Community Property Flashcards
Basic Presumptions
California is a community property state. All property, earnings, and property purchased with earnings acquired during marriage is presumed community property (“CP”). All property, earnings, and property purchased with earnings acquired before marriage or after permanent separation are presumed to be separate property (“SP”). In addition, any property acquired by gift, devise, or bequest is presumed to be SP.
In order to determine the character of any asset, courts will trace back to the source of funds used to acquire the asset. A mere change in form of an asset does not change its characterization.
Three Principals of CP System
1) Equality–spouses share 50%;
2) Tracing–prop takes on character of its source;
3) K Modification–CP is default but can be modified before/during M.
CP at Death and DV
During M–equal ownership/mgmt/control;
At DV–equal div 50% CP each.
At death:
–testate–at least 50% of CP to surviving S;
–intestate–100% CP and QCP to surviving S; and anywhere from 1/3 to 100% SP (if decedent has issue / surviving parents then surviving S takes less SP).
SP vs. CP
SP–all prop owned before M, acquired during M by gift/inheritance (lucrative title) and all prop gen by such SP (i.e. traceable to an SP source); and all prop acquired after sep.
CP–all PP and RP acquired by married P during M while in CA; anything produced by time/effort/skill of married P is presumptively CP (even a gift made in recognition of your efforts/services).
Quasi CP
Property that would have been CP if the couple had been domiciled in CA at the time of acquisition.
QCP is treated like SP until the death (or dissolution) of the MEC, when it is subject to treatment like CP.
But that does not mean S is entirely free to transfer QCP inter vivos…
Quasi CP–Right to Set Aside Transfers
In California, the surviving spouse can set aside inter vivos QCP transfers by the decedent if:
(1) the decedent died domiciled in California;
(2) the decedent transferred the property to a third party without the written consent of the surviving spouse and for less than valuable consideration; and
(3) the transfer is the type whereby property is held at the time of the decedent’s death by the decedent and another with the right of survivorship.
PMAs–EMPHASIZE
1) Pre-86: enforceability determined by case law;
2) 86-02: applicability non-retroactive;
3) >02: retroactivity of amendments; spousal-support waivers cannot be unconscionable at time of enforcement (pre-86 unenforceable; 86-02 Pendleton dictum/public policy); SS waiver NOT enforceable if P not rep by indp counsel (not retroactive pre-02).
Enforcement of PMA
4 Factors–NOT vol PMA Unless:
1) P against whom enforcement sought not rep by indp counsel (can be waived but NOT waived for SS);
2) 7 days b/t presentation of PMA and signed–regardless of whether P had counsel;
3) If no counsel–fully informed of terms and basic effect of PMA;
4) PMA not signed under duress, fraud or UD, nor lack capacity.
Retroactivity
Retroactivity does NOT apply if it would sub interfere w/ the effective conduct of the proceedings or rights of the Ps
Violated DPC if would impair vested prop right–2 considerations:
1) the signif of st’s interest served by law; and
2) extent of reliance on former law
Transmutations–EMPHASIZE
From CP to SP during M:
Post-84 Reqs–Must be explicit/unambiguous language; trans of RP/PP not valid unless made in writing by express declaration that is made, joined in, consented to, or accepted by S whose interest in prop is adversely affected; extrinsic evidence NOT allowed; presumption of UDI–can be raised by disadvantaged S to disprove trans; trans irrevocable and statement in will NOT admissible.
*Applies to BOTH interspousal prop transactions and prop acquisitions from 3P (e.g. life ins policy–presumed CP even if policy solely in one S name); a sig on grant deed b/t S or an interspousal transfer deed satisfies writing reqs.
*Depositing CP earnings into checking account in 1 S’s name alone does NOT qualify as transmutation–i.e. still need signed writing.
Gift b/t S Exception–above reqs do NOT apply to gifts b/t S if:
1) clothing, jewelry or other tangible articles of personal nature used solely by S who received gift; AND
2) gift NOT substantial in value taking into account circumstances of M
e.g. gift of porsche not “personal in nature” ; diamond ring has sub value so gift exception does not apply–i.e. character not trans from CP to SP
Presumption of UDI
To rebut presumption of UDI–advantaged S must show that transfer was “freely and vol made” w/ full knowledge of all facts.
–Presumption of UDI overcomes all other presumptions.
PMAs vs. Transmutations–EMPHASIZE
PMAs:
–No confidential rel pre-M; just obs of mutual respect/fidelity;
–Cannot promote dissolution of M;
–Writing req–CL exceptions to SOF admissible; i.e. oral agreement and estoppel;
–CL K defenses apply; i.e. fraud/duress/UD
Transmutations:
–Confidential rel–duty of highest good faith and fair dealing;
–NO CL exceptions to SOF
–CL K defenses apply
Long M Presumption
If prop poss during a LT M–gen 10 yrs or more–presumptively prop acquired during M.
Short-term M–Poss alone NOT suff to establish date of acquisition in order to raise CP presumption; i.e. CP proponent has burden to establish acquisition during M.
Brace
Post-75–during M titled prop acquired from a 3P in JT is presumptively CP unless valid trans (must satisfy writing 852 writing reqs post-84).
DV–ROR for SP contributions
Death–does NOT change form of title; JT w/ ROS.
Special Title Presumption
Historically–at DV CP presumption applied to prop acquired during M that was untitled or titled in 1 S’s name alone
*This can be rebutted by tracing funds used to purchase entirely to SP.
*Vs at Death–presumption that form of ownership on title reps form of ownership so ct can consider an asset titled in 1 S’s name alone to be SP if the source of funds used to purchase is traced to SP.
After Brace–during M titled prop acquired from 3P in JT is presumptively CP–thus CP presumption governs over gen title presumption and 1 S cannot unilaterally sever JT w/o consent of other S.
Special Community Prop Presumption at DV
For purpose of DV–prop acquired in JT during M is presumed CP–presumption may be rebutted by either:
1) clear statement in deed; or
2) proof of written agreement that prop is SP–i.e. tracing to SP NOT enough; reqs writing signed by adversely affected S.
ROR for SP Used to Improve CP
Applies to SP contributions used to improve CP.
To be reimbursed–SP proponent must trace contributions to SP source; *Reimbursement is w/o interest and cannot exceed net value of prop at time of DV–i.e. value of prop declines below SP contribution.
Look out for problem “title taken in joint form”
Signals NO % interest at DV–ONLY reimbursement.
Also improvements to prop–do NOT acquire % interest; just get reimbursement if SP prop can trace.
Apportionment of Ownership at DV–CP Contributions to Purchase of 1 S’s SP
Applies to:
1) sep titled prop acquired pre-M when CP has been used to pay debt;
2) also prop acquired during M if CP presumption rebutted by SP tracing (e.g. gift/inheritance).
Vieu Formula–apply if purchase $ debt fully paid:
SP/CP contribution to purchase / Purchase price
X FMV=SP/CP interest
Moore–apply if unpaid balance:
–Any loan balance included in numerator of fraction applying intent-of-lender test;
–ONLY payments of principal on loan included in calc of CP interest.
E.g. CP–$6K principal payments / $57K purchase price X $160K FMV at DV=$16.8K CP interest
SP–$17K SP down + $34K ($40K loan – $6K CP payments) / $57K purchase price X $160K FMV = $143.2K SP
*SP Estate pays $34K loan balance, net amt=$109.2K
Credit Acquisitions
If loan taken out during M–creditworthiness is comm asset so very difficult for SP proponent to satisfy; CP presumption applies in establishing character of loan and any prop acquired by loan–SP proponent can rebut CP presumption by tracing intent of lender (i.e. loan proceeds/unpaid balance assigned to SP estate if lender intended to look primarily or solely to SP funds for repayment of loan).
MW’s Presumption
Applies to acquisitions/trans pre-75:
1) prop acquired by MW in writing is presumed her SP;
2) prop acquired by MW and other P presumed TIC–unless diff intention in writing;
3) prop acquired by H&W described as “H&W” presumed CP–unless diff intention in writing; if JT taken in unqualified form–i.e. names only–prop presumed held by W (50%) by and by CP estate 50% as TIC.
Family Expense Presumption
If both CP/SP in commingled account–CP funds presumed to have been used to pay family expenses.
SP deemed to have been used to meet family expenses ONLY when CP exhausted–when SP used to pay family expenses, NO ROR to sep estate unless agreed otherwise.
Tracing into Commingled Accounts
If SP funds cannot be traced–presumed CP
Indirect Tracing (i.e. Exhaustion)–CP presumption rebutted if SP prop can show CP funds exhausted
Direct Tracing–SP prop must provide financial records that are character and date specific and identify the net character of funds on deposit.
Community Interest in SP Business
Apply Apportionment of Business/Investment Growth–Van Camp / Pereira
If during M SP prop exerts more than min effort in managing SP business–increase in value is in part CP/SP.
Two Formulas:
Van Camp–if mkt forces responsible for growth:
–comp for labor – family expenses = amt for CP
–value of investment at DV – amt for CE = SP amt
Pereira–personal effort more responsible for increase in value:
–original value of investment + aggregate rate of return (interest) = SP amt
–value of investment at DV – SP amt = CP amt
Formulas do NOT apply to CP business, BUT if court finds that the MEC ended before a sub increase in CP business value, then it will need to apply the formulas in reverse to allocate the increased value for the time period in between separation and divorce to the SP and CP.
