Pg 10

Question 1

What are the major categories of dispute resolution?

Answer 1

– Management and control of CP
– division of property on separation or divorce
– division of property on death
– pension benefits
– disability benefits
– severance pay
– early retirement benefits

Question 2

After January 1 of 1975, what is the basic rule with regard to management and control of CP?

Answer 2

Equal management and control of all community personal property. Each spouse can make management decisions alone regardless of who is directly responsible for earning the property. Before that, the husband had control over all community personal property except the wife’s comingled CP earnings.

Question 3

What is required for major transactions with regard to CP?

Answer 3

Joint spousal decision

Question 4

What abolished the pre-1975 woman’s presumption?

Answer 4

The family code

Question 5

If property is held in CP form, what is required before one spouse can sell, convey, or encumber the community property?

Answer 5

The other spouse’s written consent

Question 6

What kinds of things can be held as community property?

Answer 6

A family dwelling, furniture, furnishings, fittings of the dwelling, clothing, wearing apparel of the spouses or minor kids, etc.

Question 7

When does one spouse need the written consent of the other spouse with regard to making changes for CP?

Answer 7

Before he can sell, convey, or encumber community personal property used as a family dwelling, or furniture/furnishing/fittings of the dwelling, or clothing/wearing apparel of the other spouse or minor kids that are community personal property.

Question 8

If a wife gets a loan using furniture in the family home as collateral, and she defaults, what happens to the encumbrance on the furniture if the husband did not give written consent?

Answer 8

It is void. The creditor must return the furniture that was taken as collateral

Question 9

Who has access to bank accounts that are held in one spouse’s name?

Answer 9

Only that spouse whose name is on the account has control over the earnings in it. Although it is possible to get a court order for the other spouse’s name to be added to the account

Question 10

What are the rules with regard to gifts of community personal property by one spouse to a third-party?

Answer 10

One spouse cannot make a gift or a sale to a third-party or dispose of community personal property for less than its fair or reasonable value unless he has the written consent of the other spouse. It is not considered to be a gift if valuable consideration is given

Question 11

What are the options for a non-consenting spouse when the other spouse has already made a gift or sale of community personal property to a third party without his permission?

Answer 11

He can ratify the gift or revoke it and sue to recover the property for the community.

If the donor spouse dies, the non-consenting spouse can ratify the gift or void it up to 1/2 of the value and then sue the recipient or the donor spouse’s estate for the other half of the value.

Ie: if the husband gave a friend stock that was bought with CP funds without his wife’s consent and then he died, the wife can either ratify the gift and allow the friend to keep it, or void the gift and sue the friend for half of the value of the stock. If the friend can’t pay because he already sold it, the wife can sue the husband’s estate for half the value

Question 12

How long is the SOL for when one spouse makes a gift or sale to a third party without the written consent of the other spouse?

Answer 12

Three years from the date that the non-consenting spouse got actual knowledge that the gift or sale happened

Question 13

If one spouse is operating or managing a community property business, who has the management and control of it?

Answer 13

The one that is operating and managing the community property business has primary management and control to act alone in all transactions, but he must give written prior notice to the other spouse for major actions like sale, lease, exchange, encumbrance, or disposition of all or substantially all personal property used to operate the business. If he doesn’t give notice, that doesn’t adversely affect the transactions validity

Question 14

Who has management and control of community real property?

Answer 14

Either spouse. But there must be mutual consent through execution of each spouse to sell, convey, or encumber community real property, or to lease it for longer than a year. Either spouse can rent or lease real property for less than a year

Question 15

If title to RP is in the name of both spouses and indicates that they are married, who must participate in the transaction to sell the property?

Answer 15

Both parties and the buyer should know that both are needed to participate in the transaction

Question 16

If title is held in only one spouse‘s name and is not obvious to third parties that the other spouse also owns the property, if the spouse that holds title tries to sell it without the involvement of the other spouse, what happens?

Answer 16

If the third-party is a BFP and doesn’t know about the marriage, there’s a presumption that the transfer is valid. This can be overcome with proof that community funds were used to get the property

The nonconsenting spouse has the right to void the instrument that was executed without him, so the BFP has no right to the property and the community owns it, but the community must repay the purchase price to the BFP.

The SOL is one year for the innocent spouse to file an action to void the unilateral transfer that begins when the buyer files to record the instrument of sale and only applies to BFP transfers without knowledge or reason to believe that there was a marriage or that another signature was needed.

Question 17

Is it possible for the court to order that title be changed to both spouse’s names as owners of real property?

Answer 17

Yes

Question 18

If one spouse deliberately takes community property to the exclusion of the other spouse’s interest in the property, what is that called?

Answer 18

Deliberate misappropriation of CP

Question 19

If a husband knew that divorce was imminent, so he withdrew $100,000 from a CP bank account, what would happen?

Answer 19

The court would order that the husband reimburse the wife for her share of the CP funds

Question 20

What is the remedy if one spouse has deliberately misappropriated CP funds?

Answer 20

The misappropriating spouse has to reimburse the other for the amount that they are entitled to, or 1/2 of the CP. Courts usually just deduct the amount that was misappropriated from the offending spouse’s CP and give it to the innocent spouse. Usually attorney fees and costs are not given. But the court has discretion to give an additional award for existing property to the innocent spouse, although this rarely happens

Question 21

What is the spousal fiduciary duty?

Answer 21

When a spouse undertakes management or control of a CP asset, he is a fiduciary to the other spouse’s interest in the asset because of the confidential relationship between them. This involves a duty of the highest good faith and fair dealing, plus the managing spouse cannot take unfair advantage of the other.

Question 22

The spousal fiduciary duty provides the same rights and duties as those between who?

Answer 22

Non-marital business partners for corporations. The managing spouse must:
– give access at all times to any records kept relating to the CP
– give true and full information of anything affecting CP transactions
– protect the benefits and profits for the CP

Question 23

What is involved in the duty of full disclosure that accompanies the spousal fiduciary duty?

Answer 23

Each must fully disclose and give full access to information about assets and debts of the community.

Ie: if the wife didn’t tell the husband that she got a cash advance on her credit card to buy a car, that is a violation of her fiduciary duty and she must reimburse the husband half of the amount she paid for the car

Question 24

If one spouse gets an advantage over the other spouse in a CP transaction, what is there a rebuttable presumption of?

Answer 24

A violation of the spousal fiduciary duty

Question 25

How can one spouse rebut a violation of the spousal fiduciary duty claiming that he took unfair advantage of the other spouse regarding a CP transaction?

Answer 25

He must show that the deed was freely and voluntarily made with full knowledge of the facts and a complete understanding of the effect of the transfer

Question 26

When does a fiduciary duty between spouses end?

Answer 26

Not until the property is divided at divorce. It still applies during the separation period

Question 27

If one spouse makes an improvident investment choice with regard to community property, does that violate the spousal fiduciary duty?

Answer 27

No. Spouses are not bound to always succeed in marital property ventures, but they must proceed with appropriate regard for the property interests of the other spouse and not take unfair advantage

Question 28

What are the remedies for breach of spousal fiduciary duty?

Answer 28

The court can award 1/2 of the undisclosed or transferred asset, plus attorney fees and court costs. Misappropriation doesn’t get attorney fees or court costs.

If the breach was fraudulent, oppressive, or malicious: the court can give up to 100% of the undisclosed or transferred asset as tort damages. I.e.: if a husband took out $100,000 of CP and hid it offshore lied about it, the wife’s interest in the community funds was impaired, so if the court found that H breached his fiduciary duty, the court could award all $100,000 to the wife