Community Property Flashcards
Separate and CP- statutory definition
Separate Property:
- property owned by either spouse before marriage
- property acquired during marriage by gift, will or inheritance
- property acquired during marriage with the expenditure of separate funds
- rents, issue, and profits derived therefrom
Community Property
- property other than SP acquired by either spouse during marriage
community Property Pesumption
All assets acquired during the marriage are presumptively community property
Statutory CP definitions apply unless…
the character of an asset has been altered by:
- parties agrement
- parties conduct
- how title was taken
When does the Economic community End
- permanent physical separation and
- intent not to resume marital relationship by at least one party
- maintaining facade of marital relationship does not show requisite intent
How is CP handled on Divorce?
Generally:
- divided equally , asset by asset
- however, the economic circumstances exception allows a non pro ratta division for certain assets (one spouse gets the asset, the other is cashed out) like home, close held corp…
Statutory Exception:
- where one spouse misappropriates CP
- educational debts
- tort liability not for benefit of community
- personal injury award (cp, but you keep it on divorce)
- negative community- where liabilities exceed assets, who can pay for them?
Lifteime and testamentary gifts of CP
Lifetime: no gifts of CP without the other spouse’s written consent; or else the other spouse can set aside gift or recover offsetting CP on divorce
Testamentary: each spouse can dispose of 1/2 cp on death
- however, widows election
Acquisition of Credit During Marriage (rules)
- Funds borrowed during marriage are presumptively CP (community credit presumption)
- However, they are classified according to the primary intent of the lender; did the lender rely on cp or sp to give the loan
Premarital Agreement to alter character of an asset
General rule: In writing, signed by both parties.
Exceptions:
An oral agreement that is fully performed
Estoppel based on detrimental reliance
Defenses to Enforcement:
Not signed voluntarily: party must be represented by idependent legal counsel; be given 7 days to sign; and, if not represented, be fully informed in writing of the terms and basic effect of agreement.
Unconscionability:
Spousal support: unenforceable unless represnted by independent legal counsel at ttime signed OR provision was unconscionable at time of enforcement
Anything Else: unenforceable if unconscionable when made AND (i) no full and fair disclosure of other party’s assets; (ii) right to disclose not waived in writing; and (iii) party challenging had no adequate knowledge of other party’s property or financial circumstances
Transmutations
martial agreement to chane character of assets
- pre 1985- oral transmutations were permitted
- post 1985 must be in writing, signed by the spouse whose interest is adversely affected, and explicitly state the chagne
Effect of how title is taken
Presumption of joint and equal form (both spouses names on title
- lucas (death)- taking tile in joint and equal form, CP
- anit lucas (divorce) - taking tile in joint and equal form
- ownership- cp
- reimbursements- property is CP but can get reimbursements for SP spend on down payment, improvements, and principal
remenber, all this only applies in situations where title is taken in joint and equal form
installment puchase pre-marriage; debt paid down with CP during marriage
Proration rule
Principal debt reduction from CP/purchas price = amount CP
Community funds used to improve SP
Improvements became part of the property (law of fixtures) thus CP payments do not change character
But, communty can get reimbursed for the greater of CP expenditure or increase in Value
but, courts are split in one spouse spends CP on the other spouse’s SP; some allow reimbursement (presume it was a gift) others dont
so if you are feathering your own nest, the community has a right to reimbursement, but if you are feathering your spous’es you might or might now
Comingled Bank Accounts
mere comingling does not transform SP into CP, but the burden of proof is on the SP spouse to show that each asset was purchased with SP
- family expense presumption; presumed to be purchased with CP
- Exhaustaion method: show that ll CP was spent (so purchases must have been SP)
- Direct Tracing/quick-in-quick-out method: if SP is last in it is probably first out, if done quickly
SP business increases in Value during marraige: SP or CP/
discuss both theories
- pereira (personal skills and effort):
- if spoue’s time and skills were responsble for growth
- then pay interest on SP and the rest is CP - Van Camp (valuable investment)
- if investment was major factor
- then CP for spouse’s services at a reasonable rate minus family expenses, and the rest is SP
Pension Benefits
Generally CP, so
years service married/total years employed = CP portion
- two options to pay 1 if and when received and 2 cash her out
this does not apply to disability benefits (those are wage replacement, so classified according to when received)
