Community Property

NV is a CP state. All property acquired during marriage is presumed to be CP. All property acquired before marraige or after permanent separation is presumed SP. Further, any property acquired through gift, devise or bequest is presumed SP"

If you have time:
" To determine the CHARACTER of any asset , courts will trace the SOURCE of its funds. A mere change in FORM does not change the asset's characterization"

1. Ask - does CP apply to this item of prop?

2. If yes, what is the source of this item?

3. Have the parties taken any action to change the characterictic of this item?

4. Are there any applicable statutory presumptions?

5. Are there management and control issues?

6. Based on the above analysis, how would you divide the property?

1. Do we have a valid marraige
2. Does CP law even apply ( depends on where the property was acquired)

1. Mutual consent ( parental consent required if under 18)

2. Capacity

3 Age & gender ( NV doesnt recognize same sex)

4. License

5. Ceremony : by authorized person or w/ good faith belief - NV doesn't recognize CL marraiges

Disposition depends on whether the surviving spouse is putative or mereticous.

An innocent spouse with a good faith belief that she is lawfully married

- if her belief was objectively reasonable, she has the same property right as a lawful spouse when the marraige ends.

A spouse who knows the marraige is invalid

- general K principles apply ( same for couples living together)

Both share equally - if legal is dead , then putative is treated as decedent's surviving spouse.

1. If property is acquired by married couple if living in another jx, then it will be distribute according to that jx's state (NV does not recognize Quasi CP)

2. If divorced, out of state realty acquired by parties DOMICILED in a CP state is CP. IF death, then rules of the state where the realty is apply.

Sources, Actions, Presumptions

Because property takes on the character of the item used to acquire it.

1. Earnings
2. PI damages
3. Gifts
4. Real Property
5. Rents, Issues & profits
6. Property purchased w/ borrowed $
7. Life insurance
8. Education and training

Earning during marriage are CP - before & after are SP.


1. Earnings & pension
2. Disability & workers comp
3. EE stock options
4. Severence pay
5. Goodwill
6. Various federal benefits (preemption)

“Retirement benefits are CP if earned during the course of the marriage. When pensions and other retirement benefits are earned both before marriage and during marriage, cts use the time rule to determine how much of the pension is attributable to community labor and how much is attributable to separate labor. The community’s share is calculated by determining the number of years the pension was earned while married and dividing that number by the total number of years the pension was earned. Upon divorce, a pension may be difficult to divide b/c of the uncertainty associated w/the exact date of retirement. Cts can do several things upon divorce to divide a pension:

1. The court can assign the entire pension to the earning spouse and another community asset of equal value to the non-earning spouse;

2. The court can adopt a wait-and-see attitude by dividing the other community assets and reserving jx over the pension until the age of retirement (pref. in NV) or

3. Calculate the community’s share of the pension, and order the pension plan administrator to make payments of one-half of the community’s interest directly to the non-earning spouse when the age of retirement is reached.

“Disability benefits, including workers’ compensation benefits, are characterized as CP or SP depending on the wages they are designed to replace. Payments received during marriage are CP b/c they are designed to replace marital earnings. Likewise, payments received before marriage or after permanent separation are SP b/c they are designed to replace separate earnings. In this case $1 in disability benefits were received by H prior to permanent separation. Since these benefits were replacing H’s wages during marriage, they will be treated as CP. H also received $1 in disability pay after permanent separation. These funds were replacing H’s post-separation wages and will be characterized as his SP.”

1. Characterized as CP or SP depending on the wages they are designed to replace. (Very inconsistent w/retirement benefits b/c w/retirement what matters is when benefits earned and with disability what matters is when benefits received.) Doesn’t matter which estate paid for the policy.
a. Payments received during marriage are CP b/c they are designed to replace marital earnings.
b. Payments received before marriage or after permanent separation are SP b/c they are designed to replace separate earnings.

To the extent that disability payments are replacing retirement benefits, payments after retirement are CP.

a.Ex: 1000/month before separation is CP. 1000/month after separation is SP. At age of retirement, can either receive disability at 1000/month or retirement at 800/month. Will choose the 1000. But 800 of that 1000 is like retirement benefit and is treated like ordinary pension and the community will divide equally. So ex-W gets 400 and H gets 600.

Community gets to share in this enhancement, even when it occurs after separation.

“A form of compensation. To the extent stock options are earned during the course of the marriage, the community has the right to share in their value.”

Ex: 1990, H goes to work for Disney. In 1994, given right to exercise stock option. Exercisable in 1998, provided still w/company. Issue: Is he being compensated for 1990 to 1994 (past work), or 1994 to 1998 (future work), or both? Typically both. Also, Ct applies Time Rule: how many of those years were marital years? If permanent separation in 1996, and it was compensation for the entire period, then community will benefit for 6/8 years.

“There is no fixed rule w/respect to severance pay. Cts will look to the facts and circumstances of each case to determine how to characterize severance pay. To the extent that the severance pay looks like a benefit which was earned during the course of the marriage, cts are likely to treat it as CP just like other forms of deferred compensation. However, in a few cases, cts have treated severance pay as equivalent to post-separation earnings and have therefore characterized the pay as SP. (In this case, the severance pay was part of W’s compensation package when she began working for the corporation. As such, the pay appears to be a form of deferred compensation for labor during the course of the marriage. Thus, it should be characterized as CP and divided equally.”

1.To the extent that the severance pay looks like a benefit which was earned during the course of the marriage, cts are likely to treat it as CP just like other forms of deferred compensation and apply the time rule. However, in a few cases, cts have treated severance pay as equivalent to post-separation earnings and have therefore characterized the pay as SP.

2. Rule of Thumb: If the severance pay was part of W’s compensation package when she began working or somehow contractually based, the pay is a form of deferred compensation for labor during the course of the marriage CP to be divided equally.

“Bonuses are treated as CP or SP depending on the facts and circumstances of the case. Bonuses in many cases will be CP b/c hey are a form of compensation for the spouse’s labor during the marriage. In some cases, however, an employee bonus is more analogous to a personal gift from the employer to employee. In these cases, the bonus is more properly considered SP of the recipient. Likewise, where an incentive bonus is paid to an employee for work after separation, the incentive bonus should be characterized as SP.”


Treated on a case-by-case basis. Treated as CP or SP depending on the facts and circumstances of the case.

Issue: Was the bonus earned or was it a gift? Almost always treated as earnings. Most employers don’t give gifts to employees. If all employees are getting it, more likely to be earnings. If IRS treats it as compensation, it’s earnings. Bonuses received after permanent separation is SP.

Bonuses in many cases will be CP b/c they are a form of compensation for the spouse’s labor during the marriage.

In some cases, however, an employee bonus is more analogous to a personal gift from the employer to employee. In these cases, the bonus is more properly considered SP of the recipient.

Likewise, where an incentive bonus is paid to an employee for work after separation, the incentive bonus should be considered SP.

is CP if earned during marriage and is awarded based on market value or an amount ,if invested, that would produce similar income as goodwill earned during marriage

-defined as the total value of a business less the value of its total assets.

Measure by the market value of the business or the present value of future income created by the goodwill during marriage.

"Under the supremacy clause, federal law preempts inconsistent state laws. In some instances , federal law preempts NV from applying CP concepts to certain assets

1.Social Security Benefits: Spouse cannot claim interest in your SS benefits: b/c SS law already provides benefits for spouses.

2.Military Benefits: Military life-insurance policies of service members are an inducement for person to stay in military- granting spouse a ½ interest is inconsistent w/purpose of the policy.

3.ERISA: If you attempt to transfer or convey an interest in a pension. Either the employee or the spouse, no one else.

4.US Savings Bonds: One of the attractive features of savings bonds is that they allow you to designate a joint owner. Co-owner has right to bond and not the spouse.

a.Exception: BUT…if it’s clear that the purchaser was trying to defraud spouse of CP interest, then we can invalidate the transaction.

“The asset in question is a U.S. Savings Bond purchased by H with CP funds. H designated his son S as the co-owner of the bond in the event of H’s death. Although W will want to assert that the bond is CP and she is entitled to one half of the value, her claim is preempted by the federal law which governs U.S. Savings Bonds.”

5.Few areas where there was preemption, but was overturned

a.Military retirement benefits; military pension; railroad employee benefits
i.Spouse can claim ½ interest

b.Copyrights, trademarks: Regulated by federal intellectual property law.

“Personal injury awards and settlements are CP if the cause of action arose during marriage. If the cause of action arose before marriage or after permanent separation, the award or settlement is SP. Personal injury awards against the other spouse are always the SP of the injured spouse. Upon divorce, CP PI awards are assigned entirely to the injured spouse so long as they have not been commingled with other CP funds and so long as the interests of justice do not require otherwise.”

1.Characterization as CP or SP depends on when the cause of action arose (when injury occurred)- when payment received is irrelevant.

a.If cause of action arises during marriage, proceeds are CP.

b.If cause of action arises before marriage or after permanent separation, proceeds are SP.

2.One exception: Personal injury recoveries against the other spouse are always the injured spouse’s SP.

3.Upon divorce, CP PI awards are assigned entirely to the injured spouse so long as they have not been commingled w/other CP funds and so long as the interests of justice do not require otherwise.

4.For purposes of creditors’ rights, CP PI awards are still CP.

Gifts, devices bequests are SP regardless of when they are acquired - if given jointly then each spouse has 1/2 SP share

B4 and after marriage is SP - deemed acquired when perfected.

AP: acquired at the time of original entry - modern trend gives community interest if TES (time, energy, services)

Doctrine of relation back applies to land purchases but property Ked for b4 marriage but closes after, is presumed CP (if single family residence and held in JT)

If the source is CP, then CP - if SP , then SP - even if received during marriage.

Generally CP if purchased during marriage but look to :
1. whether creditor primarily intends to look for repayment

2. Source of theloan repayment

3. Signatures on the loan do not control

1.Whole Life

a.“The community has an interest in whole-life insurance policy to the extent that the community paid the premiums. (Use time rule.)

b.If a spouse has a community-funded life insurance policy and does not name the other spouse as the beneficiary, the other spouse can claim a ½ interest in the benefits after the death of the covered spouse.”

2.Term Life

a.“For term-life insurance, cts look at which estate paid the premium for the latest term (term that the spouse dies). If the community paid the premium, the community is entitled to the benefits of the policy.

b.As with whole-life insurance, a spouse may not defeat the other spouse’s ½ interest in a life insurance policy by naming some other party as beneficiary of the policy.”

c.Exception: If the insured spouse becomes uninsurable during the insurance and the policy is renewed, then it’s treated as if it’s a whole life policy.
i. Ex: In 3rd year (paid w/CP), H becomes uninsurable. Term life gives right to renew and SP used to pay renewal.

1.“Education and training received during a marriage are not CP assets subject to division. However, the community may be entitled to reimbursement when community funds were used to pay for the education or training of a spouse and that education or training substantially enhanced the earning capacity of the spouse. This right to reimbursement is the exclusive remedy for the community. --Reimbursement is with interest.

2.The right to reimbursement is not absolute. Reimbursement will be reduced or denied in three situations:

1) Where the other spouse has received comparable community-funded education during the marriage;

2) Where the education or training has reduced the need for spousal support for the educated spouse; or

3) Where the community has already benefited from the education or training. If more than 10 yrs have passed since the education or training, it is presumed that the community has already benefited from the education or training.” ---Opposite presumption if less than 10 yrs. Rebuttable presumptions.

3.Student Loans
a.Community reimbursed for contributions to student loans from community. (CP has no interest in the degree, sole remedy is reimbursement for contribution).

b.“Student loans upon divorce are entirely assigned to the educated spouse w/o offset.”

4.Education and Training include expenditures for tuition, books, supplies, etc., but not payments toward ordinary living expenses like food or rent. These are the resp. of the community

1. Agreement between spouses
2. Gifts between spouses
3. Comingling of SP & CP.
4. Community Services (TES) used to enhance the value of the property
5. Community funds used to improve SP property.
6. Community funds used to pay off purchase price owed on SP
7. Separation of the parties

1. Antenuptial or premarital: enforceable but must be in writing to satisfy SOF

2. Transmutations: "An agreement between spouses to change the character of an asset. " - "ehre there is/not a valid transmutation because....(explain effect - converts SP to CP. Here the SP will not be CP.

(Oral agreements were recognized before 1975)

3. JT: property held jointly is NOT CP, but rather SP of both . At divorce, JT divided equally. In NV property may also be held as CP " w/ right of survivorship. (Contract this w/ CP)

- no formalities required. Either spouse can make the gift of SP to CP.

1. generaly MUST be in writing (unles unsubstantial in value)

2) Implied where spouses uses SP to purchase property in the name of other spouse or to pay community debt.

But if SP used to make a downpayment , no gift is presumed and contributing spouse is entitled to reimbursement

If SP and CP are commingled in such a manner that each source cannot be ascertained and identified, the comingled whole will be presumed CP

But before all the comingled whole is deemed community, community funds cannot be de minimus.

2 method used to rebut general presumption:

1) Direct Tracing: by determining the amount of SP in comingled finds or property - look to evidence of a writing , restruction of records, showing suff. SP funds to cover price of property at time of purchase.

2. Family Expense: family expenses are presumed to be CP and SP contributions to family expenses are deemed gifts. But if show AT THE TIME property acquired w/drawals for family expense exceeded CP deposits, item is presumed SP.

- Jointly held bank account is presumed CP unless tracebale to SP and no contrary agreement

When community labor is used to enhane the value of a separate property business, the community is entitled to share in the increased value of the SP business.
- Explain the different formulas for calculating the CP's interest and explain how they apply to the facts (Pereira & Van Camp)

This method of accounting is used when the increase in value of SP business is primarily the result of community labor. NV favors this method.

Determine the value of the SP at the beginning of the business, and give it a fair market rate of return over the course of the marriage. (Normally 5% calculated annually). The SP is given the initial value plus the fair rate of return. The remainder is CP.

This method of calculating is used when the increase in value of business is primarily the result of the unique nature of the SP asset. USing this method, determine what a fair salary would be for the community labor, and multiply that by the years of the marriage. You subtract any salary already received and any amounts paid for community expenses. The result is CP share. The rest is SP.

So CP = (Fair salary – salary taken)(# yrs. business during marriage) – CP expenses paid out of the business
ii. SP = remainder
iii. Ex: Fair salary= 80k/yr. But he only took 50k/yr. Paid tuition for child out of the business 10k. So CP = (80k x 10) – 50k – 10k = 200K. SP = 800K – 200K = 600K

Community is entitled to reimbursement but no interest in CP:

1. where one spouse uses CP or his SP to make permanent improvements on the other spouse'sSP,there is a rebuttable presumption of a gift, which can be REBUTTED by writing

2. Where CP funds used by spouse to improve his own SP, w/o consent conmmunity is always entitled to reimbursement on a breach of trust theory - community received amount expensed OR value added, whichever is greater

3. Where CP funds usedby spouse to preserve his own SP , w/o consent (for taxes etc) the community is entitled to REIMBURSEMENT for amount given

4. Any fixtures generally follow title.

Community obtains a pro-rata share interest in the SP in proportion to amounts from SP & CP funds

1. Note that where SP is used towards CP property, spouse is entitled to contribution upon disposition

2. RUle applies to down payments, payments for improvements or which reduce the principle of the loan - but does not apply to maintenance costs, insurance or taxes

The earnings and cummulations of either spouse while permanently living separate & apart are that spouse's SP.

1. Sep & apart (present intent to reunite? Facade of a marital relationship?)

2. Accumulations ( the acquisition of a property from any source)

3. Valuation ( Of CP for purposes of division upon divorce is made as of the date of trial (not date of sep) unless good cause requires otherwise.

1. general presumption: all prop acq during marriage is CP

2. W & 3rd party TIC presumption:
" COnveyance to W & to any other person (including H) gives rise to a special presumption that a TIC is created & W holds her share as SP, absent a contrary intent in the instrument."

3. W & H CP Presumption : conveyance to W & H

1. Comunity Personal property
2. Community Real property
3. Community Property Business
4. Debts owed to 3rd parties

" The general rule is that during marriage the spouses have equal management and control of all the community assets. Gifts of CP asset require written consent of non-donor spouse:"

Exception to the equal management rule:
1. Real property transfers: both spouses must join
2. Gauranty, indemnity or survivorship: both spouses must join to bind the community
5. Debts betwen H & W

1. Either spouse has management and control& power of disposition (other than testamentory ) but neither spouse can:
a. make a gift w/o the other's written consent:

1. If spouse orally consents to gift , she will be estopped from attacking it.

2. Non-consenting spouse's remedy: Gift may be voided & recovered from the donee & the gift again is CP. But if donor dies , the non consenting spouse may recover only 1/2 the gift from either donee or donor's estate

b. Sell of encumber the furniture, clothes or other spouse/kids:

- sale of encumbrance nay be avoided, even if spouse who sold dies, entire transaction can be set aside, and suviving spouse need not repay consideration.

1. either spouse has management & control of community real property, but both parties must join in executing any instrument by which community real property is transferred encumbered or leased > 1yr

2. If the CP real property is in one spouse's name, an instrument executed to a BFP (w/o notice of marriage) is presumed valid. Other spouse may rebut by showing that she was unaware of the transaction & did not consent. But if she did, she can't attack
- non consenting spouse may invalidate the transaction but must restore consideration to BFP

- Non consenting spouse's coa must be brought within 1 yr

1. A spouse operating a business that is all or substantially CP are primary management and control of that business.

Primary manager spouse may act alone but must give prior written notice of disposition of all or substantially all of personal property.

Manager has a duty to spuse to act in good faith, disclose community assets and debts upon request, and obtain consent before taking a major action which affects CP interest.

Non-managing spouse may bring an action for reformation of title , accounting or impairment of interest

1. Debts incurred by H & W prior to marriage - owing spouses' SP & earning are liable , but not earnings & SP of non owing spouse

2. CP of either spouse liable for post marital Ks of either spouse, & contracting spouse is also liable, but not other spouse.

3. SP of either spouse is liable to pay living necessaries if the debts incurred while spouses living together & there is no CP available

4. Tortfeaor-spouse's liability will be satisfied from CP then his his SP if tort occurred while spouse was performing activity for the community. If liability not based on act benfitting the community then tortfeasor's SP goes before CP

1. Support payments to former spouse from SO - if spouse pays support payment to former spouse from CP of second marriage & sep. income of spouse was available but not usedm community entitled to reimbursement to the extent of the sep. income available.

2. If spouse pays SP obligation w/ Cp then CP entitled to reimbursement

3. If tortfeasor spouse is found liable for injury to the other spouse , CP can't be used to discharge his liability unless SP is exhausted first

4. If a spouse receives personal injury recivery as SO after separation, then non injured spouse is entitled to reimbursement of her SP or CP

" The basic rule at divorce is to divide each of the community assets in a reasonably equal manner."

2. The court must find a compelling reason to deviate from the equal division rule and must explain in writing:

1. Misappropriation by one spouse
2. Laibilities exceeded assets
3. Education debts will be assigned to the spouse who received the education
4. Tort liabilities will be assigned to the spouse who incurred the liability if the liability was not for the benefit of the community
5. Family home may be awarded to person who is given the custody of the children.

- marital misconduct is not considered unless there is a fiancial impact

1. If the spouse dies with a will, the spouse is etitled to dispose of all of his SP and 1/2 CP property

-if spouse made an unauthorized gift of CP, the spouse may recover 1/2 as theor CP share

2. If spouse dies w/o a will , the decendent's CP is awarded entireyly to the surviving spouse.