Liability of Community Property Flashcards
Whwat is the definition of debt for purposes of liability of marital property?
A debt includes a K, tort or other obligation, such as child or spousal support from a prior marriage
when is a debt considered to be incurred?
A debt is considered to be ‘incurred’ at the time a k is made, a tort occurs, or an obligation arises.
How long does the liability for debt last?
The liability for debt lasts ‘during marriage,’ which excludes the period during which the spouses are living separate and apart before a judgment for the dissolution of marriage is granted.
Is there a right to reimbursement of debt?
Yes; regardless of which spouse used property to satisfy a debt, and whether or not it was voluntary, there is a right of reimbursement–unless the spouse who is favored has expressly waived that right.
What is the statute of limitations for reimbursements of debt?
The statute of limitations to exercise the reimbursement right is three years from the date that the spouse who is exercising the right has knowledge of the debt satisfaction, or form the date of the spouse’s death. The court will also grant reimbursement, when appropriate, for debts satisfied after the separation but before the trial.
What are the basic principles of characterizing debts as community or separate?
Rather than characterizing debts as community or separate, the CA system allocates responsibility of ‘liability’ for debts between the CP and each spouse’s SP. The major goal is to ensure that there is property available to meet the obligations of the spouses.
What is the basic principle for liability of the community estate?
The first basic principle is that the community estate (which includes CP and quasi-cp) is liable for debts incurred by either spouse before or during the marriage. It does not matter whether one or both spouses incurred the debt.
How can CP earnings be protected from liabilities to the community estate?
To protect CP earnings from liability, a non-debtor spouse must deposit her earnings into a separate bank account from which the other spouse has no right of withdrawal. Finally, a creditor can reach CP only if a spouse incurred a particular debt or it5 was assigned t5o him at divorce or separation.
`What5 is the basic principle of liability of a spouse’s SP?
A spouse’s SP is liable for debt5s t5hat5 she incurred before or during the marriage, but not for the other spouse’s debts. Also, SP liability follows the spouse who incurred the debt.
What are the exceptions to the basic principles of liability on the community estate and SP?
A married person is personally liable for debt incurred for the ‘necessaries of life’ (living expenses) while the spouses are living together and for the ‘common necessaries of life’ while the spouses are living apart.
What does it mean for a married person to be personally liable for the living expenses while the spouses are living together?
Personal liability means that all of the person’s property, both community and separate, is liable for the other spouse’s debts. Upon divorce, the non-debtor spouse can remain personally liable only if it is assigned to him by court, but such an assignment does not erase the personal liability of the debtor spouse. However, when a spouse is not personally liable, his property will not be subject to the debt upon divorce.
What does it mean that spouses are responsible for the ‘common necessaries of life’ while the spouses are living apart?
“necessaries of life” are defined as living expenses consistent with the spouses’ station in life, including food, clothing, shelter and medical expenses. “Common necessaries of life” are defined as expenses that are required to sustain life. If the debtor spouse had SP or CP funds available at the time the debt was paid, the the non-debtor spouse can be reimbursed for any SP funds used to pay for the debtor spouse’s necessaries.
How is child and spousal support generally approached?
A child or spousal support obligation of a married person that does not arise out of the marriage shall be treated as a debt incurred before the marriage. This means that the community estate will be liable for the debt unless the non-debtor spouse shields his earnings.
But if a non-debtor spouse does not shield his earnings, then the community estate is liable for the debtor spouse’s child or spousal support obligations The non-debtor spouse can seek reimbursement for the community estate from the debtor’s SP, but only if the debtor spouse had separate income at the time that could have been used to pay the debt.
Why is child and spousal support treated like debts incurred before the marriage?
Treating child and spousal support obligations as debts incurred before the marriage manifests a policy of ensuring that children and spouses of prior marriage will not be disadvantaged by a parent or ex-spouse marrying. Children and ex-spouses are protected by liability for support obligations being placed on the community estate and the SP of the parent and ex-spouse.
When is the community estate subject to tort obligations?
The community estate is subject to the tort liability of either spouse depending on the nature of the tortfeaser’s actions at the time of the tort. This rule does not apply if the liability is satisfied out of insurance proceeds.
If only one spouse is the tortfeasor, and they were acting for the benefit of the community (like taking the kids to school), then the liability is satisfied from the community first, then the tortfeasor’s SP.
BUT, if the tortfeasor was not acting for the benefit of the community (driving to his mistress’ house), then SP must pay first.
