Quick Remember CP

Question 1

Opening Sentence

Answer 1

California is a community state. Community property is defined as all property, real or personal, wherever situated, acquired by a married person during the marriage while domiciled in the state. Separate property is property acquired before marriage or during marriage by gift, bequest, devise, or descent.

Question 2

Unilateral Gifts pre and post dissolution/death

Answer 2

If parties no longer married, other spouse can take their CP share(50%) from the gift

If married, can void if not ratified

Question 3

Common Necessaries of Life

Answer 3

During a period of separation, absent a court order otherwise, the non-debtor-spouse is personally liable only for the other spouse’s common necessaries of life. These are the necessaries of life that are typical for most families, not specific to the family in question.

Question 4

RETIREMENT ACCOUNTS and Deferred Compensation

Answer 4

Deferred compensation – such as a pension, IRA, or 401(k) – is characterized by the employee’s marital status during the period in which the deferred compensation was earned. When deferred earnings are earned entirely during a period when the employee is married, benefits are entirely CP.

The nature of pensions varies based on the employer.
While occasionally tied to the length of employment, other
facts may dictate the pension’s value. A court will
apportion a pension by the time rule if they can – SP or
CP based on the ratio of time worked during the marriage.
Otherwise, the court will apportion to reach a reasonable
and fair outcome relative to the contributions of the
community and separate estates.

Question 5

Term Life Insurance

Answer 5

Term Life Insurance covers the insured for only a specified period. It pays a fixed benefit to a named beneficiary upon the insured’s death but is not redeemable for cash value during the
insured’s life.

Question 6

Premium Payments

Answer 6

The premium payment is a contract debt that the policy owner owes the insurance company to keep the policy in force. The Last Premium Rule holds that the character of the last premium payment determines the character of any insurance proceeds that pay out during that term.

Question 7

Nonspousal Beneficiaries

Answer 7

A married person has the right to name a nonspousal beneficial designee on his or her life insurance policy. The policyholder can use community property funds tor pay for premiums, but may still name a nonspousal beneficiary.

Question 8

SP Premium Payments but had used CP

Answer 8

Reimbursement: Wife paid five years of $500 premium payments from community property earnings while her mother was the beneficiary. Husband can seek reimbursement of his one-half of those community property payments from Wife’s estate, or $250 for five years.

Question 9

See v. See Rule

Answer 9

SP Rebuttal by Exhaustion: The SP claimant must show that, on the date of purchase, the CP sums on deposit in the account were exhausted (there wasn’t enough CP $ available to pay for the whole purchase).

If not completely exhausted, then at least some of the ownership percentage is SP

Question 10

Mortgages and loans secured with SP downpayment

Answer 10

Are CP

Question 11

Hicks-Mix Direct Tracing Rebuttal

Answer 11

(i) On the date of the disputed purchase, both CP sums on deposit and SP sums on deposit were sufficient to make the disputed purchase.

(ii) On or near the date of the disputed purchase, the SP proponent declared an intention, in a writing separate from the account records, to make the purchase with SP sums on deposit.

(iii) Immediately after the purchase, the amount of that purchase was withdrawn from the SP sums on deposit.

Records prepared in anticipation of litigation are disallowed.

Question 12

Moore Formula (close to marriage)

Answer 12

SP down payment + (SP loan - CP contributions) / Historic Purchase Price = SP%

CP contributions / Historic Purchase Price = CP%

• Adding in the Value of the Appreciation:
• Appreciation = Fair Market Value at Divorce - HPP
• SP% X Appreciation = SP Appreciation = SP%
• CP% X Appreciation = CP Appreciation = CP%

Question 13

MARSDEN FORMULA (further from marriage)

Answer 13

• Start with the Moore formula.
• Adding in Premarital Equity and Appreciation:
• Equity = SP payments made before marriage
• Appreciation = Fair Market Value at Marriage - HPP

Question 14

CP IMPROVEMENTS TO SP PROPERTY

Answer 14

• When the non-owning spouse consents to the use of CP to improve the other spouse’s SP, no gift is intended.
• If the improvement is a CAPITAL IMPROVEMENT, the CP estate is entitled to an equitable ownership interest in the property.
  A capital improvement is one that increases the SP’s fair
  market value.
• If the improvement is a NON-CAPITAL IMPROVEMENT, the CP estate is entitled to reimbursement without interest for its contributions to construction costs.

Question 15

Pereira Formula

Answer 15

Fair Market Value @ Dissolution – (Fair Market Value @ Marriage + Fair Rate of Return) = CP excess profits

• Fair Rate of Return = Principal X Interest X Time
  The FRR represents what the SP business owner would have made
  on his/her investment, had the value of the business been invested
  in reasonably safe securities (stocks and bonds) over the course of
  the marriage.
• 10% interest usually applies, unless told otherwise.

      (ie. Fair Rate of Return = $100K X 4% X 10 years = $40K)

Question 16

Van Camp Formula

Answer 16

• Fair Market Value @ Dissolution – (CP Labor – Family Expenses) = SP
• Labor = Annual Benchmark Salary X Years
• Expenses = Annual Expenses X Years

Question 17

Contract Liabilities

Answer 17

• A contract liability is incurred when the contract is made. For example, when you sign the credit card receipt when you make a purchase, you’re creating a contract to repay that debt to the credit card company.
• If made during marriage, the community estate, the debtor-spouse’s SP estate, and the non-debtor-spouse’s SP estate are all liable for any contract debt that was incurred by one or both spouses during marriage for “necessaries of life.” <-like family expenses

Question 18

Marvin relationship

Answer 18

A Marvin relationship is one where two adults choose to share their lives with each other in an intimate and committed sexual relationship, and cohabitate. The existence of a Marvin relationship must be proven by clear and convincing evidence. Wife will assert that her relationship with Husband constitutes a contract for mutual support

Question 19

Summary Dissolution

Answer 19

Some requirements:
* No children.
* Marriage is < five years.
* No real property.
* No debts > $4,000.
* CP is < $25,000.
* No SP.

Question 20

Student loan payments recovering CP

Answer 20

Reimbursed unless benefitted for 10 years

if not, actually improved income

Question 21

Premarital child support

Answer 21

considered a creditor relationship. Support obligations are presumably paid by separate property, but can be paid by community property with a right of reimbursement if there were available separate property funds. Wife may seek reimbursement on behalf of the community if she can show that Husband used community property funds to pay his child support obligation when there were separate property funds available to do so.

Question 22

Non-spousal beneficiary

Answer 22

Premium payments from community property funds on a term life
insurance policy with a non-spousal beneficiary are considered a gift to that third-party.

Question 23

Divestiture Statute

Answer 23

When a former spouse is named as beneficial designee, that former spouse loses their right to the proceeds upon dissolution. But there is an exception if there is clear and convincing evidence that the transferor intended to preserve the non-probate transfer to the former spouse.

Question 24

Void/Voidable Marriage

Answer 24

A void marriage is one that:
1) fails to meet statutory formalities,
2) is bigamous or polygamous, or
3) is incestuous.

A voidable marriage is one that:
1) one party wasn’t capable of consenting to,
2) is bigamous,
3) one party was of unsound mind,
4) was forced, or
5) one party was impotent

Question 25

Marvin Suit

Answer 25

Civil court, not family
Contract law
The statute of limitations for Marvin suit based in an implied contract is two years.

Question 26

Putative Spouse Status

Answer 26

A court-granted status to a party in a void or voidable marriage if:
1) Evidence that the marriage the party thought was valid turned out not to be.
2) Substantial evidence of the petitioning party’s genuine and honest belief in the validity of the marriage.

Question 27

VALID MARRIAGE

Answer 27

A valid marriage is a civil contract between two persons based on consent, the issuance of a license, and solemnization.

Question 28

Necessaries of Life Contract

Answer 28

If made during marriage, the community estate, the debtor-spouse’s separate property estate, and the non-debtor-spouse’s separate property estate are all liable for any contract debt that was incurred by one or both spouses during marriage for “necessaries of life.

Question 29

MARVIN (burden, SoL, remedies)

Answer 29

Burden of Proof: Clear and convincing evidence.

Statute of Limitations:
* Written Contracts: 4 years.
* Oral or Implied Contracts: 2 years.

Remedies for Breach:
* Traditional contract remedies.
* Constructive Trust: Used to demand return of property wrongfully detained.
* Palimony: Ongoing post-breakup financial support.

Marvin contract obligations survive the subsequent marriage of the original nonmarital cohabitants to each other or third parties.

Question 30

CA Life Insurance on a Spouse

Answer 30

Even though a spouse has an insurable interest in the life of the other spouse, under California law an insurance company may not issue an
individual life insurance policy to an applicant on the applicant’s spouse unless the applicant’s spouse has signed the policy application or has otherwise been notified in advance of the issuance of the policy.

Question 31

Separate and Apart test

Answer 31

(1) A spouse has expressed to the other spouse his or her intent to end the marriage.
And (2) the conduct of the spouse is consistent with his or her intent to end the marriage.