Ca Community Property (Short)

Front 1

CP: Source of Acquisition

Back 1

All property acquired during marriage is CP except:

i) Property received by gift, bequest, devise, or descent;

ii) The rents, issues, and profits of SP;

iii) Property acquired in exchange for SP.

Front 2

Tracing

Back 2

Proof that an asset was acquired during marriage only raises a presumption that the asset is CP. The SP proponent may overcome the CP presumption that arises from acquisition during marriage by:

(i) showing that the property was acquired by gift or is the fruit of separate property; or

(ii) tracing the acquisition back to a SP source.

Front 3

Personal Injury Recovery Against 3rd Party Tortfeasor

Back 3

Recovery classified according to when the cause of action arose.

If the COA arises during marriage, CL treats any recovery or settlement as CP. A COA for personal injury arises when the injury is inflicted.

If the personal injury COA arises after permanent separation, it is the injured spouse's SP, but the injured spouse must reimburse the community or the other spouse's separate estate for any expenses paid on account of the injury.

At DIVORCE only, community estate personal injury damages shall be awarded ENTIRELY to the injured spouse unless the interests of justice (including economic need) require otherwise.

PI against the other spouse is ALWAYS the injured spouse's SP.

Front 4

RETIREMENT PENSIONS

Back 4

CA treats retirement pensions as CP to the extent that the right to benefits was earned during marriage (they represent community "savings").

Since 1976, CA has treated both VESTED and UNVESTED pensions as CP as long as the benefits were earned during marriage.

Front 5

RETIREMENT PENSIONS: "Time Rule"

Back 5

When a pension has mixed community-separate assets, courts use the "time rule" to apportion the separate and community interests.

Front 6

CL MARRIAGE

Back 6

Common Law marriage is still recognized in a minority of states. CL marriage is not recognized in CA, though CA will recognize a couple who is common-law married from another state because of the concept of “full faith and credit”

Determined by conduct:
o Children
o Bank accounts
o Property
o Living together
o Filing taxes as a married couple
o Do they acquire debt together (property)

Front 7

QUASI-COMMUNITY PROPERTY (QCP)

Back 7

Property that would have been community property if the parties had been CA domiciliaries at the time of acquisition.

Front 8

QUASI-MARITAL PROPERTY (QMP)

Back 8

Applies to putative spouses. Putative spouses are spouses who think that they are legally married (and actually tried to get legally married) but for whatever reason they actually are not.

Front 9

SEPARATE PROPERTY (SP)

Back 9

All property owned by a person before marriage

All property acquired by gift, devise, bequest, or descent

All property acquired by rent, issues, and profits of SP

Front 10

CA History: "Equal Management & Control"

Back 10

It wasn’t until 1975 that CA went to the system of “equal management and control”

Up until 75, married women only had control over their own separate property. Pre-1975, most women didn’t have many assets.

Front 11

Contractual Modification (PRENUP)

Back 11

(You should be able to contract in or out of the system).

It just means that you can enter into a prenuptial agreement (before marriage) or a postnuptial agreement (after marriage) to divide up your interests.

o Ks cannot violate public policy though. So, this just means that you can’t contract in a way that would encourage divorce.

Refer to: In Re Marriage of Bonds

Front 12

PRENUP: Unconscionability or Involuntariness

Back 12

K is “unconscionable” at the time of execution, if (all 3 required):

(1) no fair, reasonable, and full disclosure
(2) No waiver of such disclosure; and
(3) no knowledge of financial obligations (and could not reasonably obtain)

Presumption of Involuntariness (for any of the following):

(a) Lack of Independent counsel of waiver of such
(b) <7 days between the K and execution
(c) No explanation of the K and language proficiency in writing
(d) duress, fraud, or undue influence; lack of capacity
(e) any other relevant factors

Front 13

PRENUP: Oral Contracts

Back 13

Pre-Jan 1, 1985 – oral and implied-in-fact Ks ok

Post-Jan 1, 1985 – writing required – Section 852

Front 14

Married Woman's Special Presumption

Back 14

Acquisitions before Jan. 1, 1975 by a married woman (except with husband) is presumptively her SP. (even though she was married if the title is only in her name).

Front 15

Special Title Presumption

Back 15

• Applies only at death

• Presumption: title = ownership

• Contrary Bilateral Party intent required to rebut by clear and convincing evidence

• Unilateral severance of JT. Civil Code Section 683.2 (?)

Front 16

Special CP Presumption

Back 16

Applies ONLY AT DIVORCE.

If you hold property in joint title at divorce it will be presumptively community property.

Front 17

Lucas Formula

Back 17

PROBLEM: When spouses take title in joint and equal form but contribute disproportionately to purchase price.

Under Lucas, the SP contributor is PRESUMED TO HAVE MADE A GIFT.

This presumption can only be rebutted by a showing by the contributing party that there was an understanding or agreement between the parties that she would maintain a SP interest.

Front 18

Aufmuth Formula

Back 18

SP = SP Contribution + % of Capital Appreciation

Front 19

Joint Property Presumption (Sec 2581) -- Divorce Only

Back 19

Under CA Fam. Code Sec. 2581, all property held by the spouses in joint form is presumptively community property for purposes of distribution at divorce or legal separation.

This presumption can only be overcome by a collateral WRITTEN agreement or a statement in the documentary evidence of title that the property is "separate property and not CP"

Sec. 2581 does not apply to termination by death

Front 20

Joint Property Presumption: Reimbursement

Back 20

If the jointly titled property is Sec. 2581 CP because there is no writing to the contrary, then at divorce the SP contributions to the acquisition of the property shall be reimbursed to the SP contributor WITHOUT INTEREST OR APPRECIATION (CA Fam Code 2640)

APPLIES TO IMPROVEMENTS (BUT: does not allow any reimbursement for payments made for interest on the loan or payments made for maintenance, insurance, or taxes on the property).

Front 21

Section 2581 Retroactivity

Back 21

Sections 2581 and 2640 may not constitutionally be applied to TRANSACTIONS that occurred before the effective dates of the statutes when such retroactive application would deprive a party of VESTED property rights. (Marriage of Heikes) Would constitute a taking.

EFFECTIVE DATES:
Jan. 1, 1984 (applies only to joint tenancies)
Jan 1, 1987 (applies to all other forms of joint and equal ownership)

Front 22

TRACING Property Purchased from Commingled Fund

Back 22

FAMILY EXPENSES: Available CP funds are presumed to have been used to pay for family expenses; thus, SP funds are only deemed to have been used when CP funds are exhausted.

GIFT: When SP funds are used to pay for family expenses, a gift to the community is presumed.

TRACING METHODS:
1) Exhaustion Method
2) Direct Tracing

Front 23

TRACING Property Purchased from Commingled Fund: EXHAUSTION METHOD

Back 23

The SP proponent may show that at the time he purchased the asset whose character is contested, the community funds in the account had already been exhausted by payment of family expenses. Therefore, the asset must have been purchased with his separate funds.

Front 24

TRACING Property Purchased from Commingled Fund: DIRECT TRACING

Back 24

The SP proponent may show that at the time the asset was purchased: (i) there were sufficient separate (as well as community) funds available, AND (ii) he intended to use those separate funds to purchase a separate property asset.

Front 25

Educational Loans

Back 25

Educational loans (section 2641) are assigned to the “educated spouse” at divorce

Community contributions to education or training that substantially enhance earning capacity are reimbursed with interest. BUT, reimbursement is modified/lessened if community substantially benefited.

--Rebuttable presumption if NO substantial benefit if <10 years
--Rebuttable presumption of substantial benefit if +10 years.

Front 26

Severance Pay

Back 26

Cases are divided. Since severance pay replaces a workers earnings, it is sometimes considered CP.

Front 27

Stock Options

Back 27

Interest applied similar to the "time rule"

FORMULA:
The denominator of the fraction is the number of total years of employment until the exercise of the option, and the numerator is the number of such years during which the parties were married.

Front 28

Goodwill

Back 28

Goodwill is the difference between the total value of a business or professional practice and the value of its assembled physical assets. Goodwill is an intangible value that develops during the life of a business and includes, among other thins the reputation and habitual clientele of a business or practice. GOODWILL IS CP.

Front 29

Educational Loans: Right of Reimbursement

Back 29

Sec. 2641 creates a right of reimbursement with interest to the community when community funds are:

(i) used either to pay for education or training or are used to repay a loan incurred for education or training; AND

(ii) the education or training substantially enhances the earning capacity of the educated party.

When such education loans are still outstanding at divorce, they shall be assigned solely to the educated spouse.

Front 30

Education: What Expenses are Reimbursable?

Back 30

Reimbursement may be reduced or modified by any of the following:

(i) The COMMUNITY HAS ALREADY SUBSTANTIALLY BENEFITED from the education or training. There is a rebuttable presumption affecting the burden of proof that if fewer than 10 years have elapsed between the contributions and the initiation of the divorce, the community has not substantially benefited. If more than 10 yrs have passed, a presumption arises that the community has substantially benefited.

(ii) The education or training is offset by COMMUNITY-FUNDED EDUCATION RECEIVED BY THE OTHER SPOUSE.

(iii) The education or training enables its recipient to engage in gainful employment that substantially REDUCES THE NEED THE RECIPIENT WOULD OTHERWISE HAVE FOR SPOUSAL SUPPORT.

Front 31

LIFE INSURANCE: at Death

Back 31

CA has traditionally treated life insurance proceeds as CP in proportion to the percentage of premiums paid by the community.

Front 32

LIFE INSURANCE: at Divorce

Back 32

WHOLE LIFE: To the extent that a policy has a current cash value, that cash value is CP in proportion to what the community paid to the premiums.

TERM (PURE) INSURANCE: Has no cash value. B/c the premium covers no more than the risk of death, cts have held that the policy has no value at divorce (Lorenz). But, another case (Gonzales) held that the amount of premiums paid by the community should be measured to equate to its interest in the policy.

HEALTH INSURANCE: no right to coverage after divorce, despite making payments.

PROPERTY INSURANCE: several cases have held that even though the CP was used to pay the premiums insuring one spouse's SP, insurance proceeds arising from casualty to that property nevertheless remain SP.

Front 33

CP Presumption

Back 33

Property acquired during marriage is presumptively CP.

Think possession vs. acquisition.

Front 34

Overcoming the CP Presumption

Back 34

The SP proponent may overcome the CP presumption by showing any of the following facts:

1) Statutory Facts; i.e., it satisfies the statutory definition of SP because it was acquired by gift, bequest, devise, or decent, or was the rent or income from SP.

2) Parties took inconsistent written title in a manner which shows other intent

3) Parties otherwise agreed that property would not be CP

4) One party took title in form that evidences gift to the other (i.e., W bought H car for B'day and put title in his name alone)

5) Simple Tracing Permitted; BUT: note that tracing only establishes an ownership interest when the asset is either UNTITLED or the form of title does not tend to show that he PARTIES AGREED to some other form of ownership.

Front 35

Transmutation From SP to CP and vice versa -- Pre Jan. 1, 1985

Back 35

Writing Requirement

Prior unwritten transmutations were recognized.

Contracts which were oral were okay if could be proven.

Front 36

Transmutation From SP to CP and vice versa -- Post Jan. 1, 1985

Back 36

Act provides that agreements made before marriage affecting marital rights in property must be in writing and can be amended or revoked only by writing.

Writing must be an express declaration of intent to transmutate character of property from CP to SP or SP to CP.

Front 37

Uniform Pre-Marital Agreement Act (Post Jan 1, 1986)

Back 37

Analysis:

Start out with presumption that pre-marital agreements are enforceable.

The party challenging the pre-marital agreement has a burden to show at execution it was:

1. Involuntary; or

2. Unconscionable.

Front 38

Post-Marital Agreements

Back 38

Post-nuptial agreements are presumed valid unless party challenging can prove unfair advantage.

Evidence of unfair advantage shifts burden of proof to spouse seeking to enforce post marital agreement.

Front 39

Living Separate and Apart

Back 39

Objective Intent -- All that is required is that one spouse has no intent to resume marital relations.

Front 40

Rebutting GIFT Presumption

Back 40

Requirements:

1. Contrary Intent: Presumption can be rebutted with clear and convincing evidence of contrary bilateral intent.

2. Writing: If there is no writing, it is community property and no reimbursal. Must be specific intent.

Use Aufmuth Formula

Front 41

People Within Community Property System (Must classify on Exam!)

Back 41

On exam you need to define status.

--Same Sex Couples

--Legally Married Couples

--Putative Spouses

--Meretricious Partners NOT in CP system

--Single persons are NOT in CP system

Front 42

SAME-SEX COUPLES

Back 42

Full Faith and Credit: Not all acts of sister state must be given full faith and credit to acts of other states. But CA generally recognizes same-sex marriages or civil unions in other states.

Front 43

LEGALLY MARRIED COUPLES

Back 43

Are in the community property system.

Must have:
1. Capacity and Consent
2. License and Solemnization

Front 44

PUTATIVE SPOUSES

Back 44

Are in community property system.

Two Requirements:
1. At least one party must have a reasonable good faith belief they are married; and
2. Must have attempted to comply with formal requirements in jurisdiction.

o Ex: messed up on the marriage license
o Ex: your old divorce wasn’t finalized or legal so you are not married to the second person because you are still married to the first.

• Putative spouses are treated like spouses for the most part.

Front 45

MERETRICIOUS PARTNERS

Back 45

Not in community property system.

New Rule: Marvin recognizes that male and female can agree between themselves and all they would have is their rights in contract as to property ownership or division.

Front 46

Commingled Funds

Back 46

One or both spouses commingle community and separate funds in a single account.

1. At death or divorce, the owner of separate funds may attempt to trace these funds to claims a separate property interest in the funds or in an asset purchased.

--Party seeking to establish separate property has burden of uncommingling the funds.

Front 47

Commingled Funds: General CP Presumption

Back 47

Meaning: Stands for proposition that where community property and separate funds are commingled the entire fund will be characterized as CP, unless SP owners can specifically identify which particular funds are SP.

Two Permissible Forms of Tracing:

1. Direct Tracing -- Separate property proponent may show that at the time the asset was purchased:
i. There were sufficient separate (and community) funds available; and
ii. He intended to use those separate funds to purchase a separate property asset.

2. Indirect Tracking – Recapitulative Accounting
--The separate property proponent can show that at the time of acquisition the asset whose character is contested, the community funds in the account had already been exhausted by payment to family expenses. Therefore, the funds used must have been separate funds.

Family Expenses Presumption -- Family Expenses Paid by Community Funds
1. Available community funds are presumed to have been used to pay family expenses. Thus, separate funds are deemed to have been used to meet family expenses only when community funds are exhausted. These payments are presumed first.

Gift Presumed When Separate funds Used to Pay Expenses
1. Separate estate has no right of reimbursement when community funds are later deposited. Can be overcome with agreement for reimbursement.

Front 48

Van Camp Accounting

Back 48

Used When: Value of business or success is due to market and other external factors. Not value based on labor. Used when character of SP is cause for growth (like parking lot).
--Tends to maximize SP.

Formulas:

CP = (Fair and Reasonably Salary)(Years) – Salary Paid.

SP = FMV at time of trial less CP

Front 49

Pereira Accounting

Back 49

Used When: Appreciated value of business is attributed to time, labor, skill of worker spouse.
--Primarily used when management skill of spouse caused increase.
--Essentially this is reimbursement of initial investment less interest.
--Tends to maximize CP.

Formulas:

SP = ((initial investment)(fair rate of return)(# of years married)) + (initial investment)
--Fair rate of return = 10%

CP = FMV at time of trial less SP

Front 50

When Community Funds or Labor Enhance Value of Separate Property

Back 50

Pereira/Van Camp accounting methods applied when a business is SP to begin with (started with SP money or BEFORE marriage).

1. One spouse may bring a separate property business into a marriage and devote community labor to the management of business.
--At divorce or death, the business may have appreciated in value or assets purchased with business profits. Two tests used to determine character of business and assets:

i. Van Camp Accounting
ii. Pereira Accounting

Front 51

Apportionment of Business Profits of CP Business at Divorce

Back 51

The property is Community Property and will be divided in equity

Front 52

Classification of Credit Acquisitions

Back 52

Classification of the Loan Proceeds:

a. Did lender rely primarily on SP in extending loan? (Gudelj)
--If the lender relied primarily on SP assets to extend loan, you can say loan proceeds are in fact separate property (Recent CA Ct decision)

b. Did the lender rely solely on SP in extending loan? (Grinius)
--Loan proceeds during marriage are presumptively community property. Will be overcome if lender says the loan was primarily conditioned on SP of spouse. Difficult to do because credit at marriage is a combination of spouse.

Front 53

Improvements: Separate Property Used to Improve Other Spouses Separate Property

Back 53

Separate contributions to the acquisition of other spouse separate property equals reimbursements.

There is a presumption of separate property because other party knew the source was separate property.

Front 54

Apportionment of Business Profits of Separate Property At Separation

Back 54

Reverse methods apply when a CP business (started with CP money) has been enhanced by one spouse's efforts BETWEEN SEPARATION AND DIVORCE (which covers only a small period of time).

If after permanent separation the managing spouse continues to work in an appreciating CP business, the value must be apportioned to CP and SP.
--CP business continues after the couples live separate and apart.

Valued with two tests:

1) Reverse Pereira:

CP = FMV at time of separation + ((rate of return)(initial investment)(years of marriage))

SP = FMV at time of trial less CP

2) Reverse Van Camp:

SP = ((Reasonable Salary)(Years of Separation)) – salary already paid.

CP = FMV at time of trial less SP

Front 55

Improvements: Separate Property Used to Improve Community Property

Back 55

Pre-1984:

Use of separate funds is a presumed gift.

Post-1984:

Statutory right of reimbursement (Anti-Lucas laws).

--Writing is required if there is a transmutation.

Front 56

Improvements: Use Community Property Funds to Improve Own Separate Property

Back 56

Pre-1975:

Presumed gift when W used CP to improve W CP because of management and control belonging to H.
--Husband can rebut with contrary intent by clear and convincing standard.

Post 1975:

Reimbursement or enhanced added value; whichever is greater.

Front 57

Improvements: Community Property Interests used to Improver Other Spouse Separate Property

Back 57

Old Rule: It is presumed gift.

New Rule: When a spouse contributes community funds to improvements of their spouses separate land, the contributing spouse is entitled to reimbursement.

Front 58

Personal Injury Awards: Classification at Time of Injury

Back 58

The cause of action date is what is used to classify the award; not the date of judgment.

If you’re married when cause of action arose the judgment is considered community property

Front 59

Personal Injury Awards: Classification at Divorce

Back 59

1) At divorce tort monies will be awarded to the injured spouse.

2) Unless the interest of justice require otherwise.

California follows Unitary Approach

Front 60

Personal Injury Awards: Classification at Death

Back 60

At death, the statute is silent and we hold the tort recovery as CP at death.

Front 61

Personal Injury Awards: Interspousal Torts

Back 61

When one spouse is liable for death or injury to person or property, California Family Code provides order of satisfaction. (Must determine if tort benefits community)

1. Activity for Benefit of Community – CP First

2. Activity Not for Benefit of Community – SP of Tortfeaser spouse First

Front 62

Employment Benefits

Back 62

Replacement Analysis –Generally

--Apportionment, valuation, division.

Whether vested or not they are within CP System and are divisible at divorce.

Front 63

Retirement Benefits

Back 63

Retirement benefits are CP if earned during the course of marriage.

1. Immaterial that benefits are received after marriage is over.

2. California treats it as community savings for old age.
--Ignores replacement analysis.

Front 64

Retirement Benefits: Apportionment

Back 64

Time Rule v. Contributions:

1. Time Rule:
a. Many pensions are a mixture of community and separate assets.
b. Courts typically will apply time rule to determine valuation of assets.
--Community Share = (# of yrs pension earned while married)/(# of yrs pension earned).

Division:
1. Cash Out v. Division in Kind (at maturity)

a. Cash Out
--If the couple is younger; they will want the present cash value.

b. Division in Kind
--If you have older people near retirement, you will want to ask for division in kind.
--At retirement the company will cut two checks one to each spouse.

Front 65

Management & Control (Responsibilities and Standard of Care): Pre-1975

Back 65

1. Only H had management and control over CP.

2. Duty of Loyalty; Not Duty of Care
--A managing spouse will have breached his duty of full disclosure to the non-managing spouse, if there is evidence that the non-managing spouse sought information about investment assets and the managing spouse failed to provide such information.

3. Each spouse has management and control over own SP.

Front 66

Management & Control (Responsibilities and Standard of Care): Post-1975

Back 66

Equal Management and Control Over CP
--Either spouse alone could buy, sell, spend, encumber, all CP. This is limited to lifetime of spouse; each spouse retains testamentary control.

Exception: Real Property

Front 67

Recapture (Return of CP): Definition

Back 67

Non-transferring spouse going after CP property that was gifted away to a third party.

Recapture is the lassoing of the entire asset and bringing it back into community estate.

Front 68

Recapture (Return of CP): Right to Recapture Survives Death of Innocent Spouse

Back 68

1. Void and Voidable Transfer

2. Ratification, Waiver, Estoppel, Laches may Apply

3. Survivors Election (Disfavored)

a. Item theory (This is what we use in CA).
b. Election is required when decedent tries to pass survivors half interest

Front 69

Reimbursement to Innocent Spouse

Back 69

One Spouse May Seek Reimbursement from the Other for:

a. Child support or Spousal Support Claims Arise from Prior Relationship

b. Separate Property Applied to Debts Incurred by Other Spouse for Necessaries

c. Educational Debts

d. Pre-marital debts

Front 70

CREDITORS RIGHTS: Pre-1975

Back 70

Debt liability followed management and control (M&C)

--Pre-1975 the wife’s creditors could only reach her SP because that all she had M&C over. No CP for wife debt, but okay for H debt to attack CP.

Post 1975 creditors of each spouse could reach all CP because each spouse had M&C over all CP.

Front 71

CREDITORS RIGHTS: Post-1975

Back 71

All CP and Debtors SP are subject to debtors creditors

Premarital Debts: CP is liable for all debts of either spouse, even those incurred before marriage.

Front 72

Mandatory Equal Division of CP at Divorce: EXCEPTIONS

Back 72

1. Personal injury settlement monies (So long as they are not commingled, award will be given to the injured spouse. If commingled, out of luck).

2. Debts; educational loans -- Pre-Marital debts are assigned to debtor spouse.

3. Deferred sale of family home.

4. Less than $5k CP estate -- There can be unequal division of assets when the estate totals less than 5k.

5. Single Asset Proviso

Front 73

Division of Debt: Equitable Division Except When...

Back 73

1. Debts exceed assets.

2. Debts are pre-marital

3. Educational loans

4. Debts incurred during marriage; but not for benefit of community

5. Debts for non-necessaries incurred after separation

6. Debts incurred after separation

Front 74

Post Dissolution Remedies: Grounds to Set Aside Judgments -- FRAUD

Back 74

NEW RULE: Where the defrauded party was kept in ignorance or in some other manner fraudulently prevented from fully participating in the proceeding.
--Motion must be brought within 1 year after complaining party did or should have discovered fraud.

Front 75

DIVISION @ DEATH: Testamentary Control

Back 75

Each spouse only has testamentary control over what the spouse owns.

1. At death you own your half of CP and your SP.

If you give away more than this you are forcing an election

Survivor's Election: this is when the survivor has a choice to stand on rights or take what the testator left.

Front 76

DIVISION @ DEATH: Distribution

Back 76

California follows an item theory.

The surviving spouse is entitled to ½ of every item of CP. Unless she consent otherwise to aggregate theory (1/2 of entire estate in toto).

Front 77

DIVISION @ DEATH: Intestate Succession

Back 77

1) Decedent Spouse’s ½ CP and ½ QCP – go to surviving spouse.

2) Decedent spouse SP
--All to surviving spouse if there are no issue, parents, siblings, or issue of siblings.
--½ to surviving spouse if there is 1 child or issue of that child or parent or issue of parents.
--1/3 to surviving spouse if there is +1 child or issue of children.

Front 78

DIVISION @ DEATH: Allocation of Debts

Back 78

A debt that would have attached to CP during life gets attached to CP at death.

Allocation of debts follow the allocation of debts that would have happened if the person stayed alive.

Front 79

Basic CP Essay INTRO

Paragraph 1

Back 79

"California is a community property state. All property acquired during the course of a marriage is presumed to be community property. All property acquired before marriage or after permanent separation is presumed to be separate property. In addition, any property acquired by gift, bequest, devise or descent is presumed to be separate property."

Front 80

Basic CP Essay INTRO

Paragraph 2

Back 80

"In order to determine the character of any asset, courts will trace back to the source of funds used to acquire the asset. A mere change in form of an asset does not change its characterization. With these basic principles in mind, we can now turn to the specific items of property involved in this instance."

Front 81

Distribution of CP at DIVORCE

Back 81

"The basic rule at divorce is to divide each community asset equally in kind. Thus, each spouse is given one-half of each community asset."

Front 82

Distribution of CP at DEATH

Back 82

If the spouse dies with a will, the spouse is entitled to dispose of all of his or her separate property and one-half of the community property.

If the spouse dies withotu a will, the community property is awarded entirely to the surviving spouse. Between 1/3 and all of the decedent's separate property will be awarded to the surviving spouse depending on whether there are issue or parents surviving.

Front 83

QCP: At DEATH and DIVORCE

Back 83

"At DEATH, the surviving spouse has a 1/2 interest in the QCP titled in the decedent's name. The decedent does not have an interest in the QCP titled in the survivor's name."

"At DIVORCE, QCP is treated exactly like CP."

Front 84

Treatment of QCP at DEATH

Back 84

For every asset of QCP, there is an acquiring spouse and a non-acquiring spouse, and QCP is treated like the acquiring spouse's SP during marriage. When one spouse dies, he does not have any rights to the surviving spouse's SP. Thus, when a non-acquiring spouse dies, he has no rights to the acquiring spouse's QCP.

Front 85

Conveyance of CP Realty to 3rd Party

Back 85

Both spouses must jointly execute a written instrument in order to validly convey CP realty.

However, when CP that is titled in one spouse's name only is transferred to a BFP, there is a presumption of validity. A BFP is a purchaser who pays valuable consideration and takes the property without notice that the seller is married.

Front 86

Whole Life Insurance

Back 86

Whole life insurance has a current cash value because it represents a form of savings that exists apart from a pure insurance component of a policy. Upon death of an insured spouse, the 3rd party beneficiary and the surviving spouse each get one-half of the whole life insurance proceeds if the policy was paid with CP funds. If the policy was paid for with CP and SP funds, courts employ the buy-in rule to apportion the CP ownership interest in the policy.

Front 87

Term Life Insurance

Back 87

Term life insurance has no cash value, and the premium covers no more than the risk of death. Thus, the characterization of the final payment will determine whether the proceeds are SP or CP.

Front 88

Reverse Pereira

Back 88

Under the Reverse Pereira method of accounting, if the business generates additional revenue after permanent separation because of the LABOR, TIME, AND SKILL of the managing spouse, the MANAGING SPOUSE is entitled to that benefit -- no the community.

Under that method, the community receives the VALUE OF THE BUSINESS at the time of separation plus a REASONABLE RATE OF RETURN. The residual becomes the SP of the managing spouse.

Front 89

Reverse Van Camp

Back 89

Under the Reverse Van Camp accounting method, if the business generates additional revenue after permanent separation because of its character or outside market conditions, the COMMUNITY is entitled to that benefit, as opposed to the managing spouse (because it is still a community business).

Under this method, a REASONABLE SALARY for the managing spouse (after permanent separation) is calculated, LIVING EXPENSES FOR THAT SPOUSE are then deducted, and the remainder from that equation is the managing spouse's SP. The rest of the business goes back to the COMMUNITY.