Community Property Flashcards
Inter Vivos Transfer of QCP
Inter Vivos Conveyance
QCP is generally treated as the acquiring spouse’s SP
-does not mean that acquiring spouse is completely free to make inter vivos transfers of the QCP –
-if the acquiring spouse transfers QCP during his life for less than FMV while retaining an income right, a right to revoke the transfer, or a right of survivorship
-other spouse has a right to clawback 1/2 of the value of the transferred QCP from the transferee.
Tort Obligations
Tort obligations are “incurred” when the tort occurs, not when judgment handed down
If tort committed for benefit of the community, first CP funds used, then SP of tortfeasor, non-torfeasor spouse is not liable
If tort not commited for benefit of the community, then first SP of tortfeasor, then CP. Note: CP may be entitled to reimbursement
Allocation of Debt
Judge has disrection to allocate debts, typically judge will allocate debt to spouse who incurred the debt
Pereira
Increase in value is apportioned as follows:
Value of the SP portion = initial SP capital used * reasonable rate of return (usually 10%) * per year of marriage
The residual value belongs to the community.
Van Camp Formula
community receives a reasonable salary in return for the spouse’s contribution of time and effort, reduced by the amount of community expenses paid by the returns from the business.
The residual is the owning spouse’s SP.
CP = fmv salary – family expenses - salary taken
SP =value of biz - CP
Improvement of Separate Real Property with CP
Where CP is used to improve a SP asset, the community is entitled to an interest.
The formula used for calculating such an interest is from In re Marriage of Moore.
The community is entitled to reimbursement for the value of the contributions for down payment, improvements, and payment of principal, plus a pro rata share of the appreciation.
Transmutation
(1) express writing
(2) consented by adversly affected spouse
(3) requires both spouse approval if transmuting CP to SP
Putative Spouse
(1) not lawfully married, but has subjective good faith belief that he/she is married
(2) all CP / QCP is deemed QMP - quasi marital property, which gives putative spouse same rights as she would have to CP/QCP
Child Support
Child support obligation is treated as a debt incurred before marriage, can’t go after other spouse’s SP, but all other assets are OK
Non-Married Couples
Putative spouse, treat as married if
◆ Good faith belief
◆ Void/voidable marriage
◆ Estoppel may apply if knew
◆ QMP is property classification
Unmarried—Contracts law applies
How is Pre-nup deemed voluntary
◆ Independent counsel or waived in writing
◆ 7 days before signing
◆ Terms/rights in writing in proficient language
◆ No duress, fraud, undue influence
◆ Any other factors court deems
Premarital agreements—valid if
Premarital agreement is valid if:
(1) It does not promote divorce
(2) In writing/signed by both
(3) Entered into voluntarily
(4) Not deemed unconscionable and lacking disclosure
(5) Cannot waive child support
(6) Spousal support can be waived if independent counsel agrees at time agreement was signed
** Estoppel and laches available defenses –Equitable defenses limiting the time for enforcement, including laches (unreasonable delay and prejudi cial effect) and estoppel (detrimental reliance) are available to either party.
How is Prenup Deemed Unconscionable
Not unconscionable at execution, and
Party against enforcement is sought did not have adequate knowledge of the wealth of the other party and did not waive the right to the disclosure of wealth in writing. b. Child support
Source of funds SP, but title is CP:
When the source of funds for a property is SP, but title is taken jointly, it is presumed to be a gift to the community and characterized as CP, unless there is a contrary written intent, subject to reimbursement at divorce
Jointly titled prop at death vs. Divorce
Jointly titled prop benefitted by SP –
(1) AT DEATH Lucas: at death jointly held title is presumed CP
◆ No reimbursement
(2) AT DIVORCE Anti-Lucas: at divorce jointly held title is presumed CP
◆ DIP reimbursement
Down payment
Improvements
Principal
***MWSP = W’s name alone prior to 1975 is her SP
Tracing Commingled Funds
- Can trace SP to source
- Burden of proof on SP proponent
- Two tracing methods
(1) Exhaustion method: all CP funds exhausted when property purchased
(2) Direct tracing - Sufficient SP funds at time of purchase, and Intent to use SP funds
If SP cannot be traced, property is CP * Tracing cannot overcome joint title presumption
**Exception: bank accounts - tracing can be used to overcome the presumption for jointly titled bank accounts since bank accounts are governed by the Probate Code.
TRANSMUTATIONS
Writing required
(1) Real or personal property
(2) Describe change in ownership
(3) Consent of adversely affected spouse
Exception
(1) Personal gifts of insubstan tial nature (2) No other exceptions to writing requirement
**Pre-1985: oral and inferred from conduct okay
Management and Control : Main areas
(1) Fiduciary Duties
(2) Community personal property
(3) Community business
(4) Community Real property
Spousal Fiduciary Duties
(1) Full disclosure of material facts
(2) Good faith and fair dealing
Community Perosnal Property - Management and Control
- Equal power to manage CP
- One spouse can’t gift or dispose for less than fair value
- One spouse can’t sell or convey family furnishings with out written consent
Community Business - Management and Control
Managing spouse can make all decisions, but must give written notice to sell
Community Real Property
Both need to sign to sell or lease for more than 1 yr.
Can’t convey to 3rd party without other spouse consent, Presumed valid to BFP, however if done spouse has 1 year to BFP. If none BFP, can be voided anytime
Contribution / Improvements; CP to SP
CP to other spouse’s SP: gift presumed in some jurisdictions
CP to spouse’s own SP: CP reimbursed greater of amount spent on improvement or increase in value
CP to SP real property
CP % = amount CP con tributed to principal/total amount of loan
Then, multiply CP% by capital appreciation
**Payments for interest, tax, and insurance are excluded
Contribution / Improvements; SP to other spouses SP
Reimbursed without interest for DIP
