California Community Property For July 2009 California Bar Exam Essays

Front 1

Definition of SEPARATE PROPERTY, UNLESS character of an asset has been altered by parties' agreement, parties' conduct, or how title was taken.

Back 1

SEPARATE PROPERTY IS:

--Property owned by either spouse pre-marriage
--Property acquired during marriage by gift, will, or inheritance
--Property acquired during marriage w/expenditure of separate funds
--Rents, issues and profits thereof--income and capital gain from separate property

Front 2

What is the community presumption?

Back 2

COMMUNITY PRESUMPTION IS:

All assets acquired during marriage are presumptively community property

Front 3

The following statutory principles apply as default definitions COMMUNITY PROPERTY, UNLESS character of an asset has been altered by parties' agreement, parties' conduct, or how title was taken.

Back 3

COMMUNITY PROPERTY IS:

Property other than separate property acquired by either spouse during marriage; common examples are salary/wages earned by either spouse and income from community assets

Front 4

To what kind of relationships does CA community property law apply and not apply?

Back 4

APPLIES to registered domestic partners

DOES NOT APPLY to common law tenancies by entirety

Front 5

When does the economic community end? Three ways

Back 5

1 Divorce
2 Death
OR
3 Permanent physical separation AND ONE party's intent not to resume marital relation

Front 6

In what way does a court retain continuing jurisdiction?

Back 6

To award CP not divided on divorce and not previously adjudicated

CP divided 50/50 UNLESS interests of justice require unequal division

Front 7

When can disparity in earning power and other such factors be considered to divide CP in a way that is other than 50/50?

Back 7

Alimony AND/OR child support

Front 8

How to split? Asset by asset, or lump?

Exception? Common examples of exception?

Back 8

Asset by asset UNLESS economic circumstances warrant awarding certain assets wholly to one spouse AND overall lump is 50/50

Common examples:

--House AND loss of home would uproot couple's minor kids
--Total shares of closely hold corporation AND H or W are on board of directors
--Give one PENSION to the pension earner, and remaining assets to the other

Front 9

Statutory exceptions to the 50/50 rule where one spouse will get more than 50% of the assets?

Back 9

--Misappropriation of CP

--Educational debts (treated like separately incurred debt)

--Tort liability NOT based on acts that benefit community

--Personal injury award (CP normally, but on divorce is awarded to injured spouse)

--Negative community where community liabilities exceed assets (to protect creditors)

Front 10

What is the limitation on lifetime/testamentary gifts of CP?

Back 10

ONLY with written consent of other spouse

Failure means setting gift aside entirely DURING MARRIAGE
OR
Take equal offsetting CP assets to recover her 1/2 CP upon DIVORCE

Front 11

Distinction btw setting aside gift before/after spouses death?

Back 11

BEFORE: Can set gift aside ENTIRELY

AFTER: Can set gift aside as to survivor's 1/2 CP

Front 12

How far does power of testamentary disposition extend?

Back 12

To 100% SP
AND
To 1/2 CP ONLY

IF tries to devise 100% CP, this leads to widow's election

Front 13

What is widow's election?

Back 13

IF spouse intends to bequeath the entire interest in a community asset, widow must CHOOSE BTW:

--Take under the will and accept the giving away of the wrongfully bequeathed property
OR
--Elects against he will by claiming 1/2 community interest in the wrongly bequeathed property

Front 14

What happens for acquisitions obtained via credit?

Back 14

Community credit presumption

Where couple purchases untitled asset with 20% H's SP and 80% loan, the asset is 20% H's SP and 80% CP

So borrowed funds are presumptively CP

Front 15

"ALTERING CHARACTER OF ASSETS BY AGREEMENT"
What is it called when they agree to reclassify assets?

Back 15

Transmutation

Front 16

"ALTERING CHARACTER OF ASSETS BY AGREEMENT"

From a K perspective, a premarital agreement requires what to be enforceable? Does NOT require what?

Exceptions?

Back 16

Requires: Writing AND signed by BOTH parties

Does NOT require: Consideration

Exceptions:

--Performance of oral agreement (BUT, marriage alone is NOT sufficient performance to take it out of SOF)
AND
--Estoppel via detrimental reliance

Front 17

"ALTERING CHARACTER OF ASSETS BY AGREEMENT"

Premarital agreement scope is broad, but does NOT extend to:

Back 17

Limitation on either party's obligation to furnish child support

ALSO, spousal support waivers are frowned on, though valid

Front 18

"ALTERING CHARACTER OF ASSETS BY AGREEMENT"

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

Back 18

Coercion in signature

Conscionability

Front 19

"ALTERING CHARACTER OF ASSETS BY AGREEMENT"

A premarital agreement shall be deemed not signed voluntarily (thus unenforceable) UNLESS ct finds that party against whom enforcement is sought... (3 part test)

Back 19

1 Was rep'd by independent legal counsel at time that agreement was signed
2 Was given at least 7 days btw present with agreement and signing it AND
3 IF NOT legal counsel, was fully informed in writing of terms and basic effect AND signs documents attesting to this

Front 20

"ALTERING CHARACTER OF ASSETS BY AGREEMENT"

When is a premarital agreement unconscionable?

Back 20

Unconscionable when made
AND there was NO fair disclosure of other party' obligations
AND Rt to disclosure was not waived in writing
AND party seeking to avoid enforcement had no adequate knowledge of other party's obligations

Front 21

"ALTERING CHARACTER OF ASSETS BY AGREEMENT"

Pre- and post-1985 distinctions in transmutation requirements for MARITAL agreements (not premarital); and post-1985 exception.

Back 21

**PRE-1985

Oral transmutations were okay

**POST-1985:

Transmutation MUST BE:

1 In writing
2 Signed by spouse whose interest is adversely affected
AND
3 Expressly state that a change in ownership is being made

Exception: Inexpensive tangible property gifts like jewelry

*****Oral premarital agreements can defeat SOF with performance and estoppel; transmutations CANNOT EVER

Front 22

Is waiver of spousal support in a premarital agreement valid? Ways to defeat in/validity?

Back 22

Valid UNLESS:

EITHER no legal rep at time agreement was signed

OR waiver was unconscionable at time of enforcement (NOT time of K)

Front 23

"EFFECT OF HOW TITLE IS TAKEN"
What is married women's special presumption? Is it rebuttable as to BFPs? Rebuttable as btw the H and W?

Back 23

Pre-1975 ONLY

Where CP was used to take written title in a married woman's name before 1975, AND title didn't indicate CP or a joint tenancy, property is presumptively the wife's SP

NOT rebuttable as to BFPs
Rebuttable as btw the parties

Front 24

"EFFECT OF HOW TITLE IS TAKEN"

To what factual scenarios does the married women's special presumption apply? (3)

Back 24

--Title taken in W's name alone pre-1975: SP

--Title in name of W and H pre-1975, BUT title is not taken in joint tenancy form or as husband/wife: 1/2 W's SP, 1/2 CP

--Title in name of W and some third party pre-1975: W tenant in common with third party

Front 25

"EFFECT OF HOW TITLE IS TAKEN"

What is Marriage of Lucas?

Back 25

When spouses take title in joint and equal form but contribute disproportionately to purchase price: presumption of gift to community IF MARRIAGE ENDS IN DEATH

Taking title in a form that raises a presumption of CP keeps it CP (taking as joint tenants), EVEN IF one spouse added some of their SP to the original purchase price and to future improvements to the house

So SP-contributing spouse has NO SP interest in house and NO rt to get reimbursement

E.g.: W inherits house from cousin, so SP so far. During marriage, W conveys deed to H&W as joint tenants. NOW THIS IS CP! Only becomes SP if that was explicit in conveyance. THEN, anti-Lucas applies for W and W can get reimbursement for DIP b/c she gave her SP to the community.

Front 26

"EFFECT OF HOW TITLE IS TAKEN"

How did legislature alter Marriage of Lucas rule?

Back 26

ONLY applies to cases involving divorce, NOT death; so Lucas still applies to death

In context of deceased spouse's estate, following presumptions apply, regardless of source of funds used in acquisition

1 If title is taken in joint and equal form, asset is presumptively CP
2 If title is taken in name of parties as joing tenants, asset is presumptively in joint tenance and title passes to survivor by rt of survivorship
3 If title is taken in name of "community property w/rt of survivorship" asset is CP, title passes w/rt of survivorship

Front 27

When one spouse gets credit/loan during marriage, what is the presumption? What standard is used to rebut?

Back 27

Presumption is community credit

Standard to determine whether loan proceeds or credit purchases are borrower's SP, look to INTENT OF CREDITOR

Did lender rely primarily in borrower's SP? If so, SP. If not, CP.

Did lender rely

Front 28

Is a premarital agreement valid if it promotes divorce?

Back 28

Generally, yes.

Front 29

"EFFECT OF HOW TITLE WAS TAKEN"
What do the two anti-Lucas statute allow?

Back 29

Statute #1:

For divorce or legal separation, property acquired during marriage in joint and equal form is presumptively CP REBUTTABLE BY

EITHER express stmt in deed that property is SP

OR written agreement by parties that property is SP

Statute #2:

For divorce or legal separation, spouse who made POST-1984 sontributions of its SP to the acquisition OR improvement of CP is entitled to:

Reimbursement without interest for contributions to: DIP

Down payment
Improvements
Principal payments on mortgage

Front 30

"EFFECT OF PARTIES' ACTIONS ON CHARACTERIZATION OF ASSETS"

What are the reimbursement rules triggered by improvements? (4)

Back 30

1 H expends CP to improve his own SP----Community has reimbursement claim for whatever is greater of cost of improvements or enhanced value

2 H expends CP to improve other spouse's SP----split of authority, argue presumption of gift and claim for reimbursement

3 H expends SP to improve CP IF

Divorce----Anti-Lucas applies, and reimbursement w/o interest for DIP

Death----Lucas applies, and NO reimbursement UNLESS proof of agreement to reimburse (treat as CP)

Front 31

"EFFECT OF PARTIES' ACTIONS ON CHARACTERIZATION OF ASSETS"

What are community's rts for installment purchase pre-marriage but debt paid down w/CP?

Back 31

Comm estate takes a pro rata portion of property with this formula:

"Principal debt reduction attributable to CP" divided by "purchase price"

ONLY principal, NOT interest or property taxes, etc.

Front 32

"EFFECT OF PARTIES' ACTIONS ON CHARACTERIZATION OF ASSETS"

What are community's rts for insurance?

Back 32

IF whole insurance for cash value, pro rata according to premium division

IF term policy w/o cash value, ZERO SP and ALL CP

Front 33

"EFFECT OF PARTIES' ACTIONS ON CHARACTERIZATION OF ASSETS"

Presumptions for tracing funds in commingled acct

Back 33

Available comm funds presumed to have been used to pay for family expenses

Absent reimbursement agreement, gift to comm is presumed when separate funds are used to pay family expenses

NO GIFT PRESUMPTION FROM FORM OF TITLE HELD ON COMMINGLED ACCT; TRACING ALLOWED

Front 34

"EFFECT OF PARTIES' ACTIONS ON CHARACTERIZATION OF ASSETS"

Permissible tracing methods for commingled accts

NONpermissible tracing method

Back 34

EXHAUSTION: at time asset was purchased, comm funds in acct had already been exhausted by payment of fam expenses, there4 asset must have been purchased w/sep funds

DIRECT TRACING: At time asset was purchased, there were separate funds available and SP proponent intended to use those sep funds to buy SP asset

NON PERMISSIBLE IS RECAPITULATIVE ACCTING: SP proponent canNOT simply show that total family expenses exceeded total comm income and conclude tht all remaining funds and assets purchased from commingled acctd are SP

Front 35

"EFFECT OF PARTIES' ACTIONS ON CHARACTERIZATION OF ASSETS"

Any direct tracing requires two things

Back 35

Sufficient sep funds that were available at the time

SP proponent's intent to use SP funds to buy the asset

Front 36

"CHARACTERIZATION PROBLEMS WITH CERTAIN ASSETS"

Business improvements, apportionment methods

When are the methods necessary?

Back 36

PEREIRA: P for personal skills/efforts; P for pay interest on SP and rest is CP

Pay simple interest at 10%/annum on business value at time of marriage and give it to person w/skills as SP, rest as CP

VAN CAMP: VC is for valuable company (or asset); VC is for value of community labor

Where capital investment was a major factor

Value of spouse's services at mrkt rates
MINUS family expenses paid from comm funds
EQUALS CP
Balance is SP

***

ONLY NEED WHERE SPOUSE BRINGS A BUSINESS INTO MARRIAGE; NO APPLICATION WHERE BUSINESS OPENED DURING MARRIAGE

Front 37

"EFFECT OF PARTIES' ACTIONS ON CHARACTERIZATION OF ASSETS"

Pension benefits

Back 37

Employee retirement benefits accumulated during marriage are CP (no matter when they vest)

Formula:

"Yrs of service while married" divided by "total yrs of employment (beginning to end)"

Ratio is CP; rest is SP

Front 38

"EFFECT OF PARTIES' ACTIONS ON CHARACTERIZATION OF ASSETS"

Three ways to award pension if pensioned spouse is not yet eligible for retirement

Back 38

When and if received decree

Cash out non-pensioned spouse by awarding other asset of value equal to pension

Ct retains jurisdiction until pension kicks in

Front 39

"EFFECT OF PARTIES' ACTIONS ON CHARACTERIZATION OF ASSETS"

What does decision to not retire due to nonpensioned spouse's claim?

Back 39

REDO PENSION STUFF ON 20-21

Front 40

"EFFECT OF PARTIES' ACTIONS ON CHARACTERIZATION OF ASSETS"

For stock options, the choice of proration formula depends on what?

What are the two proration formulas?

Back 40

Intent of employer in granting the option

EITHER reward for past services
Formula---"Yrs from date of employment to date that econ comm ends" divided by "yrs from date of employment to date options become exercisable"

Ratio is CP


OR encourage to remain in company

Formula: "Yrs from date options are granted to date econ comm ends" divided by "yrs from date options granted to date options become exercisable"

Ratio is CP

Front 41

"EFFECT OF PARTIES' ACTIONS ON CHARACTERIZATION OF ASSETS"

Is goodwill CP subject to division in divorce? How to measure?

Back 41

Yes

Get expert to value it

Front 42

"CHARACTERIZATION PROBLEMS RAISED BY CERTAIN ASSETS"

Educ acquired during marriage is NOT divisible property. What is available to comm? Defenses?

Back 42

Equitable rt of reimbursement w/interest to comm WHEN:

--Comm funds are used either to pay for educ or to repay loan related thereto
AND
--Educ substantially enhances earning capacity of the party

DEFENSES to reimbursement duty WHEN:

--Comm has already substantially benefited from educ (more than 10 yrs elapse since decree was awarded)
--Other spouse has received comm-funded educ (more than 10 yrs elapse since decree was awarded)
OR
--Need for spousal support is reduced as result of educ

Front 43

"TORT/K LIABILITY; MANAGEMENT PROBLEMS"

Where one spouse commits tort against other spouse, what result?

Where third party commits tort against a spouse?

Where one spouse commits tort against third party?

Back 43

Non-tortfeasor spouse gets SP recovery

Victim-spouse gets recovery as CP during marriage; upon DIVORCE, ALL recovery from injury goes to victim-spouse IF money is still available; upon DEATH, recovery treated as CP

Creditor can reach SP first, then tortfeasor-spouse's CP IF tort-act was NOT for benefit of comm; IF for benefit of comm, CP first, then SP

Front 44

"TORT/K LIABILITY; MANAGEMENT PROBLEMS"

How is comm personal property managed during lifetime? At death?

Comm real property? BFP issues?

Back 44

Each spouse has equal management powers over comm property w/o need for other's consent EXCEPT:

--Where one spouse runs a comm business
--One spouse canNOT sell/encumber personal property in family dwelling w/o consent

Testamentary control limited to control over 1/2 CP

Comm real property requires joinder of BOTH spouses to convey, sell or lease 1+ yrs; transactions to BFPs are valid UNLESS within 1 yr nonconsenting spouse brings action, and nonconsenting spouse must reimburse purchase price to BFP

Front 45

"TORT/K LIABILITY; MANAGEMENT PROBLEMS"

General rule as to whether spouse can transfer/encumber "my 1/2 interest in comm property"? Exception

Back 45

General rule is NO; can only convey/encumber an entire comm interest

EXCEPTION: To pay family law atty rep'ing spouse in divorce

Front 46

"TORT/K LIABILITY; MANAGEMENT PROBLEMS"

General rule for creditor's ability to reach CP for premarital and marital debts? Exception?

General rule for creditor's ability to reach debtor-spouse's and nondebtor-spouse's SP for debts? Exception?

Back 46

General rule is that creditors CAN reach CP for either premarital or marital debts

EXCEPTION applies to premarital debts. Nondebtor spouse's earnings canNOT be reached for debtor spouse's premarital debts IF held in separate acct AND NOT commingled with other CP funds

General rule for creditor's ability to reach debtor-spouse's SP is, YES, it CAN.

General rule for creditor's ability to reach nondebtor-spouse's SP is NO, it canNOT. EXCEPT if the debtor-spouse's debt was marital and for necessaries UNTIL DIVORCE

Front 47

"TORT/K LIABILITY; MANAGEMENT PROBLEMS"

After divorce, what can a creditor reach? What rts do parties have?

Back 47

Indebted spouse's SP and share of CP

Nondebtor spouse's SP and share of CP ONLY IF CT ASSIGNED DEBT TO NONDEBTOR SPOUSE

IF nondebtor spouse must pay for debtor spouse's debt, can sue for reimbursement

Front 48

"MULTISTATE ISSUES"

What is quasiCP or QCP/

Back 48

QCP is property acquired by either spouse that would have been CP had spouse been domiciled in CA at time of acquisition

Front 49

"MULTISTATE ISSUES"

How is QCP treated at divorce?

Back 49

Same as CP

Front 50

"MULTISTATE ISSUES"

How is QCP treated at death for survivor and decedent?

Back 50

Survivor has 1/2 interest in decedent's QCP

Decedent has NO interest in survivor's QCP

Front 51

"MULTISTATE ISSUES"

How does the ct deal w/ out-of-state comm realty and quasi-comm realty at death? Divorce?

Back 51

DEATH

Foreign realty handled by state in which realty is located. Survivor has NO rts over that UNLESS it was converated to personal property before death.

DIVORCE

CA ct can still treat that foreign realty as QCP by:

EITHER dividing up CP/QCP in a way that does not involve messing w/foreign realty

OR exercising jurisdiction over parties and ask them to convey that foreign realty however necessary to satisfy divisions

Front 52

What is a putative spouse? What rts?

How compares to unmarried cohabitants?

Back 52

Putative spouse is someone who has a good faith reasonable belief that she's married, even though she's not.

Rts of any spouse.

Unmarried cohabitants are mere tenants in common; NO comm prop rts

Front 53

How to rebut CP presumption when asset acquired during marriage?

Back 53

1 Parties took written title in manner (joint tenancy) that shows that parties agreed to hold it as not CP

2 Parties agreed that property would not be CP

3 One spouse took title in form that evidences gift to other spouse

4 Purchase funds traced to SP source (IF form of title doesn't answer question)

Front 54

In what ways/forms can a married couple jointly hold property? (4)

Back 54

1 Joint tenancy (specific language)
2 Tenancy in common
3 CP
4 CP w/rt of survivorship

When taken as any of these, it's presumptively CP FOR PURPOSES OF DEATH OR DIVORCE; IF COUPLE IS STILL MARRIED, THEN, FOR E.G., JOINT TENANCY PROPERTY IS STILL 1/2 SP FOR H AND 1/2 SP FOR W.