Rules

Question 1

Basics

Answer 1

California is a community property state. All property acquired during the course of a marriage is presumed to be CP. All property acquired before marriage or after separation is presumed to be separate property. In addition, any property acquired by gift, devise, or bequest is presumed to be searpate property

Question 2

Quasi community property

Answer 2

Quasi-community property is property acquired by either spouse that would have been community property had it been acquired under the same circumstances in California.

Question 3

Tracing

Answer 3

To determine the character of an asset, a court will trace back to the source of the funds used to acquire it. A mere change in the form of an asset does not change its categoriztaion.

Question 4

Distribution of CP and SP at divorce

Answer 4

At divorce, community assets are divided in kind, unless some special rule governs or the spouses agree otherwise. Each spouse retains their SP. Community property is divided equally. Quasi-community property is treated as community property.

Question 5

Transmutation

Answer 5

During marriage, spouses may change (transmute) the status of their property. A transmutation must be made in a written express declaration that is consented to or accepted by the spouse whose interest is adversely affected and expressly declare that a change in the ownership of the property is being made.

Question 6

Personal injury awards

Answer 6

CP if the cause of action arose during marriage, SP if before marriage or after separation. At divorce, CP personal injury awards will be awarded entirely to the injured spouse unless the interests of justice require otherwise. Personal injury awards against the other spouse are always the SP of the injured spouse.

Question 7

Retirement benefits

Answer 7

CP if earned during the course of marriage

Question 8

Disability and workers comp

Answer 8

Either CP or SP depending on wages they were designed to replace. Classified based on when they are received. To the extent disability benefits are taken in lieu of retirement benefits, they are treated as retirement benefits

Question 9

Severance pay

Answer 9

Courts split; some courts classify based on when earned, others based on when received.

Question 10

Stock options

Answer 10

Treated as CP or SP depending on when and why they were earned.

If stock options were awarded to reward employee for past services, court should employ Marriage of Hug proration formula: (years from date of employment to date economic community ends)/(years from date of employment to date options become exercisable)

If stock options were awarded to encourage employee to remain, court should use Marriage of Nelson proration formula: (years from date options are granted to end of economic community)/(years from when date options are granted to when they become exercisable)

Question 11

Business and goodwill

Answer 11

CP if earned during marriage.

Goodwill is the difference of the total value of a business or profesional practice and value of its physical assets.

Question 12

Education

Answer 12

Not CP but the community may be entitled to reimbursement if CP funds were used to pay for education/training and the education enhanced the earning capacity of the spouse.

However, the community may not be reimbursed if the CP has already benefited from the education or training (for at least ten years), if the other spouse has also received community funded education, or the need for spousal support is reduced by the education.

Question 13

Property acquired with both CP and SP

Answer 13

When property is acquired with CP and SP funds and no title presumption applies, the community and separate interests are determined by apportioning their respective contributions.

Question 14

Using CP to benefit other’s SP

Answer 14

When a spouse uses CP to benefit the SP of the other spouse, a gift is persumed

Question 15

Using CP to benefit own SP

Answer 15

When a spouse uses CP to benefit the spouse’s own SP, the CP is entitled to reimbursement (the cost of the improvement or the increase in value of SP, whichever is greater).

Question 16

Joint title (at death)

Answer 16

At death, Lucas applies. Under Lucas, when a married couple takes title in joint and equal form, it is inconsistent with the preservation of a separate property interest in the asset. Any SP used to acquire the asset is presumed to be a gift of the SP unless there is an oral or written agreement to the contrary.

Question 17

Joint title (at divorce)

Answer 17

At divorce all property taken by a married couple in joint form is presumed to be CP. Any SP used to acquire the property does not give the SP a pro rata ownership interest, but the spouse who contributed the SP is entitled to reimbursement without interest for contributions to downpayments, improvements, or payments going to principal (DIP)

Question 18

CP labor used to enhance value of SP business

Answer 18

When community labor is used to enhance the value of an SP business, the community is entitled to share in the increased value of the SP business.

Question 19

Pereira

Answer 19

Pereira accounting is used when the increase in value of SP business is primary the result of COMMUNITY LABOR. Using Pereira, determine the value of the SP at the beginning of the business and give it a fair rate of return over the course of the marriage. Normally, this is the legal interest rate (10 percent simple interest) annually. the SP is given the initial value plus the fair rate of return and the remainder is CP

Question 20

Van Camp

Answer 20

Van Camp accounting is used when the increase in value of a business is primarily the result of the unique nature of the SP asset. Determine a FAIR SALARY for COMMUNITY LABOR and multiply by years of marriage. Subtract any salary already received and any amounts paid for the community expenses. The result is the CP and the rest is SP

Question 21

Reasons to deviate from equal division of CP

Answer 21

misappropriation by spouse
liabilities exceed assets
educational debts are assigned to spouse who received education
tort liabilities assigned to tortfeasor spouse if liability was not for benefit of community
family home may be awarded to person granted custody of minor children

Question 22

Distribution at death

Answer 22

At death the decedent can devise all of their separate property and half of the community property.

If spouse dies without a will, the surviving spouse is awarded the decedent’s share of CP and 1/3 of the decedent’s SP, depending on whether there are children or parents surviving.

Question 23

Management

Answer 23

In general, during the marriage, spouses have equal management and control of the community assets.

Question 24

Economic community begins/ends

Answer 24

The marital economic community begins at marriage and ends at one spouse’s death or on the date of separation (a complete and final break in the marital relationship).

Question 25

Termination of martial relationship

Answer 25

Termination of marital relationship requires a spouse to express an intent to end the marriage and conduct consistent with that intent.

Question 26

Debts incurred during marriage

Answer 26

All CP and the debtor spouse’s SP are liable for debts a debtor spouse incurred during the marriage but the SP of the nondebtor spouse is not liable for debts a debtor spouse incurred during the marriage

Question 27

Child support

Answer 27

A spouse’s child support obligation from a prior relationship is treated as a debt incurred before marriage

Question 28

Professional degree earned during marriage

Answer 28

A professional degree earned during marriage is not divisible at divorce and the community does not have an interest in it

Question 29

If written title to a property is taken in a form inconsistent with funds used to purchase it

Answer 29

If written title to a property is taken in a form inconsistent with funds used to purchase it, an intent to change the character of the property to form evidenced by the written title is inferred

Question 30

Spouse’s torts

Answer 30

A person is not liable and his SP may not be reached for his spouse’s torts except in cases where he would be liable if marriage did not exist.

Question 31

Separately owned capital

Answer 31

Rents and profits form separately owned capital, generated without applying community later are SP and can be traced to separate capital. The fruit of SP will remain SP unless there was a transmutation.

Question 32

Gift of CP

Answer 32

A spouse may not make a gift of CP to a third party without the written consent of the other spouse.

Question 33

Putative spouse

Answer 33

A putative spouse is not lawfully married but has an objectively good faith belief that she is lawfully married.