from Essays

Question 1

Transmutation

Answer 1

During marriage spouses may change the status of (transmute) their property
to be valid:
1. a transmutation must be made in writing and expressly declare that a change in the ownership of property is being made and
2. it must be consented to or accepted by the spouse whose interest is adversely affected

Question 2

SP Buisness value increased by Spouses labor during marriage

Answer 2

2 Accounting methods:
1. Van Camp - managing spouses services valued at ongoing market salary for such services less family expenses paid from business earnings the remainder of which is CP, the rest of the business is SP. Generally used when character of the separate business is responsible for growth/productivity.

2. Pereira - start with separate capital and impute fair rate of return (10%), SP is capital plus fair rate of return times number of years business was in operation and managed by spouse during th emarriage, remainder is CP. Generally used when management by spouse was primary cause of growth or productivity of initially separate business.

Question 3

Credit

Answer 3

1. personal credit of each spouse is presumptively CP
2. Overcome presumption look at what the lender primarily relied on a spouse’s SP in granting the loan.

Question 4

CP funds used to improve Spouses SP

Answer 4

Community entitled to reimbursement of its contribution and a pro rata proportion of the property’s appreciation

Question 5

Opener

Answer 5

• California is a community property state.
• Property acquired before marriage or after dissolution of marriage is SP
• There is a presumption that property acquired during marriage is presumed to be CP
• That presumption can be overcome by the following property types
• Property recieved by gift, bequest, device, or descent
• The rents issues and profits of SP
• and property aquired in exchange for SP
• Generally, increases to SP remain SP and increases to CP remain CP

Question 6

Transmutation

Answer 6

Simply titling property in one person’s name is insufficient to determine if the property is CP or SP.
To validly change status of property during a marriage there must be:
* transmutation must be in writing and consented to or accepted by the spouse whose interest is adversely affected. Writing must state that a change in ownership of property is being made.

Question 7

Tracing

Answer 7

When SP funds are comingled with CP, owner of SP can trace SP funds through either Exhaustion Method or Direct Tracing. Any available community funds are presumed to have been used first to pay for family expenses

Question 8

Ex

Direct Tracing Method

Answer 8

• show at time asset was purchased there were sufficient separate as well as community funds available and they intended to use those separate funds to purchase an SP asset.

Question 9

Exhaustian Method

Answer 9

SP proponent may show at the time they purchased the asset the community funds had already been exhausted by payment of family expenses.

Question 10

Disability Pay/workers comp

Answer 10

classified by when received.
* To extent pay is intended to replace marital earnings it is CP
* to extent pay is intended to replace separate post-divorce earnings it is SP.
* It is immaterial that the right to receive the benefits may have been earned during marriage or purchased with community funds.

Question 11

End of community

Answer 11

Marital exonomic community cannot be terminate dby living apart unless one spouse expresses an intent to end the marriage and demonstrates conduct consistent with that intent.

Question 12

Breach of Fiduciary Duty

Answer 12

Both Spouses have fiduciary duty to eachother to act in good faith and fair dealing in the management and control fo CP
Deliberate misappropriateion of the other’s interest in property - ct can make an award or offset against wrongdoer’s 1/2 share of remaining property.
During a distribution, each party must disclose all assets and failure to do so could result in sanctions.

Question 13

Debt Incurred

Answer 13

Debt incurred during a marriage all CP and debtor’s SP laible for debt.
SP of other spouse typically not liable

Question 14

Tracing

Answer 14

1. The owners of SP funds commingled with CP funds may trace the funds through either the exhaustian method or direct tracing
2. Exhaustian Method: SP proponent must show that at the time the asset was purchased the community funds in the commingled account had already been exhausted by payment of family expenses. Payment of family expenses is presumed to be paid first by CP then SP.
3. Direct Tracing - SP popronent must show that (1) there were sufficient separate funds available, and (2) they intended to use those SP to purchase the asset. Title helpful but not sufficient.

Question 15

Pensions

Answer 15

Retirement pensions are CP only to the extent that the right to benefits was earned DURING marriage. immeterial if benefits received after divorce

Time rule for pensions earned both during and after marriage - years of employement while married/total years of employment.

can do if and when recieved or cahs out.

Question 16

Personal Injury

Answer 16

Cause of action for personal injury arises at the time injury is inflicted
if during marriage then CP
At divorce PI damages awarded entirely to the injured spouse unless interest of justice (including economic need) prevail. Community state PI damages lose special character and are treated as ordinary CP only if commingled with other CP.

Question 17

Community Contributions to SP: Mortgage

Answer 17

when CP is made to pay off morgage for SP the community establishes a proportional ownership interest in the property to the extent it reduces the principal debt.

Mortgage interest, insurance and taxes do not count.

Appreciateion of the property is allocated in proportion to each estate’s ownerhsip interest.

When court divides CP upon divorce each spouse is entitled to half.

Question 18

Tricky types of Property: business goodwill

Answer 18

CP

Question 19

Tricky Types of Property: Disability Pay

Answer 19

CP- to extent replacing marital earnings,

Question 20

Marital Economic Community

Answer 20

Begins at marriage and ends at one spouse’s death or on the date of separation.

Date of separation shown by: Intent not to resume the marital relation (only one party
AND
Conduct consistent with that intent.

Permanent physical separation sufficies but is not a requirement.

Question 21

Exceptions to splitting CP down the middle for divorce

Answer 21

Economic Circumstances Exception: give asset to one spouse and cash out the other (family house, closely held shares of courp, pension)

Statutory exceptions:
misappropriation -fiduciary duty to sspouse in management and control of CP

Educational Debts- separate debt.

Tort liability not based on activity for benefit of community

personal injury award, CP but on divorce awarded to injured spouse barring interests of justice

Negative community - ability of spouses to pay debt considered.

Question 22

Joint Title Taken

Answer 22

**Death: **Lucas: Joint title taken: presumptively CP unless contrary agreement established no separate ownership interest and no claim for reimbursement.

Divorce: Anti lucas - Property aquired during marriage in joint and equal form is presumptively CP subject to equal devision but can be rebutted by : express statement in the deed or written agreement between parties that it is SP.
For purposes of division on divorce: Spouse who made contributions of SP to the acquisition or improvement of CP is entitled to reimbursement without interst for contributions to down payments, improvements or payments to principal on mortgage: DIP

Question 23

Mortgages

Answer 23

If made before marriage and CP funds used to pay off purchase then proration rule applies

Commuity estate is entitled to a proportional ownership interst to the extent that community payments reduce the principal debt.

Appreciation is allocated in proportion to each estate’s ownership.

CP share mesaure by the amount the principal is reduced using community funds excluding mortgage interest, insurance and property taxes.

Question 24

Life Insurance: Whole

Answer 24

CP in proportion tot he percentage of premiums paid by the community. in death apportioned according to the premiums paid by each estate and ownership of remainder of the proceeds should be determined by the final premium rule.

Question 25

Reimbursement Rules

Answer 25

CP for your SP: No presumption of gift, Community is entitled to either reimbursement for cost of improvement or the amount by which the improvement increases value of the asset whichever is greater

CP for spouses SP: traditionally gift assumed and can only be overriden by evidence of agreement to reimburse but some reject this and reimburse community.

SP to improve SP - contributing spouse entitle d to reimbursement wihtout interest or appreciation

SP to improve CP = anti Lucas Statutes - death presumptive CP unless written agreement no reimbursment, divorce - presumptive CP reimbrsment available for DIP

Question 26

Businesses owned/stock portfolilos before marriage increases in value during marriage

Answer 26

Courts may select either formula

Where character of business was major reason behind growth of business then Van Camp :
* services of spouse who is working for the businesses are valued using the going market salary
* family expenses deducted from market salary
* remainder is CP, rest of business is SP

Where business growth was from spouses contributions then Pereira (personal skills):
* Separate capital plus a fair rate of return theron (10 interest on principal) remainder is CP.

Question 27

Social Security and U.S. Savings Bonds

Answer 27

SP

Question 28

Stock Options

Answer 28

if it vests during marriage CP but if awarded but not vested during marriage thn portion considered CP determined by using proration rule based on primary intent of the employer in granting opeion (past or future services).

iF past performance: Hug
years from date of employment to the date economic community ends/ years from **date of employment **until options become exercisable.

If future then Nelson:
years from date options are granted ** until economic community ends/date options are granted until they become exercisable.**

Question 29

Education

Answer 29

Loans to the loan holder
reimbursement if CP for education or loans related thereto and education or training substantially enhances earning potential

Equitable defenses - CP already substantially benefitted from training: presumed if more than 10 years elapesed; spouse also received community funded edu; need for spousal support reduced as result of ed training.

Question 30

Creditor’s rights

Answer 30

creditor may reach any property over which debtor has legal right of management and control.

Quasi Cp treated as CP

One spouses SP cannot be reached to satisfy the other spouses separate debt

Exception doctrine of necessities - food clothing medical bills.