Community Property Flashcards
(38 cards)
Statutory Definitions generally
apply UNLESS character of asset has been altered by 1. parties’ agreement, 2. Parties Conduct or 3. how title was taken
Separate Property
- Prop owned by either spouse BEFORE marriage OR
- Prop acquired during marriage by GIFT, Will, or inheritance OR
- Prop acquired during marriage by expenditure of Separate FUNDS
- Rents, issue and Profits derived from separate property
Community Property
Prop other than separate prop, acquired by either spouse DURING marriage.
Ex 1. Salary or wages, bonus, prize money, earned by either spouse AND
2. income from Community Assets
Community Presumption
all assets acquired during marriage are PRESUMPTIVELY community property, even if taken in ANY joint form (JT tenants). Absent a showing of parties’ collateral agreement of SP or that title was taken in a way that overcomes the presumption. BOP that asset is Separate prop is on the party so contending
SAY:
- CA is CP state
- CP presumption where all assets acquired during M are presumptively CP
- There are areas of Separate property remaining such as before marriage, gifts, sep funds spent, or income from sep property.
as of 2004, CA now extends CP system to REGISTERED DOMESTIC PARTNERS who file a declaration of Domestic Partnership w/ SoS, retroactive to Jan 1, 2000. Available ONLY to:
- SAME SEX couple
- elderly opposite sex couples receiving SS Benefits
Termination of Economic community growth?
terminates before divorce when:
1. Permanent physical separation
AND
2. 1 party’s Intent not to resume marital relations
Ct has continuing jurisdiction to award CP not previously UNadjudicated at divorce. Will be 50/50 UNLESS “interests of justice require an unequal division”
Distribution of CP and Alimony
(Disparity in earning power is considered ONLY as to Alimony and Child Support)
Absent agmt, EACH & EVERY ASSET MUST BE DIVIDED 50/50.
! doing non pro rata division to find result w/ = $ values is NOT Sufficient!
UNLESS
1. ECONOMIC CIRCUMSTANCES EXCEPTION - (equal division rule)
can non pro rata division of assets w/ each spouse getting 50% of total value IF:
-Family Residence (hurts kids)
-Closely Held Corp
-Pension (all P to H vs assets to W - they can each be independent)
- STATUTORY EXCEPTIONS w/ 1 spouse ending w/ MORE than 50% of total value!
-1 spouse MISAPPROPRIATES CP before or during divorce
-1 spouse has incurred educational debts (treated separately carry w/ you)
-1 spouse incurred TORT LIAB, NOT based on act for benefit of community
-TP Tort Personal Injury award is CP,
but at DIVORCE goes to victim only so long as: - can be traced and
- not already spent,
Unless interests of justice requires diff (econ need)
at DEATH - it is CP
- BUT, if spouse is tortfeasor, award is SP
- “Negative Community” - Community liabilities exceed assets and relative ability of spouses to pay debt considered to protect creditors.
GIFTS of CP /Testamentary power of CP
NO POWER to make GIFTS of CP w/o WRITTEN CONSENT of spouse! 1/2 belongs to spouse!
Spouse can SET ASIDE gift in its entirety OR
on divorce/death take assets to recover her 1/2
FEDERAL PREEMPTION EXCEPTION - can Gift US Gov savings Bond, Fed Preemption
Widow’s Election Will
Widow cannot read will selectively.
W must TAKE UNDER THE WILL as written
OR
Take AGAINST THE WILL and claim her 1/2 of community property. But then she relinquishes all testamentary gifts in her favor!
Community Credit Presumption / Mortgage/Debt
Funds Borrowed during Marriage AND
Goods purchased during Marriage are presumptively CP.
BUT, TEST: borrowed funds and credit purchases are classified by PRIMARY INTENT of the LENDER. (where he looks to satisfy debt).
ex. credit standing, rep/standing in commty = CP
Sep land as security = SP
Fiduciary Duties
Spouses have Fid duties that arise from their Confi relationship. Highest good faith & fair dealing w/ each other.
1 spouse cannot gain an advantage from a transaction or PRESUMPTION OF UNDUE INFLUENCE. Spouse has BOP To prove did NOT breach duty.
-Gross NEG or RECKLESS investment of Community prop is a breach of fid duty!
OPT OUT
parties can opt out of statutory duties before or during marriage.
transmutation
DURING marriage, character of property has changed by Gift or Agreement. (Ex. gift of inherited jewelry to spouse)
NO CONSIDERATION required for Pre-marital agmt or Transmutation.
BEFORE 1985 - could be ORAL, written, or inferred from conduct
vs
AFTER 1985 - All transmutations must be
1) in WRITING,
2) SIGNED by spouse whose interest is adversely affected and
3) must explicitly State that a change in ownership being made
Usual exceptions will NOT apply (Sof, Estoppel, partial performance)
1 EXCEPTION to 85 requirements-
gifts of tangible property of personal nature (jewelry) which are “NOT substantial in value taking into account the circumstances of the marriage”
CAREFUL! By statute, any proceeding started before death of person who made will/revocable trust or made statement about them is NOT ADMISSIBLE as evidence of Transmutation.
PreMarital Agmt
Generally, MUST be
- in Writing
- Signed by both parties
2 Exceptions:
1. Oral Agreement is fully performed already (marriage is not evidence of performance)
or
2. Estoppel based on Detrimental Reliance (lack of writing won’t bar evidence of oral promise)
-Can pretty much agree to anything UNLESS it is void against public policy: limit on child support, sexual services
DEFENSES to Pre Marital Agmt:
1. NOT signed VOLUNTARILY
CA presumption INVOLUNTARY unless:
a. Representation by Indie Counsel
b. given at least 7 days to sign
and
c. if no indie counsel, fully informed in clear writing of terms and basic effect of agmt. and
d. party SIGNS doc declaring she got info and identifying who provided it.
- Unconscionability -
a. not enforceable if movant proves - unconscionable when executed AND
- party did not and could not have Adequate knowledge of wealth of other party and
- did not waive her right to disclosure of such wealth in writing
b. SPOUSAL SUPPORT Provision Unenforceable IF
1. Party challenging it did not have indie legal counsel OR
2. even if counsel, provision was unconscionable @ time of enforcement.
Title and Married Woman’s Special Presumption
prop acquired BEFORE 1975:
where CP used to take written title in a “married” woman’s name
AND
title did NOT indicate STATUS - CP or JT, prop is PRESUMPTIVELY Wife’s SEPARATE Prop.
(even if another TP is listed too then T in common w/ Wife)
Policy: H was sole mgr of prop; must’ve intended as gift
- presumption IS rebuttable as to Husband - can show H had different intent, or W managed property
- presumption NOT rebuttable as to TP BFP who buys from W in reliance on her ownership
3 situations - before ‘75
1. title in W’s name ALONE, = W’s SP
2. Title in name of W&H, w/o marital reference (not taken in JT form, husband & wife, or MR/Mrs.
= 1/2W SP, 1/2 CP
3. Title in name of W and TP= W and TP Ten in Common
Joint and Equal Form
& LUCAS
means title lists both spouses Names “H and W Smith” (CP Form),
LUCAS Statutes apply ONLY IF Joint & Equal Form (CP):
IF Death –> Marriage of LUCAS Rules:
If H/W take title in joint form, it is INCONSISTENT w/ preservation of SP. Any SP used to help acquire asset is presumed GIFT, unless ORAL/written agmt to contrary.
-NO SP ownership & NO claim for Reimbursement of improvements (subjective intent irrelevant)
**If NOT taken in Joint/equal form -TRACE, Source Rule
If Divorce - Jointly titled assets acquired BEFORE 1984 governed by Lucas.
vs
IF Divorce 1984 or AFTER- CA ANTI LUCAS Statutes (use both)
- Ownership Fam §2581 - prop acquired during marriage in Joint and equal form is still PRESUMPTIVELY CP & subj to equal division on divorce, BUT REBUTTABLE BY:
a. Express statement in deed/ or Title document that Prop (or portion) is SP (receipt NOT suff)
OR
b. in sep Written Agmt by parties that prop (or portion) is SP
**If no deed/Title Doc -CAN TRACE, use Source
- Reimbursement Fam §2640 - spouse who made contribution of SP to acquisition or improvement of CP is entitled to Reimbursement w/o interest for contributions to DIP:
Down payments,
Improvements or
Principal payments on mortgage. (NOT MIT maintenance, interest, taxes or)
Trace or Source Rule
Determine where the funds came from to determine the type of property
ProRation Rule
Installment Purchases, or WHOLE LIFE INSURANCE, or House BEFORE Marriage and Debt paid w/ CP DURING marriage w/ CP (or gift during marriage and DEBT/LIEN paid off during marriage w/ CP funds)
Use Moore Pro Rata Formula
=
Community takes Pro Rata Portion of Property measured by % of PRINCIPAL Debt Reduction attributable to the expenditure of community funds (NOT interest, taxes, or insurance)
ex. community paid 20% of debt, community owns 20% of value.
CP gets amount invested back + 20% appreciation
SP gets amount invested back + 80% appreciation
VS
TERM life insurance - LAST premium determines the Character!!
Doctrine of Fixtures, Improvements
A. Must REIMBURSE if Feathered OWN Nest -
expends CP to improve OWN SP, Reimburse greater of CP or increase in value
Improvements (paid by CP funds) that BECOME part of SP Real Property, will NOT CHANGE ownership character of SP house. (house Bought before marriage); NO CP % share
BUT
Divorcing spouse CAN file for REIMBURSEMENT:
-Gets Greater of:
1) CP expenditures
OR 2) increase in value
(Anti Lucas won’t apply bc SP here!)
VS
B. Feather’s SPOUSE’S Nest
expends CP on Spouse’s SP - split
H’s Salary (CP funds) used to Feather W’s SP House; upon Divorce…
SPLIT
1. NO reimbursement - presumption of gift to Spouse’s SP; Can be overcome ONLY BY evidence of agmt to reimburse community
vs
2. YES REIMBURSEMENT - rejects presumption of gift and grants reimbursement
Summary of Reimbursements
SUM -
1. expends CP to improve OWN SP, Reimburse greater of CP or increase in value
- expends CP on Spouse’s SP - split
- if SP on CP -
Death (Lucas) vs Divorce (Anti Lucas Ownership and Reimbursement/DIP)
accounting, commingling
Recapitulation -
add up all community funds and then subtract all community expenditures. The remainder or any items that were bought outside of the remainder funds are considered SP.
FAMILY EXPENSE PRESUMPTION -cp funds
BUT Problem - when CoMINGLING, does NOT show CP funds were UNavailable at time asset purchased.
- Mere fact that SP and CP funds were commingled does NOT make SP funds into CP.
- BOP on challenger to show EACH ASSET was purchased w/ SP funds. Can use:
- EXHAUSTION Method - examining each transaction to show CP exhausted and SP had to pay each time
or - DIRECT TRACING Method (quick in quick out)
Deposit specific amount of SP funds and quickly use to pay something of same amount.
REQUIRES:
a. Sufficient Separate funds were available
and
b. H intended to use SP funds to buy asset
FAMILY EXPENSE PRESUMPTION
Presumed that expenditures for Family expenses (food, clothing, housing, recreation) made w/ Community funds (to extent available) even if Separate funds were available.
IF CoMingling, some may have been paid w/ SP funds which are PRESUMED GIFT to community w/o Reimbursement.
UNLESS you have AGMT TO Reimburse.
! Business that increased in value during marriage !! (started before marriage or w/ SP)
2 Tests that Favor Community,
Ct can select best for substantial justice betw parties
1. Pereira & 2. Van Camp AND 3. maybe Goodwill!
- Pereira, think P: PERSONAL skills & Effort - *Owner keeps orig value PLUS, 10% Interest Annum on SP @ time of marriage;
Balance is CP
Increase in business from Community Effort
-Spouse’s time, skill, effort are major factors in growth of business. Spouse had creative ideas, developed new techniques, long hours, modest salary, no vaca, spouse watched kids
- Van Camp, think VC: Valuable Comp. or Asset
*Value Community Labor; rest is SP
*(Market Rate of Salary MINUS Family expenses PAID from CP funds) X yrs married = CP,
Balance is SP
- Capital Investment is major factor in Biz growth, business itself has value bc of its nature; Not skill, spouse paid substantial salary, large bonuses (community compensated), lucky, good timing
3. goodwill = CP (business started during marriage)
Pension and Employment Payments
EE retirement benefits accumulated DURING marriage are CP, whether or not vested at time of DIVORCE (deferred compensation).
Use Proration Time Rule to determine division:
CP =
Years Served while married
/
total yrs employed
Form (if NOT yet eligible/matured)
1. IF & WHEN received - spouse gets the share
or
2. Cash her out at divorce by awarding other assets of equal value
IF MATURED/ELIGIBLE in qualified plan -
FEDERAL LAW PREEMPTION - ERISA trump CP!
NO DEVISABLE right if Spouse predeceases Pension recipient, right terminated under ERISA.
-Non Participant Spouse gets Qualified Domestic Relations Order and receives payments from Plan
Disability and Worker’s Compensation -
CP ONLY IF intended to replace marital Earnings OR retirement benefits.
BUT these Wage Replacement classified WHEN RECEIVED, NOT when earned.
*Spouse CANNOT ELECT disability recovery rather than retirement in order to defeat CP interest
!!! SEVERANCE pay -
SPLIT
1. severance is SP bc replaced lost FUTURE earnings which after divorce/sep is SP
OR
2. severance is CP bc arose from collective bargaining and was thus earned by employment during marriage
Stock Options !!
Form of EE compensation and are treated as CP or SP depending on when they were earned.
if awarded DURING marriage, but does NOT vest until AFTER marriage, use PRORATION Time Rule.
*FORMULA Depends on Primary Intent of EMPLOYER in granting option. (Hug v Nelson)
- Marriage of Hug Proration Formula -
if awarded primarily to reward for PAST services as deferred compensation (HUG for good job!)
subj to equal division on divorce; CP =
yrs FROM date of employment TO date economic commty Ended
/
yrs FROM date of employment TO date option becomes exercisable
VS
- Marriage of Nelson Formula -
If awarded to encourage X to remain with company (Nelson, you should stay!)
subj to equal division on divorce; CP =
yrs from DATE OPTION GRANTED TO date econ commty Ends
/
yrs FROM date option granted TO date option becomes Exercisable
x
# shares of stock avail for purchase
