Flash Card - Community Property
(45 cards)
What does Separate Property include?
It includes:
1) Property acquired prior to marriage;
2) Property acquired after separation;
3) A gift, devise, or bequest;
4) Property acquired with separate funds; AND
5) Profits from separate property.
How will courts determine the character
of an asset?
They will trace back the source of the funding used to
acquire the property.
*A change in the form of the property will NOT change its
characterization.
What happens to Community Property (CP) upon
divorce or death?
All CP is divided equally between the spouses, and a spouse’s Separate Property (SP) will remain his/her own.
What is Quasi-Community Property (QCP)?
Property acquired while living in a non-CP state that would be considered CP if the spouse(s) had been living in California when the property was acquired.
*At divorce, QCP is treated as CP.
What happens to QCP upon death?
The surviving spouse has a ½ interest in QCP titled in decedent. (The decedent DOES NOT have any rights in QCP titled in surviving spouse’s name.)
When does the married woman’s special
presumption give the wife a presumption of
Separate Property?
If:
1) Title is taken in her name alone; AND
2) The property was acquired prior to 1975.
When does the economic community end?
When:
a) Either spouse dies; OR
b) Permanent physical separation (permanently living apart + no intent to continue marriage).
What is a Putative Spouse, and what is he/she
entitled to?
A spouse that has a good faith reasonable belief that he/she is married.
They are entitled to quasi-marital property (QMP) which is treated like CP upon divorce.
*QMP ends once a person learns they are not lawfully married.
Unmarried Cohabitants
What will courts enforce under
the Marvin case?
Agreements between cohabitating couples that are not married (as long as they are not expressly based on performance of illicit sexual acts).
What are the rights of each spouse to manage and control Community Property?
They may sell, encumber, or otherwise dispose of CP without the other’s consent.
What are the four exceptions to a spouse’s right to manage community property?
1) Personal property transfers of CP for LESS than fair and reasonable value.
2) If one spouse is managing a business, that spouse is given primary management and control of that business.
3) Transfers of community Real Property requires BOTH spouses to join the transaction.
4) Inter Vivos gifts of CP require written consent.
Fiduciary Duties
What duty does the confidential relationship of
marriage impose?
The duty of the highest good faith and fair dealing on each spouse, and neither shall take any unfair advantage of the other.
Fiduciary Duties
What two acts are considered a breach of the duties imposed by marriage?
1) An intentional grossly negligent/reckless dissipation or destruction of property; and
2) A gain in financial advantage at the expense of
the other spouse.
When do courts apply the Moore Principle?
When property is acquired with comingled funds (both CP and SP) AND there is no title presumption.
*CP and SP are apportioned based on their relative contributions.
How is jointly titled property acquired during a
marriage treated at Divorce vs. Death?
At divorce: It is treated as presumptively CP, but any SP used for the purchase is entitled to reimbursement. (under Anti-Lucas Statute).
At death: SP used to acquire jointly titled property is presumed to be a gift. (NO REIMBURSEMENT, unless otherwise agreed).
Personal Injury Awards – Against 3rd Parties
During marriage/divorce
vs.
Before or after marriage
During marriage: personal injury awards/settlements are CP.
At divorce: assigned entirely to the injured spouse (unless funds were comingled or there is economic hardship).
Before/after marriage: award is SP of injured spouse
Personal Injury Awards – Against Spouse
Who receives a personal injury award when the
cause of action is against the spouse?
Personal injury awards/settlements against a tortfeasor spouse are ALWAYS the SP of the injured spouse.
When will courts use the Pereira Method to
determine CP/SP business interests at divorce?
When business growth is mostly due to the spouse’s labor and abilities.
Owning spouse receives original principal value, plus a 10% annual rate of return. Remaining value of business is CP.
When will courts use the Van Camp Method to
determine CP/SP business interests at divorce?
When business growth is mostly due to the character and nature of the business itself.
The community receives a reasonable salary
REDUCED by expenses, and remaining value
How is the “Goodwill” of a
business defined?
The intangible value of the business reputation beyond personal skill or value of assets.
*When goodwill is generated by community labor it is deemed CP.
How is Goodwill valued?
By either:
a) The Market Value Method – price in sale of
business; OR
b) Capitalization of Excess Earnings Method –
present value of the future stream of income that the goodwill developed during marriage.
How do courts determine the CP interest in a Whole Life Insurance Policy that was paid for with CP and SP funds?
They use the Buy-in-Rule, which states that CP value is apportioned using the formula below:
# of premium payments made with CP
/
total number of premium payments
Is Term Life Insurance designated as CP or SP?
Under the Final Payment Rule, it is designated as CP or SP according to the characterization of the last payment made.
How are stock options deemed if they were awarded during marriage, but become exercisable after marriage?
It depends on how they were earned and intent of employer.
If awarded for past services: CP value is the time employed during marriage divided by the time employed until the date the option becomes exercisable.
If awarded to encourage the employee to stay: CP value is the time from the date the option was granted to the economic community ended divided by the time from the option was granted to the date the option becomes exercisable.
