Joint Titles and Divorce Flashcards
What are the 3 types of Joint Titles
- Joint Tenants
- Tenants in Common
- Community Property
Joint Tenancy
Each spouse has an undivided ½ interest in the property as their SP
At death - entire property goes to surviving spouse
At divorce – court will divide as if community property at request of either party
Creditors – non-debtor’s ½ may be immune from creditors of the other, after death you are completely immune from creditors
Tax – disadvantage at death, stepped up basis in ½ only
Characterization and Analysis of Jointly Titled Property
Death or Divorce:
i. If divorce – joint tenancy property acquired during marriage presumed to be CP
ii. If death – joint tenancy property acquired during marriage presumed JT
Step 1: How is the Property Characterized (SP, CP, are mixed)
i. Look only to the title and any agreements by the parties
ii. Only proceed to Step 2 if you determine that it is all Community Property
Step 2: Remedy for SP Proponent
i. Look to funds for remedy for the SP contributor
ii. Don’t apportion appreciation, that belongs to community
Property Acquired Pre-1984
In re Marriage of Lucas
Step 1: Characterize the Property
If titled CP, Joint Tenancy or Tenancy in Common, presumed to be CP at divorce
1. Can rebut this presumption by oral, written, or implied agreements
2. Cannot rebut by tracing to source of funds (we require something greater because they went to the effort to jointly title)
If there is no agreement, then it remains CP
If there is an agreement, then it is either the SP of one spouse or part SP/part CP (Only move to Step 2 if characterized all CP)
Step 2: Remedy for SP Contributor
Only get reimbursed for SP contribution if there was an agreement to reimburse
1. If no agreement, SP contribution is considered a gift to community
Any appreciation is split 50/50
In re Marriage of Lucas
H and W buy house in 1968, W pays down payment using SP, they take out loan for remaining balance in both names. Loan is CP. Title taken in joint tenancy. W pays for improvements using SP and rest of expenses are paid by CP. Later, they divorce
Holding: Residence bought with part SP and part CP that is titled as joint tenancy is presumed CP, unless there is an agreement to the contrary. There is no agreement for reimbursement, so SP contribution is a gift to the community.
Property Acquired between 1984 and 1987
Step 1: Characterize the Property
If titled CP, Joint Tenancy or Tenancy in Common, presumed CP at divorce
1. Can rebut CP or Tenancy in Common by written, oral, or implied agreements
2. Can rebut Joint Tenancy by written agreement only
If there is no agreement to rebut, then it is CP
If there is an agreement, it’s either SP or part SP/CP (Only move to Step 2 if characterized all CP)
Step 2: Remedy for SP Contributor
Get reimbursement automatically (based on tracing to SP funds) unless SP contributor has waived the right to reimbursement in writing
1. If traced to SP funds, SP contribution reimbursed
Any appreciation is split 50/50
Property Acquired 1987 or Later
Step 1: Characterize the Property
If titled CP, Joint Tenancy or Tenancy in Common, presumed CP at divorce
1. Can rebut presumption (for all of them) by written agreement only
2. No implied or oral agreements
If there is no agreement to rebut, then it is CP
If there is an agreement, it’s either SP or part SP/CP (Only move to Step 2 if characterized all CP)
Step 2: Remedy for SP Contributor
Get reimbursement automatically (based on tracing to SP funds) unless SP contributor has waived the right to reimbursement in writing
1. If traced to SP funds, SP contribution reimbursed
Any appreciation is split 50/50
Reimbursement
SP contributor can be reimbursed for:
1. Funds used to purchase property
2. Down payments
3. Payments for improvements
4. Payments to reduce principal of a loan used to finance a purchase or improvement
Cannot be reimbursed for:
1. Payments of interest on a loan
2. Payments for maintenance, insurance on, or taxation of property
a. These things are expenses, not contributions
If Property Value is the Same:
1. SP Contributor gets reimbursed for their contribution
- Appreciation is considered CP and is split 50/50
If Property Decreases in Value:
1. SP Contributor gets what they put in, even if that leaves nothing left for CP (SP contributor gets reimbursed for their contribution first
2. If there is a loan, both parties split the loan because that is considered CP
Which law to apply?
We apply the law at the time the agreement was made, not at the time of the divorce
If there is no agreement, apply the law at time property was acquired
Applying Law Retroactively
General Rule – Anti-Lucas legislation (after 1984) cant be applied retroactively, because it would deprive someone of a vested right without due process
How to determine if it can be applied retroactively:
Step 1: Can legislation be applied retroactively to characterization
a. Cannot apply retroactively to divorces filed before 1984, even if divorce isn’t final till after 1984
b. Can apply retroactively to divorce cases filed after 1984 when property is in joint tenancy
i. Because in that case, it is not impairing a vested interest without due process, because Joint Tenancy does not vest until a tenant dies
Step 2: Reimbursement rules can never be applied retroactively
a. Doing so would deprive non-SP contributor of a vested right without due process
Buoul
Retroactivity caselaw
Anti-Lucas statutes regarding characterization cannot apply where divorce proceedings were commenced before Jan 1, 1984 but were entered not final (on appeal) on that date
Fabian
Retroactivity caselaw
Anti-Lucas statutes regarding reimbursement cannot apply retroactively to divorce proceedings that were commenced before Jan 1, 1984
Hilke
Anti-Lucas statutes regarding characterization can apply retroactively to property acquired before 1984 where couple owned a home as joint tenants because the right of survivorship does not vest until one spouse dies and the divorce proceedings were commenced after Jan 1, 1984
Heikes
Rule – Anti-Lucas statutes regarding reimbursement cannot be applied to proceedings that start after Jan 1, 1984
