Community Property

Question 1

Matrimonial Regimes

Answer 1

A matrimonial regime governs owernship and management of property of married persons as between themselves and toward third persons

Three types:

i. Legal Regime – “Community of Acquets and Gains”, the default system in place for all couples who have not opted out by matrimonial agreement
ii. Contractual Regime – Parties’ contract (prenup or otherwise) by contract excludes them from community of acquets and gains
iii. Modified Legal Regime – modified contract that chooses parts of community acquets and gains regime that they explicitly opt out of.

Question 2

Matrimonial Agreement

Answer 2

Form – made by authentic act (notary and two witnesses) or act under private signature acknowledged by the spouses subsequently authenticated

Minors – unless fully emancipated, minors cannot enter into matrimonial agreement without written consent of parents or parent/tutor with legal custody

Matrimonial Agreement can only be entered into before or during marriage

i. Prenuptial Agreement (Before Marriage) – can freely enter w/out court
ii. Matrimonial Agreements During Marriage
1. Spouses domiciled in LA need court approval that modifies or terminates the legal regime already applying to marriage if upon joint petition, court finds this serves best interests
2. Spouses moving to LA have 1 year after acquiring LA domicile to enter agreement without court approval

Question 3

Legal Regime of Community of Acquets and Gains

Answer 3

“The legal regime of community acquets and gains applies to spouses domiciled in this state, regardless of their domicile at time of marriage or place of celebration of marriage.”

i. Even if both spouses are not domiciliaries of LA, LA choice-of-law may still apply.

Default Interest of Spouses – each spouse owns a present undivided one-half interest in the community property

i. A spouse cannot alienate/encumber/lease an undivided interest in the community or in particular things of community prior to the termination of the regime – these dispositions an absolute nullity
1. Spouse can sell the community asset itself, though

Question 4

Classification of Assets

Answer 4

Property of married persons is either community or separate

Question 5

Principles of Classification of Property

Answer 5

Classification is fixed at the moment of acquisition of the asset.

1. Even if community funds spent to acquire, it doesn’t affect ownership, it just triggers a reimbursement requirement.
2. No Mixed Titles, generally (either community OR separate)
   a. Exception – if spouse acquires an undivided interest in a thing, and later acquires an additional interest in the same thing with community property, the original interest remains separate and the second interest is community
   i. Husband inherits 1/3 house, then couple uses community funds to buy out his siblings = 1/3 separate interest, 2/3 community interest
3. Real Subrogation – when a thing is converted to another thing, the mass of the initial thing is not diminished (trace the assets)
   a. Sell previously acquired real estate to buy stock during marriage, funds used to buy stock and stock itself are separate through real subrogation
4. Estoppel by Deed – if a declaration when property acquired that property was acquired as separate property can be challenged by a spouse unless they concurred in the act OR by forced heirs and creditors of spouses even if spouses concurred
   a. Can create estoppel by deed even after acquisition of the property itself.
   b. If non-gift (onerous title) alienation, encumbrance, or lease to third party, can’t be set aside for falsity of declaration

Inheritance and Donation by Third Party – property individually acquired by a spouse through inheritance or donation is separate (donor’s intent is dispositive)

Question 6

Commingling

Answer 6

a. Commingling of Money/Fungible Assets – if community and separate funds are commingled, the funds do not lose their identity and simply trace.
i. But because of presumption of community, spouse must prove that separate funds were deposited and not withdrawn
ii. Can declare funds “hopelessly commingled”
b. Acquisition of Asset With Commingled Funds – asset acquired with commingled fund is community unless community portion of price is inconsequential compared to separate portion of price
i. Inconsequential = less than 20% of price

Question 7

Classification of Interspousal Donations

Answer 7

“Transmutations”

Transmutation of Community into Separate Property

i. Donation by one spouse to other spouse of his undivided interest that forms part of the community transforms both spouses’ interests into the separate property of the done. Fruits also convert.
ii. General form of donations apply.

Transmutation of Separate into Community Property

i. Transfer by one spouse to the other spouse of separate property with the stipulation that is shall be part of community transforms it to community.
ii. Doesn’t follow general form of donations:
1. Onerous title – must be in writing.
2. Gratuitous title – must be by authentic act
iii. Noncompliance with the form requirement = valid donation, but makes it separate property of the other spouse, NOT community property!

Question 8

Classification of Specific Assets

Answer 8

1. Earnings – property acquired through effort, skill, or industry is community property if effort was expended during existence of regime. Can be pro-rated.
2. Fruits and Revenues of Separate Property are Community
   a. Minerals fall under this rule even though they aren’t fruits.
   b. Spouse can unilaterally reserve fruits/revenues as separate by declaration of paraphernality (by authentic act)
   i. Must give notice to spouse before filing act
   ii. File in situs parish for immovable, domicile of declarant for movable
3. Funds – Earning vs. Fruit – classify funds as earnings to the extent spouse expended effort in generating the funds
   a. Insurance policy renewal commission – community property to extent agent-spouse used effort/skill during existence of regime

Question 9

Classification of special assets –> Corporeal and Incorporeal

Answer 9

Corporeal Assets Acquired Over Time
Credit Sale – Title passes upon agreement ‘on the thing and the price.’ If asset purchased by spouse with down payment of entirely separate funds and remains separate even if community funds pay off the loan.

Bond for Deed Contracts (installment sale) – if early payments before regime and payments during regime, property is community if community funds are not inconsequential

Incorporeal Assets
Pensions – pensions are exception to all-or-nothing classification, and are classified on a pro rata basis.

i. Generally community property to extent attributable to effort expended by spouse during regime
ii. Defined Contribution Plan (401(k)s):
1. At termination of community, a determinable sum is credited to employee spouse. Contributions during community are community share of determinable sum.
iii. Defined Benefit Plan (formula for years of service or salary)
1. Sims Formula – fixed percentage approach – nonemployee’s interest in pension is one half of the “community fraction”. Take community share and divide by community fraction.
a. Numerator: portion of pension gained during community
b. Denominator: total creditable service
2. Hare Exception – extraordinary achievements after regime can change allocation if achievements increase benefits that would otherwise be paid
iv. Pensions and Federal Preemption – if plan subject to ERISA, ERISA preempts all conflicting provisions of LA community property law
1. All Louisiana state pensions (LASERS) are not subject to ERISA
2. Social Security benefits are subject to ERISA and are separate property
3. Pensions can be partitioned even if original settlement was silent; partition is imprescriptible

Personal Injury Damages – damages from personal injuries sustained during existence of community are separate property (includes workers comp)

i. Exception – Damages attributable to expenses incurred by community
ii. Exception – Lost wages are community property, but if community terminated by anything other than death, any lost earnings after termination are separate property

Life Insurance

i. Proceeds – proceeds of policy payable on death are separate policy of beneficiary
ii. Ownership of Policy – policies acquired before marriage are separate, policies acquired during marriage (if consequential) are community
1. Term-life has no cash value, whole-life policy (savings component) has cash surrender value

Disability Payments

i. Nature of payment, not source, is determinative.
ii. If lost income, community if during community, separate otherwise (status when lost income)

Intellectual Property

i. Classified pro rata based on timing
ii. Copyright – only fructus is community, but usus and abusus is separate

Goodwill of Business (reputational assets)

i. Goodwill of a community-owned business is a community asset (with value) except where attributable to personal quality of a spouse

Question 10

Management of Community Property

Answer 10

Generally, each spouse acting alone may manage, control, or dispose of community asset unless otherwise provided. (Equal management.)

i. Does not make each spouse the mandatary (agent) of the other spouse.

Concurrence of Spouses Required – alienation, encumbrance, or lease of immovable, standing timber, furnishings, assets of community enterprise, harvesting of timber

i. Encumbrance Imposed by Law (lien) not subject to concurrence
ii. Business Entities With Legal Personality (corporation) not subject
iii. Only applies to alienation, encumbrance, or lease
iv. Donation to 3rd person requires concurrence, but can make individual gift commensurate with economic position of spouses

Question 11

Termination of Community Property Regime

Answer 11

Death or judgment of death of a spouse

Declaration of nullity of marriage

Divorce of spouse. Termination of community is retroactive to date of filing of pleadings on which divorce is granted

Matrimonial agreement terminating community

Judgment decreeing separation of property

Question 12

Rights and Duties of Spouses to Unpartitioned Former Community Property

Answer 12

Death – General property provisions of co-ownership in indivision apply to unpartitioned community property when regime terminated by death of spouse or where former spouse dies prior to partition

Other That Death – general property provisions do not apply to unpartitioned former community property:

i. Each spouse owns one half undivided interest in former community property, including fruits
ii. Spouse cannot alienate any former community property without concurrence. (Motivation to partition!)
1. Registered movables registered in one spouse’s name exempt
2. Sole manager of former community enterprise exempt
3. Judicial authorization for no concurrence if necessary, in best interest of petitioning spouse, and other spouse absent/incap/imprisoned

Obligation to Pay Rent for Use of Former Community Home – if court gives use, rent cannot be collected by other spouse unless agreed

Partition of Former Community Property

i. Spouse can demand partition any time, other agreements are null
ii. If spouses cannot agree, either can demand judicial partition

Question 13

Classification of Obligations

Answer 13

Obligation incurred by a spouse may be either community or separate

Importance of classifying:Creditors’s rights, Reimbursement, Allocation in the Partition

Community Obligations – those incurred during regime for common interest of spouses or for interest of other spouse:

i. All obligations presumed to be community obligations
ii. Alimentary Obligation (child support) – community obligation if imposed by law on a spouse
iii. Obligation Incurred in Action for Divorce – community, including attorney fees

Separate Obligations

i. Obligations Arising Prior to Legal Regime are separate
ii. Obligations Arising During Legal Regime:
1. If incurred for separate property if not for common interest or not for separate interest of other spouse are separate.
2. Obligations arising from intentional torts not perpetrated for benefit of community are separate obligations.

Question 14

Reimbursement between spouses

Answer 14

Claim for reimbursement asserted only after termination of regime, and shall be made from patrimony of spouse who owes reimbursement

Patrimony of a spouse consists of his share in community and his separate property. Reimbursement not due from net community assets.

Reimbursement is like an interest-free loan, based on value of assets used at the time they were used.

Accession for Spouses: Between spouses, owner of ground owns all improvements. (Different from general property rule.)

Question 15

Types of Grounds for Reimbursement (includes post-termination expenditures up to partition)

Answer 15

One Spouse’s Separate Asset Used for Other Spouse’s Separate Estate

1. Spouse whose property was used is entitled to reimbursement for value property had at time it was used.

** Something Separate Used for Community Purpose**

1. If used during existence of regime or after to satisfy community obligation, spouse is entitled to ½ of value property had at time it was used.
2. Post-Termination Payment of Registered Corporeal Movable – if community obligation incurred to acquire ownership/use of registered corporeal movable, and paid with separate funds after termination, reimbursement claim reduced in proportion to value of claimant’s use after termination, which are presumed to be equal
   a. I.e.; no reimbursement in this circumstance generally
3. Limitations on This Reimbursement
   a. General – liability of spouse owing reimbursement is limited to value of his share of all community property after deduction of community obligations
   b. Exception – full reimbursement permitted when separate property used for family expenses regardless of share
   i. Applies to ordinary/customary expenses and child-related expenses
4. Use of Separate Property to Benefit Community Property – still ½ value property had at time used, but ownership is community

Something Community Used for Something Separate

1. If community property used to satisfy separate obligation, other spouse is entitled to ½ reimbursement of value at time used
2. No limitation on amount of reimbursement due.
3. Use of Community to Benefit Separate Property – entitled to ½ reimbursement, but owner of separate ground owns improvement
4. Exception – Uncompensated Community Labor Expended on Separate Property: if separate property increased in value as result of uncompensated common labor, other spouse gets ½ reimbursement of increase in value attributed to common labor
   a. Also applies if compensation was insufficient.

Special Reimbursement Rules for Family Home

1. If family home is separate property, and community funds used to repay purchase loan, other spouse’s reimbursement claim is limited to the reduction of the principal.
2. Spouse Has Exclusive Occupancy of Home After Termination – spouse cannot be charged rent unless party agrees or court order prospectively imposed this duty

Question 16

When Partition is Allowed

Answer 16

Cannot judicially partition before termination of regime.

Can voluntarily partition before termination. In such a case, things that each spouse acquires from partition are separate property.

1. Does not alter the regime itself, so other property can still be community property.
2. If filed for registry, partition is effective against third parties.
3. Rescission of Voluntary Partition:
   a. Can attack for any ground like a contract (vices of consent)
   b. Lesion – if spouse does not receive at least ¾ of fair market value of his interest in net value of community, can rescind voluntary partition for lesion. (At least 37.5% of a 50-50 partition)
   c. Liberative Prescription – 5 years from execution for lesion, all other grounds 5 years from date of discovery of truth

Question 17

Procedure for Judicial Partition

Answer 17

Court must classify all assets and obligations as community or separate. Each spouse files sworn list of community assets and obligations (45 days), then each spouse traverses or concurs the other’s list (60 days). If party disagree, court holds summary trial for classification.

At trial, court values assets at time of trial and allocates all community assets and liabilities.

1. Court shall divide community assets equally.
2. If it can’t fairly allocate an asset, it can order parties to draw lots, order private sale, or order partition by lactation (public sale and allocation of proceeds)
3. Allocation of obligation does not affect rights of creditors.
4. Court awards “equalizing payment” if allocation unequal.

Question 18

Creditors’ Rights

Answer 18

Creditors’ Rights During Regime

i. A separate or community obligation can be satisfied during regime from community property and separate property of spouse who incurred that obligation.
ii. If community property used to satisfy separate obligation, other spouse has a claim for reimbursement.

Creditors’ Rights After Regime

i. Obligation incurred by a spouse before or during regime may be satisfied after termination from property of former community and separate property of spouse who incurred the obligation.
1. This rule applies to attorneys’ fees in divorce action.
ii. When Former Community Property Sold:
1. If spouse disposes of property of former community for purpose other than satisfaction of community obligation, he is liable for all obligations incurred by other spouse up to value of that community property.
iii. Written Assumption of Responsibility - A spouse may by written act assume responsibility of ½ of each community obligation incurred by the other spouse. The assuming spouse may dispose of CP without incurring further responsibility for obligations incurred by the other spouse

Question 19

Creating a Separation of Property Regime

Answer 19

By Matrimonial Agreement

By Judgment of Separation of Property

1. Mismanaging Spouse - When the interest of a spouse in a CPR is threatened to be diminished by fraud, fault, neglect or incompetence of the other spouse, or by disorder of the affairs of the other spouse, he may obtain a judgment decreeing separation of property
2. Absentee Spouse (Retroactive)
3. Divorcing Spouse
   a. Procedure
   i. Spouse seeking partition must file rule to show cause and must prove
4. Living apart for 30 days
5. No reconciliation
   ii. Retroactive to date of petition
   b. Reconciliation will reestablish the regime of CP between the spouses retroactively to the date of filing of the motion or petition unless prior to the reconciliation the spouses executed a matrimonial agreement to the contrary
   i. No need for court approval
   ii. Effective as to 3rd party when filed for registry
   iii. Reestablishment of community is effective toward 3rd when a notice thereof is filed for registry
6. Physically Separated Spouses
   a. If Living separate and apart continuously for a period of 6 months, a judgment decreeing separation of property shall be granted on the petition of either spouse
   b. Retroactive
   c. Reconciliation reestablishes the regime of CP retroactively unless matrimonial agreement executed prior to reconciliation

Effect of Judgment of Separation of Property on Right of Creditors

1. Creditors may intervene in a proceeding to establish a separation of property regime or to modify the legal regime and object if it s a fraud on their rights
2. Creditors may Sue to annul a judgment of separation of property within one year from the date of the rendition of the final judgment

Question 20

Responsibility for Family Expenses and Obligations under a Separation of Property Regime

Answer 20

Spouses are solidarily liable for obligations incurred by either spouse for necessaries obtained for himself or the family with respect to third parties

Apportioning Family Expenses

1. Each spouse contributes to the expenses of the marriage as provided in any applicable matrimonial agreement or in proportion to his means in the absence of a MA

Property Ownership and Management of Property During Separation of Property Regime

1. Each spouse owns his or her property alone
2. Each spouse acting alone uses, enjoys and disposes of his separate property without concurrence

Question 21

Territorial Application of LA CP Laws

Answer 21

General Rule: community property applies to spouses domiciled in this state regardless of their domicile at the time of marriage or the place of celebration of the marriage

Conflict of Laws

1. Movables:
   a. General Rule: The rights and obligations of spouses with regard to movables, wherever situated, acquired by either spouse during the marriage are governed by the law of the domicile of the acquiring spouse at the time of acquisition
   b. Exceptions:
   i. When funds are used to acquire a LA immovable, LA’s legal regime principles of classification apply, regardless of domicile
   ii. Hybrid Quasi CP – Upon termination of the community, or dissolution by death or divorce either of who is domiciled in this state, their respective rights and obligations with regard to movables, wherever situated, that were acquired during the marriage by either spouse while domiciled in another state shall be determined as follows:
2. If CP under LA Law: Property is classified as CP under the law of this state shall be treated as SP under that law
3. IF SP under LA Law: Property that is not classified as CP under the law of this state shall be treated as SP of the acquiring spouse. However, the other spouse shall be entitled, in value only, ho the same rights with regard to this property as would be grated by the law of the state in which the acquiring spouse was domiciled at the time of acquisition
4. Immovables
   a. General Rule: Rights and obligation of spouses with regard to immovables situated in this state are governed by the law of this state. Whether such immovables are community are separate is determined in accordance with the law of the state, regardless of the domicile of the acquiring spouse at the time of acquisition
   b. Exceptions:
   i. Hybrid Quasi Community: Upon termination of the community of spouses, either of whom is domiciled in this state, their respective rights and obligations with regard to immovables situated in this state that were acquired during the marriage by either spouse while domiciled in another state shall be determined as follows
5. IF CP under La Law, will be treated as CP
6. If SP under LA Law will be SP. However, the other spouse shall be entitled, in value only, to the same rights with regard to this property as would be granted by the law of the state in which the acquiring spouse was domiciled at the time of acquisition
   ii. Upon the death of a spouse domiciled outside of this state, that spouse’s immovables situated in this state and acquired by that spouse when domiciled outside the state, which are not CP under the law of this state are subject to the same rights, in value only, in favor of the SS as provided by the law of the domicile of the deceased at the time of death
   iii. Upon termination of the community between spouses, either domiciled int his state, their rights and obligations with regard to immovables situated in another state acquired during marriage by either spouse while domiciled in this state, wich would be CP if situated in this state, shall be determined in accordance with the law of this state

Question 22

Marital Portion

Answer 22

General: When a spouse dies rich in comparison with the SS, the SS is entitled to claim the marital portion from the succession of the deceased.

1. No concrete test, but will ordinarily be rewarded if comparison of patrimonial assets shows a ratio of 5: 1 or more
2. Earnings Capacity is irrelevant

Nature

1. Incident of any matrimonial regime
2. Charge on the succession of the deceased Spouse
3. Applicable to all matrimonial regimes
   a. Public order
   b. Cannot be contracted around
4. Nonheritable Right
5. Prescribes three years from date of death
6. Right to Advances
   a. When during the administration of the succession, it appears that he SS will be entitled to the marital portion, he ahs the right to demand and receive a periodic allowance from the SR:
   i. Fixed by court
   ii. If spouse receives too much, charged with deficiency
7. Quantum
   a. Depends on number of surviving children
   i. Children: Direct descendants, adopted children and issues of previous marriage
8. Deceased has No Children: Ownership of ¼ of the succession
9. Deceased has Three or Fewer: Gets usufruct over ¼ of the succession for life
10. Deceased has four or more: Surviving spouse gets usufruct of child’s share of succession of life
    b. Cap: Cannot exceed one mission
    c. Legacy left by the deceased to the SS and payment due to him as of death are deduction from martial portion including, life insurance, social security and pension plansA spouse may by written act assume responsibility of ½ of each community obligation incurred by the other spouse. The assuming spouse may dispose of CP without incurring further responsibility for obligations incurred by the other spouse

Question 23

Limits of matrimonial agreement (cant K)

Answer 23

– spouses may not, by agreement, before or during marriage:

i. Renounce or alter marital portion
ii. Renounce or alter the order of succession
iii. Limit with respect to 3rd persons the right that one spouse alone has under regime to obligate community or alienate, encumber, or lease community
iv. Can’t go against public policy, but LA draws a line between agreement to waive interim support (against public policy) and final support (OK)

Question 24

Contractual freedom of Matrimonial Regime

Answer 24

Contractual Freedom – can cover anything not prohibited by public policy.

i. Can provide how each spouse will contribute to expenses of marriage
ii. Can provide for apportionment of community property according to fixed shares (opt out of standard equal shares)
iii. Reserve fruits of separate property as separate property
iv. Provide the spouses existing or future property subject to the matrimonial regime, but may be a donation

Question 25

Community Property

Answer 25

a. Property acquired through spousal effort, skill, or industry
b. Property acquired with community things
c. Joint donations and fruits of community property
d. Damages awarded for loss of a community thing
e. All other property not classified as separate property

Anything in spouse’s possession is presumed to be community. Either spouse may rebut on a preponderance showing.

Question 26

Separate Property

Answer 26

a. Property acquired prior to establishment of regime
b. Property acquired with separate property
c. Individually inherited property
d. Damages for mismanagement of community
e. Damages to separate property
f. Voluntary partitions of community while regime exists

Question 27

Managment of Community Property Concurrence Not Required (spouse can act alone)

Answer 27

1. Ratification of the alienation, encumbrance or lease
2. Renunciation of Right to Occur
3. Judicial Authorization to Act Without Consent (best interest or incapacity)

Question 28

One Spouse has Exclusive Right to Manage Community Property

Answer 28

i. Alienation of Movable Assets of a Business – spouse who is sole manager of enterprise has exclusive right to alienate/encumber assets
ii. Alienation of Registered Movables – any community property registered in one spouse’s name (stock, negotiable instruments, bank accounts, car, etc.) is exclusive to that spouse
iii. Management and Disposition of Partnership or LLC Interest – spouse who is partner or member has exclusive right

Question 29

Mismanagement of Community Property

Answer 29

i. If concurrence required, failure to get concurrence is relatively null.
ii. Spouse is liable for any loss or damage caused by fraud or bad faith in the management of community property.