Community Property Flashcards
Basic Community Property Presumption
All property acquired during marriage is presumed to be community property, unless acquired by gift or inheritance, in which case it is presumptively separate property
Putative Spouses
One that has a good faith belief that he or she is lawfully married, even though he or she isn’t
Quasi-Marital Property
All property acquired during a putative marriage is labeled as quasi-marital property, regardless of it being CP or QCP, but treat it under normal CP and QCP rules
SP is still discussed as SP
Unmarried Cohabtiants
Apply K principles and, if applicable, restitutionary remedies (unjust enrichment, constructive or resulting trust)
Consideration may not include sexual services
Quasi-Community Property
Property acquired during marriage by the spouses that would’ve been CP had the spouses been domiciled in a CP state at the time of the acquisition
Under QCP, if the spouses move to CA, until divorce or death, the QCP…
Remains SP of the acquiring spouse
Under QCP, property acquired in a non-CP state by spouses while domiciled in a CP state is
CP
Under QCP, at divorce, or on the death of the acquiring spouse, as well as for the purposes of creditors’ rights, QCP is treated
The same as CP
If the non-acquiring spouse dies first, QCP remains the SP of the acquiring spouse
Pension, Stock Bonuses, and Options
If acquired in part during marriage and in part outside of marriage, use the pension time rule
CP Interest = (total assets earned) x (years of marriage in which asset is earned/total number of years in which asset is earned until payable)
Personal Injury Damages - Characterized based on when the injury occurred
CP if the personal injury cause of action arises during marriage
SP if before marriage or post-separation
SP if injury is due to tort of other spouse
Life Insurance - Term Life
Character of proceeds is character of last premium paid (if made from CP, then entire proceeds are CP)
Life Insurance - Whole Life
Cash value allocated based on proportion of premiums paid by SP and proportion paid by CP; term amount based on character of last premium paid
Disability Pay
If it replaces earnings during marriage, CP
If it replaces earnings before or after marriage, SP
If a business is developed entirely during a marriage, it is
CP
Van Camp/Pereira rules apply if
Spouse brings SP business into marriage, or spouse inherits SP business; and
Either spouse works in the business and business value increases at least in part due to efforts of either spouse
Van Camp
Use when increase in value primarily due to character of business
CP = (Market salary – actual salary – family expenses paid from salary)*years married
SP = FMV of business at dissolution – CP portion
Pereira
Use when increase in value primarily due to management efforts of the spouse
SP = value of managing spouse’s SP business at time of marriage + [fair rate of return (0.1)value at time of marriageyears married]
CP = Value at dissolution – SP
Business Goodwill Calculation
Goodwill is treated like CP if created during marriage (the difference between a business’ total value and the value of its assembled physical assets)
Two valuation methods: 1) market sales valuation (expert opinion) and 2) capitalization (past excess earnings attributable to good will)
Education and Training - Right to Reimbursement
Community has an equitable right of reimbursement, with interest, if community funds are:
Used either to pay for education or training, or are used to repay a loan used for education or training; and
The education or training substantially enhances the educated spouse’s earning capacity
Education and Training - Reimbursement Exceptions
Community already substantially benefited from the education or training (10 years since degree earned means no reimbursement); or
If the education reduced the educated spouse’s need for spousal support
Joint Title Rules (anti-Lucas)
All jointly held property acquired during marriage is presumed CP at divorce and legal separation. Applies to joint tenancy from and after 1/1/85, and to tenancy in common from and after 1/1/88
At death, use joint tenancy rule – all to survivor
SP contributions to the purchase of the property are reimbursed to the SP contributor without interest or appreciation (increased property value is CP)
Tracing Funds - Two Presumptions
Family expenses are presumed to be paid first from community funds
If SP funds are used to pay family expenses, presume a gift of the SP to community
Tracing Funds - Two Methods
Exhaustion - Community funds exhausted by payment of family expenses, so only SP left
Sufficient Funds - If CP balance never fell below SP amount, presume all family expenses paid from CP
Community Payments on Purchase Price of Separate Property (Moore Formula)
Used for property purchased before marriage but uses CP to make payments after marriage
Moore Formula: CP = (principal paydown during marriage/total purchase price)*value at divorce
