01 Az Community Property 2010

Front 1

Community Property Opening Shot

Back 1

1) AZ is a CP state
2) All property acquired DURING MARRIAGE is PRESUMED to be CP.
3) Assets acquired on credit is presumed to be CP credit.
4) Burden of proving that an asset is SP is on the spouse claiming that it's SP--must be shown by CLEAR AND CONVINCING EVIDENCE.
5) AZ follows the INCEPTION OF TITLE rule, meaning that character of title is determined at the time it is acquired.
6) All CP is subject to EQUITABLE DIVISION

Front 2

Separate Property Opening Shot

Back 2

All property acquired
1) before marriage
2) through gift, bequest, or devise
3) with SP funds
4) by appreciation of SP
5) by tort recovery for personal injury (but not medical or lost wages)
is SP.
6) All property acquired by spouse AFTER service of petition for divorce is SP if petition results in a final decree.

Front 3

Validity of Marriage

Back 3

Valid marriage ACLU
1) Age (18 or parental or judicial consent)
2) Capacity: No bigamy, consanguinity or same sex marriage.
3) License: Ceremony by a person authorized to perform and solemnize marriage (judge or clergy, 2 witnesses)
4) UNLESS valid in another state and not prohibited in AZ (e.g. same sex marriage will NOT be given full-faith-and-credit.)

Front 4

Equitable Division

Back 4

1) ALL CP subject to equitable division, even JTWROS, TIC, and good will.
2) Marital misconduct NOT taken into account
3) Financial misconduct taken into account
4) Contributions to spouse's education may be taken into account.
5) DEBT (creditors not a party to divorce proceedings)

Front 5

Spousal Maintenance

Back 5

A.K.A. alimony
1) Lacks sufficient property
2) Unable to support self and child
3) contributed to economic opportunities
4) Age precludes employment

Front 6

CP expended to make mortgage principal payments on SP

Back 6

Community reimbursement claim via lien for
1) CP expended
2) Pro rata share of enhanced value
3) No reimbursement for interest, insurance or taxes.

Front 7

CP expended to improve SP

Back 7

Community claim for reimbursement for enhanced value attributable to CP.

Front 8

SP expended to discharge debt, make improvements to CP, or pay community living expenses.

Back 8

1) Presumed a gift to CP.
2) Can be overcome by clear and convincing.

Front 9

SP expended to make improvements on JT property

Back 9

SP claim for reimbursement of 50% of enhanced value attributable to SP.

Front 10

Life insurance

Back 10

1) Whole life insurance = CP entitled to pro rata share.
2) Term life insurance = last payment determines character.

Front 11

Retirement Plans

Back 11

1) CP if earned during the course of the marriage.
2) (Preferred) Benefits earned before AND during marriage, course use "present cash value" rule to determine how much of pension is attributable to CP labor and how much to SP.
3) Where not possible to determine, courts use reserve jurisdiction which postpones determination until payments are due.
4) Predeceasing spouse has no CP interest in federal plans

Front 12

Defined Contribution Retirement Plans

Back 12

1) Contribution to shares -- TRACING rules apply for SP.
2) Community presumption applies.

Front 13

Military Retirement and Disability

Back 13

1) Retirement = CP
2) Disability = SP (preemption)
3) BUT spouse cannot transmute retirement to disability.

Front 14

Stock Options **

Back 14

1) primarily for past services = (date of employment to date community ends) ÷ (date of employment to date option can be exercised)

2) primarily for future services = (date option granted to date community ends) ÷ (date option granted to date option can be exercised)

Front 15

Community Labor enhancing value of SP business

Back 15

1) Business is still SP
2) Reasonable rate of return: SP interest= SP initial value + reasonable return
3) Compute enhanced value during marriage = FMV- SP interest
4) CP = amount of enhanced value attributable to community labor (66% is a good example).
5) Divide CP equitably
6) Salary does not negate CP component

Front 16

Commingled Accounts

Back 16

1) Presumptively CP UNLESS
2) negligible CP deposits
3) dormant account
4) Can be clearly traced to SP like a CD

Front 17

CP used to buy JT

Back 17

Does not overcome CP presumption unless
1) both spouses agree in writing, or
2) both sign the JT deed as grantees.

Front 18

New basis at death rule

Back 18

1) capital gains tax purposes: basis at death of spouse = FMV
2) BUT for JT, have to cut in half the FMV and add half of original basis (e.g. 100K][900K --> 50K+450K= 500K new basis)
3) AZ has CP WROS that takes advantage of entire new basis.

Front 19

SP used to buy JT

Back 19

Presumed that 50% is gift to spouse as SP

Front 20

Account WROS

Back 20

Deposits not considered gift to SP, proportion of ownership based on deposits.

Front 21

CP taken as SP?

Back 21

If title is taken as "sole and separate property" by agreement of spouses.

Front 22

Premarital Agreement

Back 22

AZ uses UPAA
1) No consideration needed
2) Signed writing by both parties
3) Can modify any disposition or rights UNLESS
4) Causes spouse to be eligible for welfare.
5) Limiting child support.

Front 23

Premarital Agreement: defenses

Back 23

1) Not signed voluntarily
2) a) Unconscionable b) no fair disclosure c) disclosure not waived d) no adequate knowledge of assets

Front 24

Marital agreements

Back 24

Probably the same as premarital, but no statute.

Front 25

Management and Control: General Rule

Back 25

During Marriage, both spouses have equal management, control and disposition of community assets.

Front 26

K's during marriage:

Back 26

Presumptively bind the community, even when only signed by one spouse.
EXCEPT property--both spouses must sign K's for acquisition,encumbrance or disposition of real property or guaranty, indemnity or suretyship, unless non-signing spouse had knowledge of K and there was ratification.

Front 27

If land deal, surety or indemnity signed during marriage?

Back 27

1) SP obligation, can only reach CP to the extent of the signor's contribution.
2) unless ratified by spouse.

Front 28

One spouse conveys or encumbers CP

Back 28

Invalid.

Front 29

SP debt collections.

Back 29

Can only reach CP to the extent of the spouse's contribution.

Front 30

Tort liability for CP

Back 30

If the activity was for community benefit INCLUDES recreation

Front 31

Unilateral gift of CP after death (insurance)

Back 31

One spouse may make unilateral gift of CP without express or written consent of other spouse, UNLESS
1) it is unreasonable under the circumstances (affair)
2) done to defraud other spouse OR
3) breaches fiduciary duty to other spouse.
4) IF gift is improper under one of these theories, nonconforming spouse may sue to reclaim one-half of gift.

Front 32

Unilateral gift of CP during marriage

Back 32

NO AZ case. Discuss
1) WA = void in entirety
2) CA = voidable as to 50%
3) TX = constructive fraud based on a) donee and donor's spouse's relationship b) amount of gift in relation to CP c) whether spouse adequately provided for
4) Watch for financial misconduct (affair)

Front 33

Quasi-CP

Back 33

1) Acquired while domiciled in another state but would be CP in AZ
2) CP on divorce
3) On death, characterized according to state of domicile during acquisition.

Front 34

Putative Spouse

Back 34

1) Does not know marriage is invalid
2) By analogy to CP, the putative spouse takes half as a partnership
3) Meretricious whores get nothing.