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27 Cards in this Set
- Front
- Back
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Basic presumptions
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California is a community property state. All property acquired during marriage is presumed community property. All property acquired before marriage or after permanent separation is presumed to be separate property. In addition, any property acquired by gift, devise or bequest is presumed to be SP.
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 the above principles in mind, w can now turn to the specific items of property involved. |
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Quasi-community property
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Quasi-community property (QCP) is property acquired by either spouse that would have been community property had the spouses been dominciled in CA at the time of the acquisition. At divorce QCP is treated as though it were CP.
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Putative spouse
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A putative spouse is not lawfully married, but has a good faith belief based on objectively reasonable grounds that she is lawfully married. Once she learns that her marriage is invalid, she no longer accrues putative spouse rights. In CA, a putative spouse is treated as legal spouse and takes according to quasi-marital property principles.
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Pereira
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Pereira is used when the W/H's management was the primary cause of the business' growth. The SP consists of the manager's capital plus a fair rate of return for each year. (The usual legal rate is 10%). The remainder is CP.
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Van Camp
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Van Camp is applied when the character of the business was the primary cause of the growth. Under Van Camp, the manager's services are valued at the going market salary. The amount of family expenses that were paid from the business earnings are then subtracted. The remainder, if any, represents the community portion of the business. The remainder is SP.
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Personal injury awards
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Personal injury awards and settlements are CP if the cause of action arose during marriage. If the c/a arose before marraige or after permenanet separation, the the award or settlement is SP of the injured spouse. Personal injury awards against the other spouse are always the SP of the injured spouse. Upon, divorce, CP personal injury awards are assigned entirely to the injured spouse so long as they have not commingled and the interests of justice do not require otherwise.
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Disability pay and worker's comp
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Disability benefits, including workers' com benefits, are characterized as CP or SP depending on the wages they are designed to replace.
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Retirement Benefits
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Retirement benefits are CP if earned during the course of marriage. When retirement benefits are earned both during and after and/or before marriages, then the courts will apply the time rule to determine how much of the retirement benefirs are CP and SP. The community's share is calculated by determining the number of years the retirement benefits were earned while married divided by the total number of years the retirement benefits were earned.
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Stock Options
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You should note that stock options are a form of compensation. To the extent stock options are earned during the court of marriage, the community has the right to share in their value
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Assets purchased with community & separate funds
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When community and separate property funds are used to purchase an asset, the CP and SP acquire a pro rata interest in the asset. To determine the respective shares of ownership, you start by figuring out the percentage that each contributed to the purchase price. The community and separate property will be entitled to its investment plus a proportional share of the appreciation.
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SP paid down with CP
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When community payments pay off the purchase price of a spouse's SP, Marriage of Moore has held that the community is entitled to a proportional ownership interest in the house to the extent that the mortgage payments reudce the principal debt. Moore sets forth a complicated forumla that is used to approportion the SP and CP interests in an asset which is purchased in part by SP and in part by CP
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Bonuses
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Bonuses are treated as CP or SP depending on the facts and circumstances of the case. Bonuses are usually CP because they are a form of compensation for the spouse's labor during marriage. In some cases, however, a bonus is more like a personal gift from an employer to an employee. Thus, the bonus would more properly by SP.
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Jointly titled property
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All property held by the spouses in joint form is presumptively CP for purposes of distribution at divorce or legal separation. This included joint tenancy, tenancy in common, CP, CP with right of survivorship, and tenancy by the enitrety. The presumption can be overcome with a collateral written agreement or statement of some sort in the documentary evidence of title. This presumption does not apply at death.
If there is no agreement to the contrary, then contributions to the acquisition of the property are reimbursed to the SP contributor without interest or appreciation. Same rule applies to improvements to CP with SP funds. If a spouse deeds SP into jointly titled property, the SP contribution to the acquisition of the property is the fair market value at the time it was deeded into joint title. |
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Joint tenancy
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Joint tenancy is a form of title in which husband each own an undivided 1/2 interest with a right of survivorship. Taking title in joint and equal form is inconsistant with the preservation of a separate property interest. Under current law, property held by spouses in joint tenancy is presumptively community property for pruspoes of distribution at divorce or legal separation.
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Transmutation.
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Transmutation is the spousal transformation of the character of property. Prior to Jan 1. 1985, oral agreements to transmute proeprty as well as donative acts inferred from one or both parties' behavior to transmust property were allowed. As of Jan. 1. 1985, transmutations must be evidenced by an express declaration in writing that is signed or accepted by the spouse whose interest is adversely affected. However, there is an exception for personal gifts of relatively insubstantial value.
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Retirement benefits
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Retirement benefits are CP if earned during the course of the marriage. For retirement pensions and other retirement benefits earned before and during marriage, courts use the time rule to determine how much of the pension is attributatble to CP labor and how much is attributatble to CP labor and how much is attributable to SP labor.
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Severance pay
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Courts are split on severance pay. Courts which treat severance pay as SP do so because they believe the severance pay replaces future wages which would have been received.
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Business and professional goodwill
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Business and professional goodwill is CP if earned during marriage.
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Antenuptial agreements
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Antenuptial agreements are enforceable, but must be in writing to satisfy the statute of frauds.
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Married woman's special presumption
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The married woman's special presumption that applies to peorpty taking in the married woman's name alone prior to 1975. According to the MWSP, property taken in the name of a married woman's name prior to 1975 is presumed to be her separate property. The MWSP is based on the fact that prior to 1975 the husband was given sole management and control of the community assets and thus, any property in the woman's name was presumed to have been a gift to her.
The MWSP does not apply to assets where some intent other than a gift is shown or where the woman controlled how title to the asset was taken. |
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What happens to jointly titled property at death?
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At death, Lucas applies. Under Lucas, when a married couple takes title in joint and equal form, it is inconsited with the preservation of a separate property interest in the asset. Any SP used ot acquire the asset is presumed to be a gift of SP unless there is an oral or written agreement to the contrary.
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What happens to jointly titled property at divorce?
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At divorce the rules vary depending on when the asset was acquired. Under CA Family LAw, when a married couple take title to an asset in joint tenancy after 1984, the asset is presumed to be CP for the purposes of divorce. The legislation was later revised so that property taken by a married couple in any joint form after 1987 is now presumed to be CP for purposes of divorce. Thus, any SP used to acquire the jointly titled asset does not give the SP a pro rata ownership interest in the asset. However, the SP is entitled to reimbursement for its contributions to the purchase price of a jointly titled asset. Jointly titled assets acquired before 1984 are governed by Lucas.
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Distribution at divorce
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The basic rule at dorce is that to divide each community asset equally in kind. Thus, each spouse is given one-half of each community asset.
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Reasons to deviate from the equal division rule
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1) misappropriation by one spouse
2) laibiltieis exceeded assets 3) eduactional debts will be assigned to the spouse who received the education 4) tort liabilties will be assigned to the tortfeasor spouse if the liability was not for the befit of the community. 5) family home may be awarded to the person who is given custody of the minor children. |
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Distribution at death
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If the spouse dies with a will, the spouse is entitled to dispose of all of his or her SP and one half of the CP
If the spouse dies without a will, the CP is awarded entirely to the survivng spouse. Between 1/3 and all of the decedent's SP will be awarded to the surviving spouse depending on whether there are issue or parents surviving. |
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Management and control during marriage.
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The general rule is that during the marriage the spouses have equal management and control of all the community assets.
Exceptions: 1) For real property transfers both spouses must join 2) Personal belongings including clothing and furniture 3) spouse managing a business is given primary management and control. 4) Bank accounts in the name of one spouse alone. |
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Preemption
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Under the Supremacy clause, federal law preempts inconsistant state laws. In some instances, federal law preempts CA from applying community property concepts to certain assets including, federal homestead claims, military life insurance benefits, U.S. savings bond, and social security benefits.
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