Community Property Flashcards
(42 cards)
Quasi-Community Property
Property acquired by one of spouses while domiciled in non-CP state that WOULD have been CP had spouse been domiciled in Cal or any other CP state at the time of acquisition is QCP.
Remains SP of acquiring spouse until divorce or death, at which time it’s treated same as CP (including for purposes of creditors’ rights).
Jointly Acquired Property in non-CP State
If property is acquired by both spouses in joint title in a non-CP state, follow the joint title rules
Quasi-Marital Property
All property acquired during the putative marriage is labeled as quasi-marital property – whether it otherwise would’ve been CP or QCP had marriage been valid.
Community Interest in Bonuses & Pensions
Multiply total amount of stock, compensation, or other benefits by a fraction.
Numerator = total number of years during marriage where stock or other compensation is earned
Denominator = total number of years for stock or other compensation
Community Interest in Stock Options
Multiply total value of stock options by a fraction.
Numerator = period of marriage from date options are granted until divorce or legal separation
Denominator = period from date options are granted until date options exercisable.
Personal Injury Damages
PI damages are characterized based on date of occurrence.
CP if personal injury cause of action arises during marriage.
SP if injury arises before marriage or post-separation. Also SP if injury is caused by tort of other spouse.
Term Life Insurance
For TLI, which covers only risk of death, character of proceeds is character of LAST premium paid.
If last premium paid with CP, surviving spouse gets ½ and B gets ½ of proceeds.
Disability Pay
Disability pay (including workers’ comp) is characterized by what it is intended to replace.
Replacing earnings during marriage > community property.
Replacing earnings before or after marriage > SP.
When to apply Van Camp/Pereira
Use when:
(1) spouse
(a) brings SP business/investment into marriage,
(b) inherits SP business during marriage, or
(c) inherits money and starts business, all during marriage;
(2) either spouse works in the business; and
(3) business value increases at least in part due to efforts of either spouse.
Pereira Test
SP portion = Value of SP at Marriage + ( Value x 10% x Years of Marriage)
CP Portion = Value at Divorce - SP Portion
Van Camp
CP Portion = (Market Salary - Family Expenses - Salary Taken) x Years of Marriage
Business Valuation Methods
Businesses are valued using either
(1) market sales valuation of comparable businesses (expert opinion), or
(2) based on capitalization of excess earnings, based on standard for particular industry
Goodwill Definition
Treated like CP if created during marriage - (difference between a business’ total value and value of assembled physical assets)
Education/Training
NOT community property even if acquired during marriage.
However, absent agreement contrary, the community has right of reimbursement, with interest, when community funds are
(1) used to pay for education or training, or repay student loan, and
(2) the education or training substantially enhances earning capacity of educated party.
Reduction of Reimbursement (Education/Training)
Reimbursement may be reduced or eliminated if
(1) community has already substantially benefitted from the education and training (10 year presumption) OR
(2) education reduced educated spouse’s need for spousal support
Prenuptial Agreements
Do not require consideration, but must be in writing signed by both parties to satisfy the SOF.
Prenuptial agreement will not be enforced if they
(1) “promote divorce,” or
(2) are not “voluntary.”
Prenuptional Voluntariness
Voluntary if:
(1) represented by independent counsel or expressly waived representation;
(2) had 7 days to review before execution and advised to seek independent counsel; and
(3) if unrepresented, party is
(a) fully informed in writing,
(b) proficient in language of the agreement, and
(c) no duress, fraud, or undue influence
Transmutation Pre-1985
Oral Agreement is OK
Transmutation Post 1/1/1985
Anti-Lucas Legislation: Express Declaration in Writing
Jointly Owned Property Rules
Divorce: All jointly held property acquired during marriage is presumed CP at divorce and legal separation, absent collateral written agreement or separate statement to contrary.
Death: NOT presumed CP, remains JT and goes to surviving spouse
SP Contributions to Jointly Owned Property
SP contributions to acquisitions of property are reimbursed to SP contributor without interest or appreciation.
Credit Acquisitions
Loans or credit obtained during marriage are community debts.
Can only be overcome by evidence that lender primarily relied on borrower’s SP in extending the credit.
Tracing of Funds General Rule
If commingling, the owner of separate funds may attempt to trace these funds to claim SP interest in funds or asset
Tracing of Funds Presumptions
(1) Family expenses are presumed to be paid first from community funds.
(2) When SP funds are used to pay family expenses, presume a gift of the SP to the community.
