California Community Property

Front 1

What is separate property? (SP)

Back 1

property owned by either spouse before marraige;
-property acquired during marraige by gift, will or inheritance;
-property acquired during marraige with expenditure of separate funds
-rents, issue and profits derived from separate property

Front 2

What is community property? (CP)

Back 2

Property, other than SP, acquired by either spouse during marraige.

Front 3

Who has the burden of proof that a particular asset is SP and why?

Back 3

The party contending that an asset is SP has the BOP. This is because there is a CP presumption in CALI.

Front 4

Does CP law apply to assets of same-sex couples?

Back 4

Yes, as of 2004, "registered domestic partners" may file a declaration of domestic partnership with the Sec. of State. (retroactive to 1/1/00). For same sex couples or elderly couples receiving SS benefits.

Front 5

May any same-sex couples claim CP as spouses, and not just as domestic partners?

Back 5

Yes, for couples legally married between 2008 (In re Marraige cases) and Prop 8 in 2009 share CP as spouses, not as domestic partners.

Front 6

When does the economic community end?

Back 6

1) at permanent physical separation; or
2) upon one party's intent not to resume marital relations. (no facade of marital relations)

Front 7

What happens to CP not divided at divorce?

Back 7

The court has continuing jurisdiction to divide CP that was not previously adjudicated. They will be divided, on motion, 50/50 unless the court determines justice requires unequal division.

Front 8

How is all CP divided, absent a settlement agreement?

Back 8

All CP MUST be divided equally.

Front 9

Is Pro Rata division of CP OK? (i.e. is the division fair so long as each party receives equal value)?

Back 9

No, generally, each and every item of CP must be divided equally. There is an exception where the economic circumstances of one party warrant awarding certain assets wholly to that party.

Front 10

Examples of how pro rata division works under the economic circumstances exception.

Back 10

Family residence: give to spouse with custody of children
Pension or Closely held Corp. stocks: give to one party so they aren't forced to deal with each other later to divide the asset

Front 11

What statutory exceptions are there to the equal division CP rule on divorce?

Back 11

-1 spouse misappropriates CP during pendancy of divorce
-one spouse has: educational debt; tort liability not based on activity to benefit the community; PI award is CP but goes to injured spouse;
-when negative community (debts exceed assets), apportioned according to ability to pay usually

Front 12

How can a spouse make a gift of CP?

Back 12

No spouse, even one that manages the CP, can make a gift of CP without the other spouse's WRITTEN CONSENT!

Front 13

Federal Preemption exemption to prohibition on one spouse's gift of CP to a third party

Back 13

Spouse cannot recover a 1/2 interest in US Savings bonds (CP) that are given to a third party.

Front 14

Testamentary power over CP.

Back 14

Each spouse only has testamentary power over their 1/2 share of CP.

Front 15

What is the widow's election?

Back 15

Surviving spouse may elect to take "under the will" or take "against the will".

Front 16

What is the community credit presumption?

Back 16

Funds borrowed during marraige and goods purchased during marraige are presumed to be CC. Credit purchases and loans will turn on where the lender is looking for satisfaction of the debt. Primary intent of the lender is the controlling test.

Front 17

How does the presumption of undue influence operate?

Back 17

If one spouse gains an advantage in a transaction, the presumption arises and the BOP is on the spouse to show they did not breach a fiduciary duty. (2002 statute--- grossly negligent and reckless investment is a breach)

Front 18

SP and CP statutory definitions rule in absence of contrary agreement. However, spouses may change the nature of CP or SP through a transmutation. What is that?

Back 18

A transmutation is an agreement (or can be accomplished by gift) that changes the character of an asset during marraige. If made before marraige, it is governed by the Uniform Premarital Agreement Act)

Front 19

Generally, premarital agreements regarding the character of assets must be in writing and signed by both parties. What exceptions?

Back 19

1) where the oral agreement is executed (i.e. fully performed)
2) estoppel based on detrimental reliance

Front 20

In a premarital agreement, couples can agree to do anything, except ____.

Back 20

agree to limit either party's contribution to furnish child support.

Front 21

What are the 2 defenses to enforcement of a premarital agreement?

Back 21

1) NOT signed voluntarily (2001 statute responding to Bonds)
2)unconscionability

Front 22

How does statute determine that a premarital agreement was not entered voluntarily?

Back 22

Bonds- woman declined representation and informal wedding- led to 2001 statute:
K deemed not voluntary unless challenger was;
1) rep. by ind. counsel
2) given at least 7 days to sign
3) if no counsel, fully informed in writing or terms and basic effect of writing

Front 23

When is a premarital agreement unconscionable?

Back 23

1) 2001 statute deemed agreement regarding spousal support unenforceable if i)party not rep. by counsel ii) provision unconscionable at time of enforcement (even with counsel)
2) for anything else, unenforceable if unconscionable when made and i)no full disclosure of other parties property or financial obligations ii) right to disclosure not waived in writing iii)party challenging had no adequate knowledge of other party's property or financial circumstances.
(determined as a matter of law by judge, not jury, under statute)

Front 24

What are the transmutation rules before and after 1985?

Back 24

Before-oral transmutations permitted whether by express agreement or agreement in fact

After- must be 1)in writing 2)signed by spouse adversely affected 3)explicitly state change in ownership is being made

Front 25

Any exceptions to 1985 transmutation writing requirements?

Back 25

estoppel, SoF, partial performance exceptions to writing reqs don't apply here.

Only exception: gifts of tangible personal property of a personal nature which are not substantial in value (in light of circ. of marraige)

Front 26

What is the pre-1975 (acquired property) married woman's presumption?

Back 26

Where CP was used to take written title in a married woman's name before 1975, and title didn't indicate if joint tenancy or CP was intended, then the property is presumptively SP of the married woman. (normally, assets titled in one spouse's name don't overcome the CP presumption) The husband must have intended a gift if titled in wife's name.

Presumption not rebuttable against 3rd party BFP, but is against H who may show he intended somehting other than gift by titling in her name.

To W, a married woman.

Front 27

Summary of married woman's presumption.

Back 27

1. Title is taken in W's name ALONE before 1975 (W's SP)

2. Title in name of W&H before 1975, but not taken in JT form and not as "H&W" or "Mr. and Mrs." (property is 1/2 W's SP and 1/2 CP)

3. Title in name of W and some third party before 1975 (W would be tenant in common with 3rd party)

Front 28

Presumption from taking in "Joint and Equal form". Marriage of Lucas (Cal SC 1980): (STILL LAW in case involving DEATH of ONE PARTY)

Back 28

by taking title as joint tenants, property was presumptively CP. Absent proof of intent to make W SP, taking title in CP form, W must have intended gift to community.

W/out an agreement otherwise, W has no SP ownership and no right to reimbursement.

(ex. where W uses SP to help purchase CP and take joint title)

Front 29

Presumption from taking in Joint and Equal form: at DIVORCE. The Anti-Lucas statutes for purpose of division on divorce or legal separation.

Back 29

Ownership: FC 2581, property acquired during marriage in joint and equal form is presumptively CP, but rebutted by 1) express statement in deed or instrument of title ; or 2)written A that the property or portion of is SP

Reimbursement: FC 2640: spouse who made SP contributions to CP is entitled to reimbursement without interest for DIP: down payments, improvements, principal payments. NO reimb. for SP used to pay interest on mortgage, taxes, insurance, or maintenance

Front 30

What is the pro-ration rule for pre-marraige installment purchases paid down during marriage?

Back 30

The community take a pro rata portion of the property measured by the amount of principal debt reduction. (expressed in terms of percentage- paid down 50% of debt, then 50% is CP)

Front 31

Rule for life insurance when paid pre and during marriage.

Back 31

For Whole Life, a proration rule applies.

For term life, the last premium paid determines the character.

Front 32

When CP are used to improve SP (i.e. fixtures rules), what are the rights of the non-owning spouse?

Back 32

Spouse will get the greater of the CP contributed to the improvements or the FMV of the improvement.

Anti-Lucas statutes don't apply because CP is being used to augment SP, not the other way around.

But, there is a split where W owns, and CP improves. Can give rise to presumption of gift without express agreement for reimbursement.
Other courts hold for reimbursement.

Front 33

Summary of reimbursement: Lucas and Anti-Lucas

Back 33

If H expends CP to improve own SP, C has reimbursement claim for the greater of the cost of improvement or enhanced value.

if H expends CP to improve other spouse's SP, there is a split of authority on whether there is reimbursement.

If H expends SP to improve CP, we are governed by anti-Lucas statutes at divorce or Lucas at death (no reimbursement).

Front 34

What is the ownership status of property purchased from an account of comingled CP and SP?

Back 34

Mere fact of commingling does not transmute, but the BOP is on the spouse claiming SP to show that each asset was purchased with SP funds.

Front 35

What is the family expense presumption in the context of comingled bank accounts?

Back 35

presumed that expenditures for family expenses were made with CP funds even though SP funds were available. Where it is difficult to determine and some SP may have been used on community expenses, the presumption is of a gift to the community with no right of reimbursement.

Front 36

What accounting methods can be used to trace SP funds in comingled accounts?

Back 36

Exhaustion: if spouse can show that no CP funds were left when purchase of asset was made

Direct Tracing: quick in/quick out rule: money deposited in comingled account and promptly used. Requires that there were sufficient funds available and that spouse intended to use SP funds to buy asset.

Front 37

When a business owned as SP greatly increases during marriage how do court's treat the increase?

Back 37

The are two major cases governing 2 different situations.
When the business increases due to the personal skills and efforts of the spouse, apply Pereira.

When the business itself is a valuable company or concept, apply the Van Kamp method.

Apply both if given an essay where a SP business grows substantially during marriage.

Front 38

What is the Pereira formula to calculate CP contribution to the growth of a previously owned business/

Back 38

Pay interest (10% annum) on value of business at time of marraige and the rest is CP.

ex. 100k at start. 10k per year in interest. 5 years in, this would be 50k. If Biz is worth 500k, then 50k is SP and 450 is CP.

Look for this when a spouse is working long hours and taking a modest salary.

Front 39

What is the Van Kamp formula?

Back 39

value of community labor--avg salary for executive in like company-- for the number of years (less community expenses). That portion will make up the percentage of total net value of biz.

This is the case when capital investment was the major factor in the business's growth.

Front 40

Are employee retirement benefits accumulated during marriage CP?

Back 40

Yes, even if they have not vested at the time of divorce, they are CP as they are a form of deferred compensation.

Use the proration rule:
years of service while married divided by ttl years employed.

Front 41

What options for a divorcing spouse where a pension has not vested or has not been taken yet?

Back 41

1) Can get the court to issue a decree presently for "if and when" the fund vests

2) or cash her out by awarding her assets of equal value so that they may go their separate ways in peace

Front 42

Can a divorcing spouse devise her interest in the other spouse's pension?

Back 42

Not if she predeceases participant.

But, the non-participating spouse in a qualified pension plan has a property interest and can receive payments even where spouse has not elected to receive benefits yet. Get a qualified domestic relations order (QDRO).

Federal law, ERISA, preempts if NPS predeceases and death was cause of marriage, so there is no devisable property interest.

Front 43

How are disability payments and worker's compensations benefits treated? Can divorcing spouse get them?

Back 43

No. They are treated as wage replacement and thus the status is determined when they are received, not when they are earned.

They are not CP if received after economic community is terminated.

Front 44

Is severance pay treated as CP?

Back 44

Courts are split. Argue Both!

It is SP b/c it replaced lost earnings which after divorce or legal separation would be SP.

Or

It is CP b/c it arose from a collective bargaining A and was thus earned during the marriage.

note: Spouse cannot elect a disability payment to defeat CP interest where there was a CP option. S might reach they otherwise unreachable disability in such case.

Front 45

Are stock options earned during the marriage? Is the option CP?

Back 45

Turns on the intent of employer in granting:

Marriage of Hug: where they are to reward for past services--proration: yrs from employment to end of EC/ divided by years until option vests.
That percent is CP and is divided equally on divorce.

or

If stock options meant to keep party at company:
Marriage of Nelson: yrs from grant of option to end of EC/ divided by yrs from grant to date exercisable.
That percent is CP and subject to equal division on divorce.

Front 46

Is business goodwill CP?

Back 46

Yep. Goodwill of a professional practice (to extent acquired during marriage) is subject to division at divorce.

Front 47

Is a degree paid for by CP funds CP?

Back 47

No, but contributing spouse is entitled to reimbursement for cost of education if it enhanced the other's earning capacity. (could also apply if school before marriage, but CP funds paid loans down)

Front 48

Defenses to reimbursement for educational expenses from CP?

Back 48

If the community has already substantially benefited from the earnings of the educated spouse. (presumption that this is true where more than 10 years has elapsed)

Front 49

If a SPOUSE is a tortfeasor, how is the judgment satisfied in priority?

Back 49

If performing an act for the benefit of the community, then the liability is satisfied by CP and then SP. If not, then vice versa.

Front 50

Can a spouse sell or encumber personal property used in the family dwelling?

Back 50

No, not without the other spouse's written consent. Transaction voidable by other spouse at any time.

This also true where business is made up of all community personal property.

Front 51

What is required to convey CP real property?

Back 51

Joinder of both spouses is required, and a non-participating spouse can void the transaction w/in a 1 yr SOL. This true even against BFP.

If BFP knew person conveying was married, then no defense at all under SOL.