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Flashcards in Community Property Deck (33)
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What is the California Community Property Presumption?

CA is a community property (CP) state. All property acquired during marriage is presumed to be CP, while all property acquired before marriage or after permanent separation, or by gift or inheritance, is presumed to be SP.

The characterization of an asset as either CP or SP depends upon three factors: 1) the source of the asset; 2) actions by the spouses that may have altered the character of the asset; and 3) statutory presumptions that apply to the asset. In order to determine the character of any asset, courts will trace back to the source of funds used to acquire it.

Mere change in form does not change an asset's character. The burden of proof is on the spouse claiming the property
Property acquired in another state by a spouse before they become domiciled in CA is QCP, which is treated as CP upon divorce or death.

The economic community ends when 1) there is permanent physical separation and 2) there is no intent to resume the marital relation.

1

What is a Putative Spouse?

Person who reasonably believes they are married even though marriage was not lawful or properly executed.

Status ends when spouse has reason to believe they are not lawfully married.

2

What is Quasi-Community Property?

Property acquired by married couple in another state is presumptively CP (or quasi-cp).

If property remains out of state at divorce, the court will divide the QCP so as not to alter the nature of the interests of the out-of-state property.

Surviving spouses have 1/2 interest in QCP, but a spouse who did not acquire the QCP and dies first has no interest in the QCP.

3

What is the Effect of Intestate Succession without a Will on a Spouse?

Spouse who dies without a will gives all CP to surviving spouse.

4

What is the Surviving Spouse's Duty to Elect?

Surviving Spouse must choose between the gift provided by a will or 1/2 of CP (and other presumptive rights) when decedent's will attempts to override surviving spouse's right to CP.

5

What Are a Spouse's Fiduciary Duties?

A spouse owes the other spouse the duty of the highest good faith and fair dealing.

6

What Are the Exceptions to Half Distribution at Divorce?

(MEET Family)

1) Misappropriation;

2) estate liabilities exceed assets;

3) educational debts are assigned to the educated spouse;

4) tort liabilities are assigned to the tort feasor;

5) the family home is given to the spouse with custody of the children.

7

How May the CA community property presumption be pre-empted?

The CA presumption will not apply to the federal benefits of:

1) federal homestead claims;

2) military life insurance benefits;

3) US savings bonds.

Military retirement benefits; railroad retirement benefits; or copyrights ARE NOT pre-empted.

8

In What Situations May a Spouse Encumber Community Property or the Property of their Spouse?

Both spouses may encumber their respective 1/2 interest in CP, but they can do so to pay attorney's fees in a divorce action.

Each spouse is liable for the other spouse's contracts that cover for that spouse's necessities (e.g medical bills).

SP cannot be reached for pre-marital debts if SP is in separate account and not commingled with CP.

9

Who is Responsible for Family Expenditures?

Courts will presume that family expenses are paid with CP funds.

If there are inadequate records, SP expenditure is presumed to be a gift to the marital community.

10

What Are the Consequences of Commingled Accounts?

The mere fact that SP funds are mixed with CP funds creates a presumption that the funds are intended to be transmuted into CP.

A spouse has the burden to show that each asset was acquired with separate funds through tracing or exhaustion.

11

When May a Spouse Be Reimbursed for Separate Property used to improve Community Property?

At divorce the spouse may seek reimbursement for the SP expenditure without interest.

At death there is no reimbursement unless there is proof of an agreement.

SP used to improve CP will be considered a gift to the marital community, but a spouse is entitled to reimbursement of costs for improvements or payments of principal balances.

12

What Are the Results of Community Property used to improve Spouse Property?

The resulting improvement is spousal property, but the marital community may seek reimbursement for the greater of the cost of the improvement or the enhanced value of the SP.

Courts are SPLIT where a spouse uses CP to improve other spouse's property. Some courts find a gift to the spouse, while others permit reimbursement to the marital community.

13

What is the Pro-Rata Rule?

Amount of reduction of debt on property asset achieved with CP funds divided by the purchase price equals the CP share.

(E.g.)

Installment purchases before marriage, subsequent funds for purchase from CP

SP inherits title w/ mortgage and pays with CP.

SP pays life insurance policy (not term life insurance) with CP.

14

What is the Effect of Spouses Taking Asset with Separate Title?

Property acquired after 1985 requires a writing indicating that omission of spouse in a deed constitutes a gift to the acquiring spouse. (Anti-Lucas presumption)

Pre-1985, oral agreements are permitted. Without agreement the property is CP.

15

What is the Lucas Rule?

(Lucas Presumption) When a married couple takes title to property jointly and in equal form, that property is presumptively CP. Any SP used to acquire the asset is presumed to be a gift to the marital community.

Property held by both parties during the marriage, whether by tenants in common, joint tenancy, tenancy by the entirety or community property is presumptively community property.

The presumption may be rebutted by an expressed intent in the transfer instrument that the property should be separate (after Anti-Lucas Legislation, 1984), or before 1984, by any evidence of a mutual understanding otherwise.

(Post 1984-Anti-Lucas Rule) A spouse who makes contributions of SP to down payments, improvements or principal loan balance on jointly titled property is entitled to reimbursement without interest upon legal separation. This presumption may be rebutted by a written waiver of the spouse's right to reimbursement.

16

What is the Married Woman's Presumption?

Before 1975, if CP was used to take title in a married woman's name, and the instrument did not indicate that CP or joint tenancy was intended, the property is presumptively the separate property of the wife. The presumption is rebutted if:

1) wasn't intended as gift but had community purpose;

2) wife took title without her husbands knowledge or consent.

Rebuttal of this presumption is not available to a third-party bona fide purchaser.

If title is taken in the name of both husband and wife, with no reference to marital status, a tenancy in common will result with each spouse receiving a one-half interest.

17

What are Transmutations?

An attempt to change the character of property.

Before 1985: Oral agreements ok

After 1985: must be 1) in writing; 2) signed by adversely affected spouse; 3) expressly state that change in ownership is occurring.

Gifts of tangible property of a personal nature (e.g. rings) are exceptions to this rule and are gifts to the spouse.

18

What Are the Requirements of Waivers of Spousal Support to Be Enforced?

Waivers are unenforceable if:

1) spouse was not represented by independent counsel at the time of signing; and

2) provision is unconscionable at the time of enforcement.

19

What are the Requirements of Pre-marital Agreement?

Must be 1) in writing; and 2) agreed upon by both parties unless there is either a) full performance or b) detrimental reliance.

Defenses:

1) involuntary;

2) 11th hour ultimatum (Bonds case);

3) not given 7 days to review with independent counsel or not fully informed of terms;

4) or unconscionable term.

20

What is Van Camp Accounting?

Applicable where an SP asset increased in value during the economic community as a result of an increase in value due to the overall market economy,

Court will calculate a reasonable rate of earnings for the working spouse, and multiply that by the number of years the spouse worked during the marriage. This figure would be awarded to the community as CP. The Remainder is working spouse's SP share of the property and is said to represent the increase in value from the growth of the economy.

21

What is Pereira Accounting?

Applicable where a business is started by a spouse with SP and the increase in value is primarily the result of the working spouse's unique effort.

Determine the value of the SP business or asset at the beginning of the marital community, add fair rate of return (10%) over amount of years worked during marriage. Result is SP share, remainder over 10% return is CP share.

22

What is the Presumption on Funds Borrowed During Marriage?

Presumptively CP including credit cards and consumer debt, but depends on the primary intent of the lender and to what individual or community the lender would look to for satisfaction?

23

What is the Presumption for a Spouse's Education?

Not CP, but community may be entitled to reimbursement when CP funds are used to pay educational expenses of spouse and education increased the spouse's earning capacity.

Community not entitled to reimbursement if it substantially benefitted (e.g. for 10 years or more) or other spouse also received CP for educational expense.

24

What is the Presumption for Professional Good-will of a Spouse's Business?

CP to the extent it is earned during the marriage.

25

What is the Presumption for a Spouse's Stock Options?

Courts use the time rule to determine respective shares.

Time Rule: present value of asset multiplied by years accumulated during marriage, divided by total years worked.

26

What is the Presumption for a Spouse's Severance Pay?

SPLIT:

SP because it represents future wages after separation,

OR

CP because spouse earned them as a result of community labor during marriage.

27

What is the Presumption on a Spouse's Personal Injury Awards?

Personal injury awards are CP if the cause of action arose during the marriage.

If it arose before or after it is SP.

At divorce, CP personal injury awards are given entirely to the injured spouse.

28

What is the Presumption for a Spouse's Disability & Worker's Compensation?

Considered SP or CP depending on the type of benefit they are designed to replace.

29

What is the Presumption for a Spouse's Personal Injury Liabilities?

Are always the SP of the tort feasor, unless tort occurred while spouse was acting for benefit of the community. In this case, look to SP first, then to CP.