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Flashcards in Community Property Deck (41):
1

Form requirement for a valid, enforceable matrimonial agreement

Authentic act or under private signature duly acknowledged

2

Requirements for minors to enter into a matrimonial agreement

Emancipated, giving them contractual capacity, OR, written permission of the person with custody over the minor.

3

Recordation requirements for matrimonial agreements

To be effective against third persons it must be filed in the parish where the immovable property is situated, and for movables, in the parish where the spouses are domiciled.

4

When can you enter into a matrimonial agreement prior to marriage?

At any time prior or during marriage.

5

How do spouses enter into a valid post-marital matrimonial agreement?

Must be authentic act or private signature duly acknowledged. AND Court approval that the agreement is understood and in their best interests.

6

How long do spouses have to file a matrimonial agreement upon moving to LA?

One year

7

What are spouses prohibited from contracting in a matrimonial agreement?

1) Renounce or alter marital portion 2) modify the established order of succession 3) Limit the right with respect to third person to obligate, alienate, encumber, or lease community property 4) waiving interim spousal support (but you can limit final spousal support).

8

Who does the community property regime apply to?

Spouses who are domiciled in LA and have not contracted out. Place of marriage is irrelevant.

9

Types of separate property

1) Property acquired in advance of the community property regime; 2) property acquired with separate property or a mixture of separate and community property where community property is inconsequential in comparison with the separate property used; 3) Inheritance or donation from a third party to a spouse individually 4) Damages one spouse is awarded against the other for breach of contract or a claim for fraud or bad faith management of community property; 5) Damages a spouse is awarded in connection with his separate property 6) Things a spouse is awarded in a voluntary partition

10

What is the default status of property acquired during the community property regime?

All property that is in possession of either spouse is presumed to be community property. The presumption can be rebutted by the spouse claimin the asset is separate property by a preponderance of the evidence.

11

When are assets classified during a community property regime?

Assets are generally classified at the monent of acquisition, even if all or a portion of the price hasn't been paid. E.g., a credit sale before marriage is considered seperate property, even if a large portion of the price hasn't been paid.

12

What is the prohibition against mixed titles?

Property in LA is either community or separate property.

Exception: a spouse acquires undivided interests at distinct times. E.g., when my dad dies without a will, my two siblings and I inherit his home. Then, I buy out my siblings' interest during the marriage with community funds.

13

Define Real Subrogation

Real subrogation is a tracing principle under which a new thing is classified in the same manner as the old thing that was converted. In other words proceeds retain the same status as the original property.

14

How does a spouse donate separate property to the community?

These donation must be in writing and must stipulate that the spouse is donating the property to become community property.

If gratuitous, the donation must be in the form of an authentic act.

15

How does a spouse donate community property to a spouse's separate estate?

No form requirement. The donor donates his share, and the community interest of the donee becomes separate as well.

16

How are DIV and DMC from third parties classified?

The key is donor's intent. DIV and DMC to one spouse individually from third parties are always separate property.

 

Domations to the spouses jointly are community property.

17

Contemporaneous mixings of separate and community property to acquire an asset, how do you classify the asset?

When spouses mix separate and community property to acquire an asset, the asset acquired will be separate property unless the community property used is consequential in comparison with the separate property used ( around 20%-25%)

18

How do you deal with separate goods mixing with community goods?

When spouses mix fungible things identical in kind (most frequently bank accounts), the mixing generally has no effect on classification unless they no longer retain their distinct character.

19

Property acquired through the effort, skill, or industry of a spouse

All property acquired through the effort, skill,or industry of a spouse is community property. Property of this type would include wages, but also sweepstakes and lottery winnings. Any effort, however slight, is sufficient to trigger community classification.

20

Are fruits of property classified?

Fruits of a spouses separate property, and mineral-related revenues, are generally community property in LA.

EXCEPTION: a spouse may unilaterally reserve the fruits of his separate property to himself, but he must:

  1. Execute an authentic act or act under private signature duly acknowledged.
  2. Record that act, even to trigger effect between the spouses, in the parish where immovables are located and where the declarant is domiciled for movables.
  3. Give a copy to the other spouse

21

Active Investments:

How do you classify payments from active inventments?

These must be classified as either fruits or earnings. Fruits may be reserved, earnings may not. LA employs a balancing test to make the distinction. Did you get the money by working more (effort, skill or industry), or is it more like receiving fruits?

22

How do you classify insurance renewal commissions?

Community property. These are the product of a spouse's effort, skill or industry and are generally classified accordingly.

When does the effort, skill or industry that resulted in payment arise? Renewal commissions are to be apportioned, and classified pro-rata based on when the effort was expended. Commissions received during the existence of the community property regime are presumed to be community property and the spouses claiming they are separate property bear the burden of proving more work was done outside of the regime.

23

How are credit acquisitions classified?

Ownership is fixed at the moment of acquisition (e.g., upon credit sale). As a result, when parties engage in a credit acquisition in LA, you look to the source of the funds used to make any down payment to classify the asset. Subsequent payments on the price have no bearing on classification.

Exception: Bond for deed: When the buyer and seller of immovable property agree that the buyer will not take title in a credit acquisition until the final payment is made, they have created a bond for deed contract. Here, all payments made would govern classification under the consequentiality test.

24

How are pensions classified?

Pensions are community property to the extent attributable to the effort expended by the spouse during the existence of the community.

(Service during the community property regime

Defined contribution plans: The employee benefit upon retirement is what the employee and employer contributed to the plan, plus interest accrued. The portion of the total pension attributable to contributions made during the legal regime is community property. The rest is separate. 

Defined Benefit Plans: employer promises to pay the employee, upon retirement, stated benefits based upon the length of the employee's service--not their financial contributions. Numerator: portion of the pension attributable to creditable service during the community. Denominator: total creditable service.

 

25

How are damages for personal injuries classified?

Damages for personal injuries sustained during the existence of the community property are separate property

EXCEPTION: 1) any portion of the damage award for reimbursement of medical expenses that were paid with community funds, and 2) any portion of the damages award that represents lost wages. If the community ends by divorce and the lost wages award covers some future time period, the code requires a retroactive reclassification of the lost wages award.

26

How are life insurance policies (and proceeds) classified?

Policy classification: the inception of title/right rule governs, such that classification is determined by the source of the funds used to initially to acquire the policy. Subsequent premium payments with a different source of funds do not change the classification of the policy.

Proceeds classification: life insurance proceeds are treated sui generis and belong entire to the designated beneficiary.

27

How are disability payments classified?

Disability payments are classified under the real subrogation theory, which means these payments are classified according to what the payments are substituting for. E.g., If substituting for lost wages during the period of the community property regime, then the disability payments are community property.

28

How is intellectual property classified?

Louisiana community property rules apply alongside federal law. Classified on a pro rata basis. Work performed during the existence of the community is community property. Work performed outside the community is seperate property.

Fruits received during the community are community property, while the right to use, possess, or alienate works is separate property of the author/creator of the spouse.

E.g., Ownership of a copyright, vests in its author, BUT revenues (fruits) derived from copyrighted work shared between the spouses as a result of the effort, skill, or industry of one spouse.

29

How is goodwill classified?

Good will of a community owned corporate, commercial, or professional business is community property EXCEPT to the extent it is attributable to any personal quality of the spouse. Is the good will attributable to one spouses personal qualities (unique style, people recognize his/her)?

Goodwill: the value of a business beyond its assets. Reputation.

30

How is community property managed?

Either spouse, acting alone, may generally manage, control, or dispose of community property under the equal management scheme. The participation and consent of the other spouse is not required.

Exceptions:

  1. Concurrence required for alienation of community immovables; furniture in the family home; all or substantially all assets of a community enterprise; movables registered in a spouse's name as provided by law; all donations of community property unless it's a usual or customary gift commensurate with the economic position of the spouses at the time of the marriage.
  2. Sole and exclusive management for a spouse acting as the sole manager of a community enterprise to alienate, encumber, or lease its movables; movables issued or registered as required in the name of one spouse alone; partnership and LCC interests; contractual relationships, under the privity principle.

31

For what property is the concurrence of the other spouse required for the alienation, encumbrance, or lease required?

Concurrence required for

  1. alienation of community immovables; 
  2. furniture in the family home; 
  3. all or substantially all assets of a community enterprise; 
  4. movables registered in a spouse's name as provided by law;
  5. all donations of community property unless it's a usual or customary gift commensurate with the economic position of the spouses at the time of the marriage.

Alternatives to concurrence:

  1. Renunciation of right to concur in alienation in lease of an immovable or sale of all substantially all assets of a community enterprise. These may be irrevocable for a period of 3 years.
  2. Judicial authorization to proceed without concurrence in a summary proceeding upon proof that the act is in best interests of the family, and that the other spouse either arbitrarily refuses to concur or can't concur because of absence or incapacity.
  3. Ratification of the act of management. E.g., I didn't agree to the sale, but I took the money from the sale to buy something.

32

What are the alternatives to the concurrence requirements?

Alternatives to concurrence:

  1. Renunciation of right to concur in alienation in lease of an immovable or sale of all substantially all assets of a community enterprise. These may be irrevocable for a period of 3 years. If the renunciation is not expressly made irrevocable, the renunciation remains in effect until revoked.
  2. Judicial authorization to proceed without concurrence in a summary proceeding upon proof that the act is in best interests of the family, and that the other spouse either arbitrarily refuses to concur or can't concur because of absence or incapacity.
  3. Ratification of the act of management. E.g., I didn't agree to the sale, but I took the money from the sale to buy something.

33

When can one spouse act as sole and exclusive manager of community property?

Sole and exclusive management for

  1. a spouse acting as the sole manager of a community enterprise to alienate, encumber, or lease its movables;
  2. movables issued or registered as required in the name of one spouse alone;
  3. partnership and LCC interests; contractual relationships, under the privity principle.

34

What are the remedies for mismanagement?

When a spouse acts without authority, in violation of the management rules, the transaction is a relative nullity and can be set aside, even when in the hands of a third person.

 

Even if a spouse acted consistently with the management scheme, the other spouse may sue for damages for management activities that rise to the level of fraud or bad faith management of community property.

35

What events cause the termination of the commnunity property regime?

  • Death of a spouse
  • Declaration of death
  • Declaration of nulity of marriage
  • Judgment of legal separation (in covenant marriage)
  • Judgment of divorce (termination date retroactive to date of filing the pleading on which divorce is granted)
  • Judgment of separation of property

36

Specialized co-ownership rules after termination of the community property regime.

After termination, but before the spouses partition the property, they are co-owners of the former community property except as otherwise provided by law.

Rules of co-owership apply except:

  1. Spouses each own an undivided one half interest in teh former community property, but they must now preserve and prodently manage former community property within their control, in a manner consistent with the use prior to termination.
  2. Concurrence is required for all alienation, encumberance, or lease of property. Equal management no longer applies. But in a judicial proceeding, a spouse mayseeek judicial authorization to proceed without concurrence if the other spouse arbitrarily refuses to concur or cannot concur because of unavailability/incapacity and that it is in the best interest of the petitioning spouse and not harmful to the nonconcurring spouse.
  3. The court can award temporaryy use and occupancy of the family home. Rent is not owed unless the court sets it at the outset or the parties agree to defer the issue unitl later.
  4. Spouses may not agree not to partition their community property. Spouses can demand partition at any time.

 

37

Classification of obligations

Obligations incurred during the existence of the community property regime are presumed to be community obligations. Further, community obligations are defined as those incurred during the regime either for the common interest of the spouses or for the benefit of the non-concurring spouse. Child and spousal support obligations, and attorneys' fees in a divorce and incidental actions are legislatively classified as community obligations.

Separate obligations:

  • Obligations not for the common interest of the spouses or the interest of the other spouse
  • obligations incurred for a spouse's separate property, but only to the extent it doesn't benefit the family. E.g., incurring obligation on family home.
  • Intentional torts, to the extent they don't benefit the family (embezzle money for the benefit of the family).

38

When can one spouse get reimbursement?

Reimbursement: claims are owed as monetary claims from one spouse to another bty the community. A spouse is reimbursed for:

  • Use of separate property to benefit the other spouse's estate. The spouse using his separate property is entitled to the value of the separate property at the time it's used.
  • Use of separate funds to satisfy a community obligation or to acquire, improve, or benefit community property. The spouse using his separate property is entitled to one-half of the separate funds used. Subject to a limitation of liability to the extent that the spouse owing reimbursement has a sufficient net share in teh community to pay the claim.
    • No limitation of liability for the ordinary and customary expenses of marriage or for the support, education, or maintanance of the children or other spouse.
  • Use of community funds to satisfy a separate obligation or to acquire, improve, or benefit separate property: the spouse whose separate property was benefited owes teh other one-half of the community property used. 
    • Obligations relating to the family home: if the spouses are benefit from it by living there or receiving community property fruits: a reimbursement claim may be made only for 1/2 of the funds used to reduce the principle. Funds used to pay the interest portion will not be reimbursed.
  • Use of one spouse's community labor devoted to one spouse's separate property when one spouse's uncompensated or under-compensated labor increases the value of the separate property. The spouses whose property benefited owes the under-compensated spouse 1/2 the increase in the value attributable to the community labor.
    • If the one spouse proves that their community labor was uncompensated and it increased the value of the house, the other spouse must prove that the value was attributable to something other than community labor.
  • Educational expenses: Factors to be considered in determining whether to reimburse educational expenses:
    • The claimant's expectation of a shared benefit
    • Degree of detriment suffered by the claimant (putting career on hold, has to take a second job)
    • The bagnitude of the benefit to the other spouse.

39

How can the spouses partition the community property?

Community property partitions can be voluntarily or Judicially.

Judicial partitions are not permissible during the community property regimes. Done in the aggregate, by allocating entire assets and ordering equalizing payments as necessary.

Voluntary partition: these are contracts, subject to all of the vices of consent applicable to basic contracts--fraud, error, duress, and lesion. Voluntary partitions may be set aside if a spouse does not receive 3/4 to which she's entitled. There is a 5-year prescriptive period for asserting these vices of consent.

40

What is a judgment of separation of property? On what grounds can you get one?

A spouse may unilaterally seek to terminate the community property regime and may, under some circumstances, obtain a judgment of separation of property, but stay married.

One of the four grounds must be proven in the request to the court:

  1. A spouse's community interest is threatened by the fraud, fault, neglect, incompetence, or disorder of the affairs of the other spouse
  2. The other spouse is an absent person
  3. The one spouse filed petition for divorce and lived separately for 30 days before or after filing of the petition
  4. The spouses have lived separate and apart for 6 months.

 

41

Conflict of laws

Implicated when parties are domiciles of LA, but acquire property while domiciled elsewhere.

Movables: generally governed by the law of the domicile of the acquiring spouse at the time of acquisition

Immovables situated in LA: Immovables in this state are governed by the law of LA, regardless of domicile at the time of acquisition.

Quasi-community property: when a LA court is partitioning a couple's proeprty, but they acquired the property while domiciled elsewhere, the doctrine of quasi-community property treats the property acquired when the spouses were domiciled elsewhere as if acquired by the spouses when in LA.