GR

A

The character of personal injury awards as CP or SP hinges on when the tort COA arose. A COA generally arises when the injury occurs.

42
Q

If COA arose before marriage

A

any recovery is SP of injured spouse

43
Q

if COA arose during marriage

A

any recovery is CP BUT court usually awards it to the injured spouse only, so long as they have not been commingles w/ other CP assets.
-Even if commingled, court can determine the “interests of justice” require another disposition, balancing:
1. economic condition and needs of each party
2. time elapsed since recovery
3. all other facts of case
BUT injured party must receive AT LEAST One half of damages

44
Q

if COA arose after divorce or permanent separation

A

recovery is the SP of injured spouse

45
Q

Reimbursement for personal injury settlement

A

If CP or other spouse’s SP was used to pay expenses related to injury, reimbursement is required

46
Q

Personal injury caused by other spouse

A

the SP of the tortfeasor spouse must be exhausted before community property may be used to discharge liability for a personal injury recovery against tortfeasor spouse

47
Q

Fiduciary duties

A

-Full disclosure of material facts
-Good faith and fair dealing

48
Q

Community personal property rules

A

-both have equal power to manage CP
-one spouse can’t gift or dispose for less than fair value
-One spouse can’t sell or convey family furnishings w/out written consent

49
Q

Management + control of community business

A

Managing spouse can make all decisions but must give written notice to sell

50
Q

management + control of community real property

A

-both need to SIGN to sell or to lease for > 1 year
-can’t convey to 3rd party without other spouse consent (presumed valid to BFP)
-if done, spouse has 1 year to void sale (if non BFP can void at any time

51
Q

When CP contributed to other spouse’s SP

A

Gift presumed in some jdxs

52
Q

When CP contributed to spouse’s own SP

A

CP reimbursed greater of amount spent on improvement or increase in value

53
Q

when CP contributed to SP real property

A

CP % = amount CP contributed to principal/total amount of loan.
Then multiply CP% by capital appreciation.
-payments for interest, tax and insurance are excluded

54
Q

SP contributed to other spouse’s SP

A

reimbursed without interest for DIP (down payments, improvements, principal)

55
Q

Stock options short rules

A

-vests during marriage = CP
-If for past services = time rule
-if for future service = SP

56
Q

Disability/worker’s comp

A
  1. CP if used to replace marital earnings
  2. SP if used to replace post-divorce earnings
  3. If intended to replace a pension use the Time Rule
57
Q

severance pay

A

-if replacing retirement benefits earned when married = CP
-if replacing future post-divorce earnings = SP

58
Q

Bonuses

A

-if earned during marriage = CP
-if earned after marriage = SP
-doesn’t matter when paid

59
Q

Education/training acquired during marriage GR:

A

not a community asset/debt even when community pays for it, unless there is a written agreement to the contrary.

60
Q

Education/training right to reimbursement

A

Reimbursement required for CP contributions to education/training that substantially enhanced the earning capacity of the party, with interest, accruing from the end of the calendar year in which the contributions were made.

61
Q

Defenses to education reimbursement

A

Reimbursement may be reduced or denied if:
a. The community already substantially benefited from the
education, which is presumed after ten years;
b. The education is offset by the CP funded education received
by the other spouse; or
c. The education reduced the need for spousal support for the
educated spouse.

62
Q

Life insurance

A

-Whole: lifetime coverage & accumulates cash value = each estate gets % cash value for % premiums paid, multiply SP and CP percentage interest by total cash value of insurance
-Term: Coverage for specified term and no cash value = SP or CP based on latest estate to pay premium

63
Q

Credit acquisitions

A

-During marriage = CP debt
-Intent of lender = rebut CP by showing lender relied on SP
-Earning capacity: If the credit is based on earning capacity, it
is a CP debt because earning capacity is a community asset.

64
Q

Debt liability

A

Community property is liable for all debts incurred before and
during marriage by either spouse, regardless of which spouse has the management and control of the property and which spouse incurred the debt.
-Exception: The earnings of the nondebtor spouse are not
liable for premarital debts of the other spouse if these earnings are held in a separate deposit account over which the debtor spouse has no right to withdraw and the funds are not commingled with other community funds.

65
Q

Federal preemption

A

Under the Supremacy Clause, federal law preempts inconsistent state law when specific types of income or liabilities are designated as the sole property of one spouse under federal law, but they otherwise would be community property under state law.

66
Q

Division at death

A

-1/2 CP/QCP to surviving spouse, 1/2 to estate
-Will: Can devise all SP & 1/2 of CP/QCP
-No will: All CP to spouse, 1/3, 1/2 or all SP to spouse, depending on survivors

67
Q

Domestic partnerships

A

treated exactly the same as married persons in California.

68
Q

Requirements for an enforceable premarital agreement

A
  1. must not promote divorce
  2. signed writing
  3. voluntarily made (presumed involuntary unless court finds ALL of the following: 6. Post 2001 – CA Premarital Agreement Act Amended Section 1615
    a) GR: An agreement is presumed involuntary unless the courts find ALL of the following:
    (1) The person was represented by independent counsel, unless advised to seek independent counsel and it was waived in writing;
    (2) the parties had AT LEAST 7 days to review the agreement before signing;
    (3) The party, if not represented by counsel, was fully informed in writing of the terms of the agreement and the rights they were giving up in a language in which they are proficient; AND
    (4) The agreement was not executed under duress, fraud or undue influence and the parties did not lack capacity to enter into the agreement.

Can invalidate for unconscionability

69
Q

Premarital agreement and child support, spousal support

A

-child support cannot be waived
-spousal support CAN be waived if
1. independent counsel represented spouse at time agreement was signed and
2. provision is not unconscionable at time of dissolution

70
Q

Joint title

A

joint title trumps tracing for real and personal property, but tracing always allowed for jointly held bank accounts

Community Property (1 decks)

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