Marriage & Property

Question 1

What are the two systems of marital property that States employ?

Answer 1

1. Common-Law Property
2. Community Property

Question 2

General Rules of Common Law Property System

Answer 2

During the Marriage:

Title Theory System. (Title Rules!)

Each spouse is entitled, during the marriage, to sole ownership and control of their separate property.

The separate property rights of the spouses are NOT impacted by the marriage.

Dissolution of the Marriage:

Due to reform, property in common law states began to be divided equitably.

Courts assessed the spouse’s separate property in order to provide for a financially dependant spouse.

Question 3

What type of marital property state is North Carolina?

Answer 3

Common-Law

Question 4

Describe NCGS § 50-20

Answer 4

§ 50-20. Distribution by court of marital and divisible property.

(a) Upon application of a party, the court shall determine what is the marital property and divisible property and shall provide for an equitable distribution of the marital property and divisible property between the parties in accordance with the provisions of this section.
(c) There shall be an equal division by using net value of marital property and net value of divisible property unless the court determines that an equal division is not equitable. If the court determines that an equal division is not equitable, the court shall divide the marital property and divisible property equitably.

Question 5

Community Property States

Answer 5

1. Arizona
2. California
3. Idaho
4. Louisiana
5. New Mexico
6. Nevada
7. Texas
8. Washington
9. Wisconsin

States adopted UMPA (Uniform Marital Property Act)

Question 6

General Rules of Community Property States

Answer 6

Equality is the main premise of underlying community property.

Reverses the separate property ownership principle under common law and treats individual earnings acquired during the marriage as the joint property of the spouses REGARDLESS of title.

Property in which each spouse has a 50 percent interest because it was acquired during the marriage other than by a gift, will, or intestate succession to only one of the spouses.

Community Property General Rule

Accumulation by one spouse before marriage and a gift or inheritance received by one spouse during the marriage should NOT be included in the community assets.

During an intact marriage in a community property state, a couple may hold three types of property:

• Wife’s separate property (owned solely by her)
• Husband’s separate property (owned solely by him)
• Community property (owned equally by each)

Question 7

How is property managed in a community property state?

Answer 7

Traditionally

Both spouses were equal owners, but the husband managed the community assets under law.

Currently

All community property states have moved from “male management” to sole management, joint management, and/or equal management.

Question 8

What are the characteristics of the Uniform Marital Property Act (UMPA)?

Answer 8

Generally regarded as a community property law

Wisconsin is the only state that has adopted the UMPA

Management and Control rights are based on title

Categorizes property as marital (MP) or individual property (IP)

IP is acquired before marriage or by gift or inheritance from a third party during marriage

IP retains its character if exchanged for other assets

IP appreciation remains IP unless substantial appreciation is attributed to the substantial uncompensated efforts of the other spouse

If IP and MP are commingled, the asset is classified…..

Each spouse has a present undivided 1/2 interest in marital property.

All property of spouses is presumed to be marital and income from any source is designated as marital property

Spouses can alter their community property rights through a marital agreement

Limits a spouses’ ability to gift MP to a third party

Question 9

Uniform Marital Property Act

9A U.L.A. 109 (1987)

§ 4. Classification of Property of Spouses

Answer 9

(a) All property of spouses is marital property except that which is classified otherwise by this [Act].
(b) All property of spouses is presumed to be marital property.
(c) Each spouse has a present undivided one-half interest in marital property.
(d) Income earned or accrued by a spouse or attributable to property of a spouse during marriage and after the determination date is marital property.
(e) Marital property transferred to a trust remains marital property.
(f) Property owned by a spouse at marriage after the determination date is individual property.
(g) Property acquired by a spouse during marriage and after the determination date is individual property if acquired:
(1) by gift or a disposition at death made by a third person to the spouse and not to both spouses;
(2) in exchange for or with the proceeds of other individual property of the spouse; \
(3) from appreciation of the spouse’s individual property except to the extent that the appreciation is classified as marital property under § 14;
(4) by a decree, marital property agreement, written consent, or reclassification under § 7(b) designating it as the individual property of the spouse;
(5) as a recovery for damage to property under § 15, except as specifically provided otherwise in a decree, marital property agreement, or written consent; or
(6) as a recovery for personal injury except for the amount of that recovery attributable to expenses paid or otherwise satisfied from marital property.

Question 10

Transmutation Agreement (Reclassifying the Property)

Answer 10

In both common law and community property states, parties can AGREE to reclassify their property.

Common law states:

An agreement that specific separate property can become marital property and vice versa