Community Property

Front 1

Bar Bri "characterization of an asset"

Back 1

"The characterization of an asset as a community property or separate property depends on three factors:
1) the SOURCE of the item
2) ACTIONS of the parties that may have altered the character of the item (State Rule), and
3) any statutory PRESUMPTIONS affecting the item
(4) (conclusion/DISPOSITION)

Front 2

Basic Approach

Back 2

1) state presumptions of CA community property law, and if applicable, Quasi community property

2) are there any issues which affect all or most items of property (e.g.- transmutation), and what gave rise to this litigation

3) Organize your answer by item of property (subheadings for liability)

4) analyze the character of each items of property (sources, actions of parties, special rules, distribution)

5) discuss preemption issues (if any)

Front 3

The Basic Presumptions which govern the law of Community Property" (absolutely must memorize)

Back 3

"California is a community property state"

"All property acquired during the course of 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, devise or bequest is presumed to be separate property"

"With these basic principles in mind, each item of property will be examined"

Front 4

If quasi community property is involved add the following to the basic principles introduction

Back 4

"Quasi Community is property acquired to either spouse that would have been community property had the spouse been domiciled in California at the time of the acquisition"

Front 5

What types of issues may affect all of the assets (discuss this issue first)

Back 5

-There may be transmutation which affects all of the assets

-Rules regarding what happens to the property at divorce (if applicable)

-Rules regarding what happens to the property at death (if applicable)

Front 6

What happens to the property at divorce

Back 6

"At divorce, the community assets will be equally divided in kind unless some special rule requires deviation from the equal division requirement"

Front 7

What happens to the property at death

Back 7

"At death, the decedent can leave all of his separate property and half of the community property. If the decedent dies intestate, the surviving spouse is automatically entitled to the decedent's share of the community property and 1/3 to all of the decedent's separate property depending on whether the decedent left issue or parents surviving"

Front 8

Special classifications

Back 8

-personal injury awards
-disability pay and worker's compensation benefits
-severance pay
-stock options
-business and professional goodwill
-education and training

Front 9

Personal Injury Awards (special classifications)

Back 9

Personal injury awards are CP if the cause of action arose during
marriage.

If the cause of action arose before marriage or after permanent separation, the award is SP.

At divorce, CP personal injury awards will be awarded entirely to the injured spouse unless the interests of justice require otherwise.

Personal injury awards against the other spouse are always the SP of the injured spouse

Front 10

Retirement Benefits (Special classifications)

Back 10

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 attributable to CP labor and how much is attributable to SP labor.

Front 11

Disability Pay (Special Classifications)

Back 11

Disability pay and worker's compensation benefits are either CP or SP depending on the wages they are designed to replace.

To the extent disability benefits are taken in lieu of retirement benefits, disability benefits are treated as retirement benefits.

Front 12

Severance Pay (Special Circumstances)

Back 12

Courts are split on severance pay...

If it arises on the bar exam, raise arguments on both sides:

-H's severance pay is SP because it replaced lost earnings which after a divorce or permanent separation would be H's SP, OR

-H’s severance pay is CP because it arose from a collective bargaining agreement and was thus earned by employment during marriage.

Front 13

Stock Options

Back 13

Stock options are a form of employee compensation and they are treated as CP or SP depending on when they were earned. Courts use the time rule to determine the respective CP and SP shares.

Front 14

Business and professional goodwill

Back 14

Business and professional goodwill is CP if earned during marriage!!!

The community will receive the fair market value (FMV) of H's partnership share in the firm

Front 15

Education and Training

Back 15

Education and training are not CP and degrees are not divsible.

The community may be entitled to reimbursement however when CP funds are used to pay for education or training and the education enhances the earning capacity of the spouses.

The CP is not entitled to reimbursement where the community has already benefitted from the education or training; where the other spouse has also received community- funded education; or, where the need for spousal support is reduced by the education or training.

Front 16

Separate Property

Back 16

Property owned by either spouse before marriage; or

Property acquired during marriage by gift, will, or inheritance; or

Property acquired during marriage with the expenditure of separate funds (this is called source rule or tracing)

Rents, issue, and profits derived from separate property

Front 17

Community Property

Back 17

Property other than separate property, acquired by either spouse during marriage. The most common examples are:
- salary or wages earned by either spouse (can be labor/salary or even bonus at work), and
- the income from community assets

Front 18

Community Presumption

Back 18

all assets acquired during the marriage are presumptively community property

absent a showing of the parties' agreement or that title was taken in a form that overcomes the community presumption, the burden is on the party contending otherwise

Front 19

Economic Community

Back 19

A period of time when property can be labeled community property

It ends when two conditions are met:
i) permanent physical separation
ii) intent not to resume the marital relation (only need intent from one party)

Front 20

How is community property handled at divorce?

Back 20

Absent a property settlement agreement, all community property must be divided equally- Pro Rata.

Disparity in earning power can be considered only as to spousal support (AKA alimony) and child support

NOTE: each and every community asset must be divided up 50/50

Front 21

Economic Circumstances Exception (community property @ divorce)

Back 21

Can have non-pro rata division, giving particular asset wholly to one spouse and "cash out" other spouse with other assets (with each spouse still receiving 50% of total value)

This is very common with the family residence in an effort not to uproot couple's children

Also common with pensions and shares of stock of a closely held corporation

Front 22

Statutory exceptions to equal 50/50 division at divorce (where one spouse ends with more than 50%)

Back 22

One spouse misappropriates CP, whether before or during pendency of divorce

one spouse has incurred educational debts, treated as separately incurred debt :(take law school loans with you)

One spouse incurred tort liability not based on activity for the benefit of the community

Personal injury award is CP but on divorce is awarded to injured spouse (unless interests of justice require otherwise)

"Negative community"- community liabilities exceed assets; relative ability of spouses to pay debt is considered (concern is protect creditors)

Front 23

Power to manage CP property

Back 23

Neither Spouse can make a gift of CP without the other spouse's written consent
UNLESS: US government savings bonds are involved (federal preemption)

Each spouse has the power of testamentary disposition over all of his SP, but only over 1/2 the CP


The power to manage CP is not equal to the power to give it away

Front 24

Widows Election Will

Back 24

Where one spouse purports to bequeath the entire interest in community asset, the other has a choice or an election, either:

-take under the will and receive according to the will's terms; OR
- take against the will and receive 1/2 CP



NOTE: widow spouse CANNOT read the will selectively and choose only the provisions she/he likes

Front 25

Community Credit Presumption

Back 25

funds borrowed during the marriage, and goods purchased during the marriage, are PRESUMPTIVELY community credit

However, borrowed funds (and credit purchases) are classified according to the primary intent of the LENDER, we look at where the lender is looking for satisfaction for the debt

Front 26

Community Credit Presumption (Primary intent of the lender)

Back 26

CP if lender is looking for satisfaction from/ or relying on"
-general standing in the community
-personal creditworthiness
-personal reputation

SP if lender is looking for satisfaction from/ or relying on:
- land bought by one spouse using SP

NOTE: May also be a split

Front 27

Effect of the spousal confidential relationship

Back 27

spouses are subject to fiduciary duties that arise form the confidential relationship with one another, imposing a duty of the highest good faith and fair dealing

If one spouse gains an advantage from a transaction, a presumption of undue influence arises

Under a 2002 statute- a grossly negligent and reckless investment of community funds is a breach of a spouse's fiduciary duty (more than a dumb purchase)

Front 28

Characterizing SP and CP (default)

Back 28

absent any contrary agreement, the statutory definitions of SP and CP control

CA has always allowed the parties to opt out of the CP and SP characterization by agreement, either as to the particular assets or as to all acquisitions

agreements may be made before marriage or during marriage by transmutation (NO CONSIDERATION NEEDED)

Front 29

Transmutation

Back 29

When by agreement during the marriage the character of an asset is changed (from SP to CP, or vice versa, or from one spouses SP to the others) this results in transmutation

transmutation can be by gift or by agreement

Front 30

Premarital agreements

Back 30

General Rule: premarital agreements must be in writing, signed by both parities (oral agreements are invalid)

2 Exceptions
1) Where oral agreement is executed (meaning fully performed)-- though marriage alone is never sufficient performance
2) Estoppel based on detrimental reliance

Front 31

What can parties agree to in premarital agreements?

Back 31

Just about anything!

Ex:
- agree that after marriage, each party's salary and wages will be that parities' SP
- that neither party will claim a family allowance in other's estate
-that an agreement will govern disposition of property on separation, divorce or death

Exception: parties cannot agree to limit either party's contribution to furnish child support

Front 32

Defenses to a premarital agreement (involuntary)

Back 32

Note Signed Voluntarily
-2001 Statute: a premarital agreement shall be deemed not voluntary (and thus unenforceable) unless court finds that party challenging agreement:

i) was represented by independent counsel or waived in separate writing; AND
ii) was given at least 7 days to sign; AND
iii) if not represented by indp counsel, was fully informed in writing of terms and basic effect of agreement. Party must execute document declaring that they got information and identifying who provided it

Front 33

Defenses to a premarital agreement (unconscionability)

Back 33

Unconscionability claims divide into 2 area, those involving spousal support and thos involving anything else

spousal support- provision in premarital agreement regarding spousal support is unenforceable on on of two grounds
i) party challenging was not represented by indp counsel at time signed; OR
ii) provision is unconscionable at the time of enforcement (not when entered into)

anything else- agreement unenforceable if unconscionable when made, AND
i) no full and fair disclosure of other party's property or financial obligations;
ii) the right to disclosure not waived in writing; and
iii) party challenging had no adequate knowledge of other party's property or financial circumstances

Front 34

Marital Agreement (Transmutation) Requirements

Back 34

Before 1985- oral transmutations were OK

After 1985:
i) must be in writing;
ii) signed by spouse whose interest is adversely affected; and
iii) must explicitly state that a change in ownership is being made

Applies to all transmutations (SP<-->CP), (H SP <---> W SP)

Front 35

Exceptions to Transmutation Requirements

Back 35

NOTE: usual exceptions to the writing requirements (statute of frauds, estoppel, partial performance) do NOT apply)

Only one exception: gifts of tangible property of personal nature (inherited jewelry) which are not substantial in value taking into account the circumstances of the marriage

Front 36

For property acquired before 1975- Married woman's special presumption

Back 36

Where CP was used to make a written title in a married woman's name before 1975, and the title did not indicate or joint tenancy was intended, the property was presumptively wife's SP

NOTE: this is an exception to the general principal that an asset titled in one spouse's name does not overcome the community presumption (here it is presumed SP)

H could rebut the presumption by showing he did not intend to make a gift to W, but had some other reason for taking title in her name (maybe he was concerned about creditors)

Front 37

When does Married woman's presumption apply?

Back 37

- if title is taken in only W's name before 1975

-if title in name of W and H before 1975, but not taken in joint tenancy form, and not "husband and wife" or "Mr. and Mrs." (property is 1/2 W SP, and 1/2 CP)

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

Front 38

"Joint and Equal Form"

Back 38

means the title lists both spouses names ("harry and wanda smith"),

"Marriage of Lucas"- by taking title as joint tenants, property was presumptively CP

In cases involving death of one party, Lucas is still law

If divorce or seperation- CA legislature has passed 2 anti-Lucas statutes

Front 39

Anti Lucas (Ownership)

Back 39

for purposes of division of property on divorce or separation, property acquired during marriage in "joint and equal form" is presumptively CP, and is subject to equal division on divorce

CP presumption can be rebutted by:
-express statement in deed or other instrument
-written agreement by the parties

Front 40

Anti-Lucas (Reimbursement)

Back 40

For purposes of division on divorce or legal separation, spouse who made contributions of SP to the acquisition or improvement of CP is entitled to reimbursement without interest for contributions to:
- Down Payment
- Improvements
- Principle Payments on the mortgage
(DIP)

*But no reimbursement for SP used to pay interest on mortgage, taxes, insurance, or maintenance

Front 41

Quasi Community Property at Divorce

Back 41

"at divorce, quasi community property is treated exactly like community property"

Front 42

Quasi community property at death

Back 42

at death, the surviving spouse has a one half interest in the quasi-CP in the decedents name. The decedent does not have an interest in the quasi-CP titled in the survivor's name

Front 43

Anti Lucas Statutes apply only to

Back 43

title document or deed

Front 44

Proration Rule

Back 44

if installment purchase before marriage, payment with CP funds after marriage (or during marriage W inherits land subject to mortgage and pays off note with CP funds), the community estate takes a pro rata portion of the property, measured by the amount (percentage) of principal debt reduction attributable to the expenditure of community funds

CP pro rate portion = (principal debt reduction attributable to CP)/(purchase price)
*only look at how much the debt was reduced by CP

Front 45

Life insurance and the proration rule

Back 45

proration rule applies to life insurance policies where the spouse is not named as the beneficiary

Front 46

Real property doctrine of fixtures

Back 46

If community funds (CP) of H salary are used to improve SP of H, the improvements become part of the property. Expenditure of CP does not change ownership character of house (owner in SP)
***Spouse can claim reimbursement for the community (community gets the greater of the community property expenditure or the increase in value)

If community funds (CP) of H salary are used to improve SP of W-- split of authority:
- no reimbursement: give rise to presumption of gift to W's SP
- Reimbursement: see above

Front 47

Spending CP to improve his SP and visa versa (3 scenarios)

Back 47

If H expends CP to imrpove SP, community has reimbursement claim for the great of the cost of the improvements or the enhanced value

If H expends CP to improve other spouses SP, there is a split of authority on whether there is reimbursement or not

If H expends SP to improve CP, we are governed by anti-lucus statutes (divorce) or lucas statutes (death)

Front 48

Commingled Bank Accounts (recapitulated theory)

Back 48

The mere facts that SP funds are commingled with CP fund does not transform or transmute the SP into CP (but the BofP is on H to show that each asset was purchased with SP funds)

Problem: does not show that that CP funds were unavailable when each asset was purchased?

Front 49

Commingled Bank Accounts (recapitulated accounting)- family expense presumption

Back 49

It is presumed that expenditures for family expenses (food, housing, clothing, recreation, etc) were made with community funds (to the extent they were available), even though separate funds were available

But...because of commingling and inadequate records, some family expenses may have been paid with SP funds, in which case- presumption of a gift to the community with no reimbursement intent

Front 50

Commingled Bank Accounts (recapitulated accounting)- meeting BofP

Back 50

1) Exhaustion Method: show that there was CP in account then SP was added then a CP purchase was made whipping out all CP, then a SP purchase was made

2) Requires:
i- sufficient separate funds were available (15k of CP)
ii- H intended to use SP to buy the asset (H added 12k of SP then made 12k SP purchase)

Front 51

What happens where a business owned before marriage is greatly increased after marriage

Back 51

There are 2 test:

1) Periera Test

2) Van Camp Test

Front 52

Periera Test (business owned before marriage)

Back 52

Think: Personal Skills and Effort

Use this test when Spouse's time, skill and effort are major factors in growth of business. Look for instances where spouse contributed creative ideas or develops new techniques, and/or worked long hours and only drew modest salary

Formula: H gets value of business at time of marriage + (legal rate of 10% annum on value of business at time of marriage); the rest CP

Front 53

Van Camp (business owned before marriage)

Back 53

Think: Valuable Company or Asset

Use this test when capital investment was the major factor in the business's growth, and spouse's skills and efforts were less of a factor (got lucky). Look for instances where spouse was paid substantial salary and large bonuses (meaning the community was compensated)

Formula: (Value of Spouse's services at market rates (x years) -- Family expenses paid from community funds (x years) == CP) ; the rest is SP

Front 54

Pereira vs Van Camp

Back 54

CA suprême court says that it is not bound to adopt either. May select which ever formula will achieve substantial justice between the parties

***ANALYZE BOTH ON BAR EXAM***

Front 55

Pension Benefits

Back 55

Employee retirement benefits accumulated during marriage, whether or not vested at the time of divorce, are community property

Use Proration rule to figure out what percentage is CP:
CP=Years serviced while married/total years employed to retirement

Front 56

Pension Benefit (distribution)

Back 56

if the retirement benefits are not yet eligible upon divorce there are 2 options:

1) if and when received, she spouse her share (1/2 CP proration share)

2) cash spouse out by awarding assets of equal value

NOTE: if H could retire at time of divorce but chose not to, his benefit had matured (H's election not to retire cannot defeat wife's present right)

Front 57

Qualified Domestic Relations order

Back 57

If a nonparticipant spouse in a qualified pension plan divorces a participant spouse, her community property interest is recognized and thus under federal law she can get a "qualified domestic relations order" and receive payments from the [pension/retirement] plan

If the marriage ended in death rather than divorce, the non-particant spouse has does NOT have devisable interest in a qualified plan if she predeceases the participant
- there is federal preemption under the employment retirement income security act which trumps CP laws
- her interest is terminated when she predeceased the participant

Front 58

Disablity retirement benefits & workers compensation benefits

Back 58

Treated as wage replacement

Disability retirement and worker's compensation benefits are classified according to when they are RECEIVED, not when they are earned (therefore if received after the divorce they are SP)

Front 59

Severance Pay

Back 59

No clear rule... Argue both ways!

1) H's severance pay is SP because it replaced lost earnings which after a divorce or permanent separation would be H's SP;

OR

2) H's severance pay is CP because it arose from a collective bargaining agreement and was thus earned by employment during the marriage

Front 60

Stock Options

Back 60

A stock option gives an employee (typically an executive) an option to purchase shares of the company's stock at a set price on a certain date in the future.

Stock options typically provide that they are not "vested", and that the option-holder must be employed by the company as of the date the option becomes exercisable for the option to vest.

if the option is awarded during marriage but does not vest until after the economic community has ended, the proration formula depends on the primary intent of the employer in granting the option -- Either Apply:
1) marriage of Hug
2) marriage of Nelson

Front 61

Marriage of Hug (stock options)

Back 61

Apply if the stock options were awarded primarily to reward H for past services, as a form of deferred compensation

Formula: starting point is the date of employment

.
.
Numerator: years from the date of employment to date economic community ends
----
Denominator: years from the date of employment to date options become exercisable

this fraction is then multiplied by the number of shares of stock

this equals the CP

Front 62

Marriage of Nelson

Back 62

Use if the stock options were awarded primarily to encourage H to remain with the company.

Formula: starting point is the date the options are granted
.
.
Numerator: years from date options are granted to date economic community ends
---
Denominator: years from date options granted to date options become exercisable

this fraction is then multiplied by the number of shares of stock

this equals the CP

Front 63

Goodwill of company

Back 63

Goodwill of a professional practice (to the extent acquired during the marriage) is community property subject to division on divorce

Goodwill: those qualities that generate income beyond that derived from:
1) profesional's labor
2) reasonable return on capital and physical assets

Do not need to come up with a number on bar exam (just know it is CP)

Front 64

Educational expenses

Back 64

Degree is not property that is subject to division on divorce

Spouse (or the community) who does not incur the expenses, is entitled to reimbursement for cost of the education if the education the other spouses earning capacity is improved

if the educational expenses were incurred before marriage and the loans were paid with community funds after the marriage, reimbursement is still available

Front 65

Defense to reimbursement for educational expenses

Back 65

community has already substantially benefited from earnings of the educated spouse
-if more than 10 years have elapsed since the degree was awarded, presumption is that the community has substantially benefited meaning that unless presumption is rebutted, no reimbursement

OR

Argue that other spouse also received a CP funded education

Front 66

What happens to educational loans after divorce

Back 66

*you take law school loans with you*

The loans are assigned solely to party who inured the educational debt

Front 67

Tort damages (recovery)

Back 67

Where the other spouse was a tortfeasor, the tort recovery is SP
-otherwise he would benefit from his wrongful act

where damages are recovered from a third party, the tort recovery is CP
-in a property division on DIVORCE or legal separation, the damages will be awarded entirely to the injured spouse, so long as the damages can be traced and as not already spent
-but on DEATH tort recovery will be treated as CP

Front 68

Tort liability

Back 68

Community property is subject to the tort liability of either spouse

-If spouse was performing an act for the good of the "community", the liability is first satisfied from the CP and then from SP
- If spouse was not performing an act on behalf of the community, the liability is first satisfied from her SP and then from CP

NOTE: judgment creditor cannot each the non-tortfeasor's SP

Front 69

Management Rules

Back 69

Equal Management Powers: each spouse has equal management and control over all community property, and thus has full power to buy or sell CP and contract debts without the other spouse's joinder or consent

Front 70

Management Rules (personal belongings)

Back 70

- personal belongings exception: one spouse cannot sell or encumber personal property used in a family dwelling (furniture/clothing) without written consent of the other spouse)

Front 71

Management Rules (business exception)

Back 71

business exception- applies when a spouse operates a business interest that is all or substantially all community personal property and has primary management and control of all the business.

While this spouse can act alone in all transactions, if the spouse sells, leases, or otherwise encumbers substantially all of the personal property used in the business, must give written notice to other spouse

Front 72

How to convey CP

Back 72

General Rule: neither spouse can transfer or encumber their 1/2 interest in real CP (i.e.- house)
-Only entire interest can be transferred or encumbered

For conveyance of CP, joinder of BOTH spouses is required

- there is a 1 year statute of limitations

Front 73

The family attorney's real property lien

Back 73

exception to joint conveyance of CP: a spouse can unilaterally encumber her 1/2 interest in real CP to pay the family attorney representing her in a divorce action (attny must be paid)

Front 74

Can CP be reached by creditor if debt was incurred by spouse before marriage?

Back 74

Yes, with one exception:
- the earnings of a non debtor spouse cannot be reached for premarital debts if held in a separate account (in which the other spouse has no right of withdrawal) and not commingled with other CP funds

Front 75

Medical Expenses

Back 75

Family code provides that each spouse has the duty to support the other spouse and minor children

This means that each spouse is personally liable for the other spouse's contracts for necessities

If CP funds are available (and used) spouse can be reimbursed from the community estate

***Medical bills can also come from other spouses SP!
- but after divorce, a creditor cannot reach other spouses SP or the CP awarded to other spouse unless that spouse incurred the debt or was assigned the debt by the court

Front 76

Quasi Community Property

Back 76

Rule: property acquired while the couple was domiciled in a non-community property state, which would have been classified as community property had it been acquired under the same circumstances in CA, is quasi community property

Front 77

QCP on divorce

Back 77

treated same as CP -- divided 50-50

Front 78

"foreign" real property

Back 78

DIVORCE: QCP properly subject to 50-50 division upon divorce

DEATH: that state's law controls and it all goes according to will or intestate

Front 79

Does the non-acquiring spouse have any power of disposition over QCP if she dies before the acquiring spouse

Back 79

NO, the QCP system gives protection only if the non-acquiring spouse survives the acquiring spouse

Front 80

how is the property characterized if a couple moves from a community property state to california

Back 80

Both are true community property states and their property is treated as such

Front 81

Common Law Marriage

Back 81

CA does not recognize common law marriage (where people live together and hold themselves out as married)
-only spouses and domestic partners can have CP

exception: where common law marriage is validly contracted in another state

Those who live together and hold themselves out as married are tenants in common

Front 82

Putative Spouse

Back 82

A spouse who had an objectively reasonable and good faith belief that they were lawfully married (when they really weren't)

here the assets acquired are called quasi-marital property and when they split the assets are treated as 50-50 (same as CP)

Front 83

Quasi-Community Property: treatment during marriage & creditor

Back 83

Marriage= treated as acquiring spouses separate property

Creditor: treated as though it were community property

Front 84

When does the community obtain an interest in a spouses separate property business?

Back 84

when one spouse brings a separate property business into the marriage and devotes community labor to the management of the business, the community obtains an interest in that business

2 different methods used to determine the managing spouses labor
i) Pereira
ii) Van Camp

Front 85

Pereira (Short version)

Back 85

accounting method in which the increase in value of a business is due to the managing spouse's labor, the separate property investment is given a reasonable rate of return and the remainder is deemed community property

Front 86

Van Camp Short (Short Version)

Back 86

accounting method in which the increase in value of a business is not due to the managing spouses services but the character of the business, the community receives a fair market salary less any family expenses already paid and the remainder is separate property

Front 87

Child Support

Back 87

A spouses child support from a prior marriage is treated as debt incurred before marriage; thus all the community property and debtor spouse's separate property are liable

Note: the non-debtor spouse's separate property is not liable

If the separate income of the debtor spouse was available, but not applied to satisfy the obligation, the community is entitled to reimbursement

Front 88

2 Techniques for computing Goodwill

Back 88

1) market sales valuation: is the price the goodwill would command in a sale of the business or professional practice

2) capitalization of past excess earnings (usually higher): does not contemplate a sale, but instead ascertains the present value of the future stream of income that the goodwill developed during the marriage will generate in the business or professional practice

if either of these exceed a firm's partnership agreement for value of goodwill, firm's valuation should NOT be used

Front 89

Putative Spouse

Back 89

one that has a good faith belief that he or she is lawfully married

In CA a putative spouse is treated as a legal spouse and takes according to quasi-marital property principles

Front 90

Quasi marital property laws (putative spouse)

Back 90

all property acquired during the putative marriage is quasi-marital property, while property acquired before the putative marriage or after permanent separation, or by gift or inheritance, is separate property (characterization of QMP or SP depends on the normal 3 factors)

When one partner is a good faith putative spouse but the other knows of the defect in the attempted marriage, it is not clear whether the non-good-faith spouse may make any claim to the QMP accumulated by the good-faith spouse (CA supreme court has said it might treat the spouses equally despite lack of good faith)

Front 91

Approach: QMP & QCP

Back 91

Represent the property in a QMP regime as QCP

Approach when in another state: All property that would be QCP if W's marriage to H were lawful, is labeled as QMP

Approach when in CA: the land QMP

NOTE: all earnings during a putative marriage are considered QMP regardless of how the earnings are held