Effect of Parties' Actions on Characterization of Assets Flashcards Preview

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Flashcards in Effect of Parties' Actions on Characterization of Assets Deck (9)
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1
Q

Pro Ration Rule

A

Installment purchase before marriage, payment with CP funds after marriage (or during marriage W inherits land subject to mortgage and pays off note with CP funds), the community estate takes a pro rata portion of the property, measured by the amount (percentage) of principal debt reduction attributable to the expenditure of community funds.

e.g. W buys house for $100K with $20K Sp. Then marries. During marriage reduces mortage to $70K. Then continues to pay down to $0 with CP. House now worth $500K. Who takes what?

calculation - CP = (principal debt reduction attributable to CP)/purchase price

$70K/$100K = 7/10 CP

So $500K * 7/10 = $350K CP, $150K SP
So when dividing up property H gets $175 (1/2CP) + 100% SP

THIS REALLY JUST BOILS DOWN TO HOW MUCH WAS PAID WITH CP.

2
Q

Pro ration rules and life insurance policy

A

CP will be the number of payments made during the marriage. SP will be the nunber of payments outsid ethe marriage, so

calculation CP = (principal installment payments attributable to CP)/purchase price

3
Q

term life insurance

A

the last policy payment determines if its’ SP or CP

4
Q

CP used to improve SP

A

Fixtures - If CP is used to spend on fixtures which make a house more desirable, you can only get reimbursement.

E.g.
Hobie owns a house at the time of his marriage to Winkie. Thereafter, Hobie spent $50,000 out of his salary (CP) to add a family room to the back of the house, to put in a swimming pool, and to build a redwood deck around the pool. These improvements increase the value of the house from $200,000 to $280,000. Winkie has filed for divorce.

5
Q

Spouse spending CP on other spouse’s SP

A

E.G.
Winkie owned the house as her SP. Thereafter, Hobie spent $50,000 out of his salary (CP) to add the family room, swimming pool, and redwood deck. Those improvements increased the value of the house and land from $200,000 to $280,000.

TESTS - USE BOTH
No reimbursement –These facts (CP expended other spouse’s SP) give rise to presumption of gift to W’s separate estate; presumption of gift can be overcome only by evidence of an agreement to reimburse community estate.

o Reimbursement – Other cases rejected presumption of gift and granted reimbursement.

6
Q

reimbursement Rules

A

FEATHERING NEST - If one spouse extends CP to improve own SP, community has reimbursement claim for the greater of the cost of improvements or the enhanced value

if one spouse expends CP to improve other spouse’s SP, there is a split authority on reimbursement

if one spouse expends SP to improve CP, we are governed by anti-Lucas on divorce and Lucas upon death.

7
Q

Recapitulation

A

Process of showing that things that look like CP were purchased with SP funds.

Family expense presumption - food, housing, cloth were made with CP even though SP were available. It is presumed that they made a gift to the community in purcahsing

8
Q

recapitulation and exhaustion method

A

Basically just showing that you exhausted the CP funds by payment on CP and so only SP left

9
Q

recapitulation and direct tracing method

A

requires

  1. sufficient separate funds were avialable
  2. perosn intended to use SP funds to buy an asset