Community Property Flashcards

Question

Debt within marriage - installment debts

Answer 1

In the event of installment debts, such as a loan, when an installment debt is paid with community funds, the community will acquire ownership right on the asset in proportion to the percentage of the loan's principal that was paid with CP

Answer 2

Considered a community asset absense evidence that purchaser relied on SP's credit in obtaining the asset

Answer 3

When property is acquired via JT, the CP's reimbursement to the property depends on whether the marriage ended in divorce or the marriage ended when a spouse died Courts will use Lucas and anti-Lucas to determine

Answer 4

Any business or profit goodwill earned during marriage = CP Upon dissolution of the marriage, the CP's share will be determined via the goodwill of the business "Goodwill" beyond professional spouse's labor and the value of assets in the business Two methods to determine how assets divided: Market Sales: court will evaluate the profits from the sale of the business or interest in the business Capitalization of excess earnings: court will evaluate the present value of future stream of income that the spouse's goodwill developed during the marriage

Answer 5

Property acquired before marriage would be distributed based on their contract/agreement or based on contract principles. The property acquired during marriage would be governed by community property principles. If no k, court will examine conduct as to whether an implied k existed and court may grant equitable remedies

Answer 6

A putative marriage occurs when one or both spouses have a good faith belief that there is a valid marriage. The spouse(s) who have a good faith belief in the validity of the marriage is a putative spouse. A putative spouse may rely on community property principles. However, the putative spouse’s rights stop accruing when he/she discovers the marriage is not valid.

Answer 7

QMP: All property that would have been considered CP or Quasi-CP had the marriage been valid would is labeled “Quasi-Marital Property” and the putative spouse is entitled to 1/2 at the end of the putative marriage. SP: A putative spouse has the same rights as a surviving spouse to the other spouse’s separate property If a person has a legal spouse (valid marriage) and a putative spouse (not a valid marriage), the two spouses split the person’s estate.

Answer 8

Courts will not enforce pre-nup if it promotes divorce, is unconscionable, or involuntary Unconscionable: 1. Unconscionable when made 2. No full and fair disclosure of other person's finances/property 3. Right to disclosure not waived in writing 4. Party challenging lacked adequate knowledge of wealth/finances 5. Party challenging lacked adequate disclosure of other party's wealth

Answer 9

Community Property Separate Property Special Community Property

Answer 10

Applies only at divorce and presumes that jointly held property is CP Anti-Lucas: After 1987, all jointly held property (joint tenancy, tenancy in common, tenancy by the entirety) acquired during marriage is presumed to be CP upon divorce. This presumption can be rebutted by an express writing evidencing the spouses’ intent to hold the property as SP. If a spouse contributes SP to the purchase of the property, she/he has a right to reimbursement for the amount of contribution (but not any increase in value). Lucas: Before 1987, property taken in joint form (joint tenancy, tenancy in common, tenancy by the entirety) was presumed to be CP upon divorce. This presumption could be rebutted by evidence that the spouses did not intend to hold the property as CP. Any SP used to purchase the property was presumed to be gift and there was no right to reimbursement (unless there was an agreement).

Answer 11

Each spouse has equal management and control over CP. Both spouses must participate in decisions regarding CP personal and real property. If a spouse gifts personal property that is CP or sells/leases real property that is CP, there are specific rules that apply Gifts to 3P: If one spouse gifts or otherwise disposes of personal CP for less than fair/reasonable value without the other spouse’s written consent, the non-consenting spouse can ratify (affirm/approve) the gift, or revoke the gift and sue to recover the gift. Sale or Lease of CP Real Property: Both spouses must participate in the sale or lease of real property for more than one year. If title to the CP real property is held in one spouse’s name only and an innocent party does not know of the other spouse, the innocent party’s purchase of the property will be presumed valid. The innocent spouse has one year to file an action to void the transfer.

Answer 12

Duty to act in the highest good faith and respect in the management and control of the CP. Failure of a spouse to obtain the consent of the other spouse when making gifts or selling/leasing property, gives rise to a breach of duty. The innocent spouse can seek a greater share of CP due to the breach. In CA, spouses have equal management and control over CP, and at the same time owe each other a fiduciary duty not to improperly sell, encumber, or gift CP.

Answer 13

A commingled bank account occurs when the SP of one spouse is mixed or combined with the SP of the other spouse or with CP. If a spouse wants to claim that an asset purchased with funds from the account is his own SP, the burden is on him to trace the asset back to his SP funds in the account Direct and Exhaustion tracing Failure to trace: if tracing fails, entire commingled account and assets purchased are treated as CP If account is jointly held, presumed CP unless tracing

Answer 14

Spouse can recover SP when, at the time asset was purchased, SP funds were available and they were intended to be used to purchase a SP asset

Answer 15

Generally, education and training are not property but the person who received the education and training may have to reimburse the community. There is an equitale right to reimbursement if: 1. Community funds were used to pay for education/training or loan repayment and 2. The education/training substantially enhances the earning capacity of the party Defenses - A spouse has no duty to reimburse when: 1. Community has already substantially benefitted from the education/training 2. The need for spousal support was reduced as a result of the education/training

Answer 16

Pensions are CP to the extent that the right to benefits was earned during the marriage Court will apportion a pension to what was earned during marriage Spouse's interest in pension is not termintated upon death

Answer 17

Disability and worker's comp are CP if recieved during marriage SP after marriage

Answer 18

Courts are split. Some say SP becuase its lost earnings. Others say CP becuase it arises from collective bargaining agreement and earned by employment during marriage

Answer 19

Term Life: estate that paid most recent premium is the owner of the policy or the policy proceeds Whole Life: if has current monetary value, the cash value is CP

Answer 20

Presumed CP unless substantial in light of financial situation of the community, then needs to be in writing

Answer 21

Split Some presume gift, presumption overcome by evidence of an agreement to reimburse the community estate Other jdxs do not presume gift and require reimbursement

Answer 22

Equal Division of CP unless otherwise found to be not CP

Answer 23

Dets acquired after permanent separation are SP and debtor spouse will be liable to his creditors for such debt Exception: Necessaries of Life Spouse can be liable for post-separation but pre-divorce debts if it is a "necessity of life"

Answer 24

Spouse's child support obligations from previous marriage = debts incurred before marriage

Answer 25

Non-debtor spouse must deposit earnings into a separate bank account from which the debtor spouse has no right to withdraw from. If no separate earnings, community is liable for all obligations Non-debtor spouse can seek reimbursement for the CP estate from debtor's SP if the debtor spouse had SP to pay the debt

Answer 26

If one spouse incurs debt during marriage, creditors can reach CP unless the non-debtor spouse kept funds separate and the other spouse had no right to withdraw

Answer 27

Tortfeasor acting in his own benefit: SP then CP Tortfeasor acting in community benefit: CP then SP of tortfeasor Incurred at the time tort incurrs

Answer 28

Highest GF and FD to each other. A managing spouse must fully disclose al material facts re dets for which the community may be laible Remedy for breach: larger portion of CP

Answer 29

Each spouse has equal management and control over community property, which means that both spouses must participate in decision regarding major personal property transactions. If one spouse improperly gifted or disposed of community personal property, such as household furniture or furnishings, for less than fair and reasonable value without the other spouse’s written consent, then the non-consenting spouse has the right to either (i) ratify the gift or (ii) revoke the gift and sue to recover all of the property.

Answer 30

Because the value of the CP business increased threefold while W continued to manage it after their separation, the court may use the Pereira and Van Camp formulas in reverse to apportion the respective CP and SP interests in the increased value. When the increase in the value of an accounting business is likely the result of the personal skills and effort of the managing spouse as opposed to the natural appreciation of the initial CP investment, the court is likely to apply the Pereira approach to determine W’s share of the post-separation increase in the business’s value, unless the court finds that W has already been adequately compensated by her post-separation salary. When the increase in the value of the business is likely the result of the character of the property itself, the court is likely to apply the Van Camp approach to determine W’s share of the post-separation increase in the business’s value.