Pg 6

Question 1

What is the Pereira Approach method of apportioning the enhanced value from an SP business?

Answer 1

The court takes the original SP investment and gives a reasonable rate of return over the years of marriage, and adds those together to be the SP. The rest is CP that is owned legally by both spouses. But the business stays the SP of the ownership spouse.

Question 2

In a nutshell, what are the Pereira approach and the VanCamp approach to apportioning the enhanced value from an SP business?

Answer 2

– Pereira approach: reasonable rate of return method. Favours the community
– VanCamp approach: reasonable value of services method. Favours the owner spouse

Question 3

What is the rate of legal interest that is given in the Pereira approach to the enhanced value of an SP business?

Answer 3

10% unless a different rate is proven to be appropriate

Question 4

What is the rationale behind the Pereira approach to an SP business enhancing in value during a marriage?

Answer 4

Marital labour is a community contribution

Question 5

What would be an example of when you would need to use either the Pereira approach or the VanCamp approach?

Answer 5

If SP funds were used from an inheritance to start an SP business, which profited from the owner’s labour during the marriage

Question 6

When is the Pereira approach preferred?

Answer 6

If the owner spouse’s effort was the major cause of the increase in value. If the increase was due to his skills, efforts, and talents during the marriage

Question 7

How do you discuss the Pereira approach on an essay?

Answer 7

“If the increase in value can be attributed to community efforts, then this approach is used. Using this method, the court apportions the profits of the SP business by allocating a fair return on that investment and gives the excess to the community. Using Perera, wife would be entitled to her original ($ dollar amount) investment plus a reasonable rate of return for the years of (# married years) marriage. After subtracting any value already gotten by the community, the remainder would be CP and would get divided equally between the husband and wife. This method favours the community.”

Question 8

What is the VanCamp approach to the increased value of an SP business?

Answer 8

The court considers the reasonable market value of the services given by the owner spouse and allocates a reasonable salary to the community for his efforts during the marriage, then subtracts that amount from any salary he already got, and that is the CP share. The rest is the SP of the owner. This favours the SP spouse

Question 9

When is the VanCamp approach preferred?

Answer 9

If the original SP investment was the cause of the increase in value. The increase was due to economic circumstances or something other than community effort

Question 10

How would you discuss the Vancamp approach on an essay?

Answer 10

“If the increase in value resulted from the business itself and not the labor of the owner spouse, then the VanCamp method is used. Under this method, the court determines the reasonable value of the spousal services [via a comparison with someone similarly situated] and allocates this as a CP. After subtracting any salary already gotten by the owner spouse, the remainder is SP. This method favors the SP owner spouse.”

Question 11

How should you always finish any essay where you have talked about the Pereira approach and the VanCamp approach?

Answer 11

“The court is free to choose one of these methods, to combine them, or to use a method it deems fair. It appears that the increased value of the business was due to __________ (either the time/skill/effort or an increase in value of something outside of the spouse’s control), so it is likely the court will use ___________ method (Pereira or VanCamp).”

Question 12

In what situation do you discuss the Pereira approach and the VanCamp approach?

Answer 12

When you’re trying to figure out the apportionment for an SP business that increased in value during the marriage

Question 13

If an SP business enhances in value due to the non-owner spouse’s labour during the marriage, what happens?

Answer 13

– If the non-owner spouse was already fully compensated through salary: there is no additional CP interest in the business, so all profits stay SP for the owner spouse
– If the non-owner spouse was not compensated: either the labour was intended to be a gift to the owner spouse, or the community must be reimbursed for the portion of increased value due to the non-owner spouse’s labor. Ie: if the non-owner spouse manages a store that is owned by SP of the owner spouse and doesn’t get a salary, those efforts are CP if they are not meant to be a gift. So the increased value of the SP due to the CP labour is apportioned to the community

Question 14

What happens when a CP business enhances in value during the marriage due to post separation labour before the actual divorce?

Answer 14

The marital community ends at permanent separation, and at that point all time/skill/efforts of each party become SP, not CP. So there are two possible approaches to apportion the enhanced value after marriage due to one spouse’s SP efforts:
- reverse Pereira:
– reverse VanCamp:

Question 15

When do you use reverse Pereira and reverse VanCamp on an essay?

Answer 15

When a CP business continued to increase in value after separation of the couple due to one spouse’s efforts

Question 16

What do you say on an essay if you’re going to use reverse Pereira and Vancamp?

Answer 16

“In California, a marriage ends when either spouse intends to permanently separate. The marriage ended on __________ (date) when husband intended to permanently separate. From the time the marriage ended until the divorce court divided the property, when the wife continued working for the business, her labour was her SP.“

Question 17

What is the reverse Pereira?

Answer 17

CP investment plus reasonable rate of return on it is allocated as CP with the remainder being SP.

ESSAY: “If the increase in value is attributable to one spouse’s effort during the post separation interval, that effort is considered a separate effort, and the resulting increase in value is SP. Here, husband and wife owned the business, but only W worked it.“

Question 18

What is the reverse VanCamp approach?

Answer 18

The reasonable value of the spouse’s services after marriage minus any value already given to the spouse is SP, and the remainder is CP

Question 19

What happens when purchases that were made on credit during the marriage have increased in value, such as a house?

Answer 19

This is called an enhanced credit acquisition. There’s a rebuttable presumption that property acquired on credit during marriage is CP. The character of the property is determined by the intent of the seller or lender in relying primarily on either SP of the purchaser or a community asset. This presumption can be overcome by showing the lender intended to rely on one spouse’s SP and did in fact do so. Without satisfactory evidence of the lender’s intent, the general presumption prevails. If the lender relied on both SP and CP, there is no apportionment

Question 20

What happens when the value of real property enhances during the marriage?

Answer 20

The spouses get a pro rata ownership interest in the property or reimbursement of funds that were used to pay down the mortgage.