Community Property - Bm Outline -

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1. (4) Introductory Sentences

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a. “California is a Community Property state. There is a Presumption that all property acquired during marriage is Community Property. In California, all property acquired during marriage is community property. Separate Property is property acquired before marriage or after permanent separation, or acquired by gift, bequest, devise or decent with rents issues and profits thereon.”

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1. b. Analyze the character of each item by asking:

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(1) Source of the property (when and how was the property acquired?), (2) Actions (did the spouses take any action that would change the character of the property?), (3) Presumptions (are there any legal presumptions that may affect the character of the asset?) and (4) Disposition (what will be done with the property?)

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c. DATE OF MARRIAGE (4 Ways)
i. Married –

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Capacity, License, Witnessed ceremony, Registered with the county recorder.

1. CA recognizes a marriage from another jurisdiction (Except for same sex marriages)

2. Marriage can’t be void (no incest/pre-existing marriage)

3. Common Law marriages do NOT exist in CA
a. Exception – CA recognizes valid common law marriages from another state.

4. Same-sex marriages do NOT exist in CA
a. Exception – CA recognizes same sex marriages as valid that occurred after the In re Marriage Cases but before the effective date of Proposition 8. i.e. the same sex couples may claim CP rights as Spouses, not Domestic Partnerships

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c. DATE OF MARRIAGE (4 Ways)
ii. Domestic Partnership –

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All laws pertaining to married persons apply to DP’s

1. Filing – Declaration of domestic partnership with the Secretary of State

2. Include – (1) Same Sex couples, or (2) Elderly who receive social security benefits.

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c. DATE OF MARRIAGE (4 Ways)
ii. Domestic Partnership –
1. Quasi-Marital Property

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All laws pertaining to married persons apply to DP’s

1. Filing – Declaration of domestic partnership with the Secretary of State

2. Include – (1) Same Sex couples, or (2) Elderly who receive social security benefits.

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c. DATE OF MARRIAGE (4 Ways)
ii. Domestic Partnership –
2. Marvin Actions – Contracts that allow you to get into Family Law Court

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1. Rule – Courts should enforce express contracts between non-marital partners, unless the contract is founded on illegal sexual services. If no contract exists, courts look to see if the parties’ conduct demonstrates a tacit understanding of an implied contract.

2. Result – All property acquired during a Marvin Action will be treated as CP.

3. Examples – Cohabitation with no marriage, Same Sex Relationships.

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d. DATE OF SEPERATION (DOS) –

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date when marriage is Irretrievably Broken.

i. Irretrievably Broken – The economic community ends when:

1. Permanent physical separation, AND

2. Intent NOT to resume the marital relationship (only need intent of 1 party)
a. i.e. look to whether the parties are maintaining the facade of marriage
b. Note – Parties may agree as to the date of separation.

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2. JURISDICTION OF THE COURT –

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The court has limited jurisdiction to determine what is CP and divide it EQUALLY (50/50).

a. Court shall only confirm SP assets back to the SP holder

b. The court has NO right to divide SP (i.e. not a court of equity)

c. Continuing Jurisdiction – The court has continuing jurisdiction to award CP that was not previously adjudicated. (i.e. royalties from a book written during marriage)

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3. EQUAL DIVISION REQUIREMENT –
The general rule is that the court must divide each and every community asset equally, unless there is a written agreement to the contrary.
a. Exceptions:
i. Economic Circumstances Warrant –

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When economic circumstances warrant, the court may award an asset of CP to one party and cash out or order payments to the other party.

1. Use – This exception is used when a major item of community property is NOT reasonably subject to division and there is a critical need to maintain the asset.

2. Examples – Family residence, Closely held Business, Pension.

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3. EQUAL DIVISION REQUIREMENT –
The general rule is that the court must divide each and every community asset equally, unless there is a written agreement to the contrary.
a. Exceptions:
ii. Statutory Exceptions –
one spouse can get more than 50%
1. Misappropriation –

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One spouse misappropriates CP either before or during divorce.

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3. EQUAL DIVISION REQUIREMENT –
The general rule is that the court must divide each and every community asset equally, unless there is a written agreement to the contrary.
a. Exceptions:
ii. Statutory Exceptions –
one spouse can get more than 50%
2. Educational Expenses –

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the community is entitled to reimbursement for actual costs incurred for educational expenses (tuition and books) IF the education substantially enhances your earning capacity

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3. EQUAL DIVISION REQUIREMENT –
The general rule is that the court must divide each and every community asset equally, unless there is a written agreement to the contrary.
a. Exceptions:
ii. Statutory Exceptions –
one spouse can get more than 50%
2. Educational Expenses –
a. Defenses:

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i. Community has already substantially benefitted. If more than 10 years have elapsed since the degree was awarded, there presumption is that the community has substantially benefited.

ii. If the other spouse also received a CP funded education

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3. EQUAL DIVISION REQUIREMENT –
The general rule is that the court must divide each and every community asset equally, unless there is a written agreement to the contrary.
a. Exceptions:
ii. Statutory Exceptions –
one spouse can get more than 50%
3. Tort Liability –

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the community is subject to the tort liability of either spouse.

a. Act Benefiting Community – Liability is first satisfied from CP, then SP

b. Act NOT benefiting Community – Liability is first satisfied from the tortfeasor spouses SP, then CP. Innocent spouse is NOT personally liable

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3. EQUAL DIVISION REQUIREMENT –
The general rule is that the court must divide each and every community asset equally, unless there is a written agreement to the contrary.
a. Exceptions:
ii. Statutory Exceptions –
one spouse can get more than 50%
4. Personal Injury Award –

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If there is a personal injury cause of action from the DOM to the DOS there is a presumption that all of award will be the CP

a. Note – what is important is date when injury occurred and not when monetary recovery date is.

b. At Death – If the award is still existing unspent at the injured spouse’s death, the PI award will be treated as SP.

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3. EQUAL DIVISION REQUIREMENT –
The general rule is that the court must divide each and every community asset equally, unless there is a written agreement to the contrary.
a. Exceptions:
ii. Statutory Exceptions –
one spouse can get more than 50%
5. Negative Community –

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When community liabilities exceed assets, the relative ability of spouses to pay the debt is considered.

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4. QUASI COMMUNITY PROPERTY –

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Property acquired in another state that would be CP if it was acquired in CA but it was not.

a. Divorce– California Courts treat QCP as CP and it is subject to the equal division rule.

b. Death – The surviving spouse has a one-half interest in the decedent’s quasi community property. Decedent has NO rights in the survivor’s quasi community property.

c. Property Acquired in another CP State – Treated as California CP and not as QCP.

d. Jurisdiction – CA court has personal jurisdiction over the spouse and may order him to execute any conveyance necessary.

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5. DATE OF VALUATION

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a. Rule – The court shall value assets and liabilities as close to the time of trial at practicable.

b. Exception – Closely held business is valued at Separation. (i.e. spouse can’t purposely lower value)

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6. GIFTS –

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The court has the ability to determine if the gift is truly a gift or if it is given because of work preformed. If given for work performed than it is CP.

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7. PRESUMPTIONS
a. “Married Woman’s Presumption” –

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BEFORE 1975, property that was acquired during marriage in a (1) married woman’s name alone or in (2) her name and a 3rd party, is presumed to be the wife’s SEPARATE property.

i. Funds – Does not matter where the funds came from. (i.e. could be ALL CP)

ii. Rationale – Husband had control over assets. If the property is placed in Wife’s name alone or in Wife’s name and a 3rd parties, it must be that he intended to make it that way.

iii. Rebuttable Presumption – this presumption is rebuttable by the husband as against the wife, but NOT as against third party bona-fide purchasers.

iv. Special Note – If title in the Husband and Wife’s name, but not in joint tenancy form, and not as husband and wife, the wife will receive ½ SP, and the husband will receive ½ CP.

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7. PRESUMPTIONS
b. Community Property Presumption –

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All property, real or personal, wherever situated, acquired by a married person during the marriage while domiciled in this state is CP.

i. Rebuttable Presumption – Spouse may overcome the presumption by preponderance of the evidence by tracing the separate property acquisition of the property.
1. Comingled Funds – Difficult to prove acquisition with SP funds. Must use one of two accounting methods to overcome the presumption of CP:
a. Exhaustion – All of the CP funds have been exhausted from the account.
i. Family Expense Presumption – Presumption that expenditures for family expenses were made with CP funds.

b. Direct Tracing Method – (1) Sufficient SP funds were available, and (2) Spouse intended to use SP funds to buy the asset.

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7. PRESUMPTIONS
c. Property Held in Joint Form –

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Property acquired by the parties during marriage in joint form, including property held in TIC, JT, or husband and wife, is presumed to be CP.

i. Presumption may be rebutted by:
1. Express statement in a deed or other documentary evidence of Title stating SP, OR
2. Written Agreement declaring that the property is meant to be SP

Essay Quote – “California allows spouses to opt out of CP characterizations by agreement. Agreements made before marriage are governed by the Uniform Premarital Agreement Act. Agreements made during marriage to change the character of an asset are called Transmutations.”

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8. PREMARITAL AGREEMENTS (Uniform Premarital Agreement Act)
a. Scope of Agreement

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i. Can waive nearly ANY rights and assets (i.e. spousal support and property rights) EXCEPT:

1. Address child custody, visitation or support

2. Include anything that violates public policy (Encourages divorce)

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8. PREMARITAL AGREEMENTS (Uniform Premarital Agreement Act)
b. Pre-nuptial Agreement Requirements

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i. In Writing and Signed by both parties

1. Exceptions:
(1) The executor promise is fully performed, or

(2) Estoppel based on detrimental reliance. (Note – Marriage alone is not sufficient performance)

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8. PREMARITAL AGREEMENTS (Uniform Premarital Agreement Act)
c. Defenses
i. Not Signed Voluntary –

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Must be signed Voluntarily or agreement is Unenforceable unless:

1. Written in the language in which the person is proficient

2. Agreement is in its final complete form and given to the party 7 days before they sign it

3. Must be represented by independent legal counsel at the time it was signed (OR waived in a separate writing)
a. If a party chooses to waive counsel a third person must fully inform the party (signed in writing) of the terms and basic effect of the pre-nuptial agreement.

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8. PREMARITAL AGREEMENTS (Uniform Premarital Agreement Act)
c. Defenses
ii. Unconscionability (2 Categories)
1. Waiver of spousal support –

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Not per se unenforceable but Unenforceable IF:

a. Not represented by independent legal counsel at the time it is signed, OR

b. The provision is unconscionable at the time of enforcement. (i.e. not fair to someone who is in need of spousal support)
i. Unconscionability will be determined at the time of trial
ii. Thus, there is essentially NO waiver of spousal support

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8. PREMARITAL AGREEMENTS (Uniform Premarital Agreement Act)
c. Defenses
ii. Unconscionability (2 Categories)
2. Anything Else – Agreement is unenforceable if:

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c. Unconscionable when made,
a. No full and fair disclosure of spouses assets and liabilities or a written waiver of disclosure thereof, AND
d. The party challenging had NO adequate knowledge of the other party’s property or financial circumstances.

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8. PREMARITAL AGREEMENTS (Uniform Premarital Agreement Act)
c. Defenses
ii. Unconscionability (2 Categories)
3. By statute, Unconscionability is a matter of law to be decided by the court.

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*

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9. TRANSMUTATION –

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A Transmutation Agreement is an agreement between married persons that changes the character of property owned by one of the parties, or the parties jointly, during marriage.

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9. TRANSMUTATION –
a. PRIOR to 1985 –

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Oral transmutations were permitted, whether by express agreement or implied by conduct. Party must show substantial evidence of the party’s intent to transmute.

i. Ex. Substantial evidence – “welcome to our new house”

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9. TRANSMUTATION –
b. AFTER 1985 (2 Step Analysis)
i. FIRST STEP – Analyze Elements

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1. There must be a WRITING, (other than a will prior to death)

2. SIGNED by spouse whose interest is adversely affected, AND

3. The writing must state an EXPRESS INTENT to transmute
a. The writing must explicitly state that a change in ownership is being made
b. i.e. an unequivocal intent to give up all rights and interest to the property.

4. Gifts Exception – Gifts of tangible property of a personal nature, which are not substantial in value, taking into account the circumstances of the marriage, do NOT have to be in writing. (i.e. jewelry, clothes)

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9. TRANSMUTATION –
b. AFTER 1985 (2 Step Analysis)
ii. SECOND STEP – Undue Influence Presumption

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1. Rule – A presumption of undue influence arises when one spouse has gained an advantage over the other in a transaction.

2. To overcome the presumption, the spouse who gained has the burden of proving that the non-gaining party knew what they were doing and did so voluntarily.

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10. SP CONTRIBUTION INTO CP ASSET – Must back the SP out of the CP.

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Anytime you have a transmutation, transmuting SP into CP, you will have a SP into CP problem for a right of reimbursement – the two work hand in hand.

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10. SP CONTRIBUTION INTO CP ASSET – Must back the SP out of the CP.
b. Two Sets of Laws (Death or Divorce)
i. Lucas Case (Death) –

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If you put SP into a joint asset, it is presumed to be a gift to CP. The only way to overcome this presumption is a writing to the contrary.

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10. SP CONTRIBUTION INTO CP ASSET – Must back the SP out of the CP.
b. Two Sets of Laws (Death or Divorce)
ii. Anti-Lucas Legislation (Divorce)

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1. Ownership §2581 – 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:
a. Express statement in the deed or other instrument of title that the property (or portion thereof) is SP or
b. Written agreement by the parties that the property (or portion thereof) is SP

2. Reimbursement §2640 – You will get dollar for dollar back off the top of SP put into CP for the Down Payment, improvements, or principle reduction (DIP) of that property. Not for interest, taxes, dividends, insurance, or maintenance.
a. Dollar for dollar – You only get back THE money you originally put in.
i. If property declines in value below your SP contribution the spouse can only get up to the value of the depreciated asset even if it later increases in value.
ii. Even if property appreciates in value or if community gets a benefit from the SP you only get back exactly what you put in (the exact $$)
b. Back off the top – you get all your money back from a declining value asset. The community takes the loss in value. (i.e. You get the first dollars out)
c. Waiver –This will be applicable unless a party has made a written waiver of the right to reimbursement or has signed writing to the effect of a waiver.

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11. CP CONTRIBUTION INTO SP ASSET (Each asset has its own formula (businesses, houses, stock, etc)
a. BUSINESS –

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Concern is that own business is your efforts, but when married it’s not your efforts, it’s the community doing it. Community is entitled to being reimbursed.

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11. CP CONTRIBUTION INTO SP ASSET (Each asset has its own formula (businesses, houses, stock, etc)
a. BUSINESS –
i. 2 Formulas (Pereira / Van Camp) Do Both on Bar
1. Pereira Analysis

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(Personal Skills and Efforts caused increase in value)

a. SP Formula – SP spouse will receive their original SP investment (+) a Reasonable Rate of Return (10%) on the SP investment compounded annually
i. Everything else is CP. (i.e. the excess is attributed to CP labor)

b. When to Apply –Use where the spouses time, skill and effort are major factors in growth of the business. Look for instances where the spouse contributed creative ideas, develops new techniques or works long hours with only a modest salary.

c. Community Benefits

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11. CP CONTRIBUTION INTO SP ASSET (Each asset has its own formula (businesses, houses, stock, etc)
a. BUSINESS –
i. 2 Formulas (Pereira / Van Camp) Do Both on Bar
2. Van Camp Analysis (Valuable company or asset)

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a. Formula – Reasonable value of your services per year while working (x) the # of years the spouse worked while married (–) the compensation the community has already received.
i. Reasonable value – How much would similar executives make.

b. When to Apply – Use where capital investment was the major factor in the business’s growth, and the spouse’s skills and efforts were a lesser factor. Look for instances where the spouse was paid a substantial salary or bonuses (i.e. meaning the community has already been compensated)

c. Separate property benefits

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11. CP CONTRIBUTION INTO SP ASSET (Each asset has its own formula (businesses, houses, stock, etc)
a. BUSINESS –
ii. Goodwill –

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Goodwill of a professional practice acquired during marriage is CP.

1. Goodwill are those qualities that generate income beyond that derived from the (1) professional’s labor and (2) a reasonable return on capital investments.

2. Expert Testimony – Goodwill is primarily established by expert testimony.

3. Artificial Limits – Artificial limits set in contracts are factors but not conclusive.

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11. CP CONTRIBUTION INTO SP ASSET (Each asset has its own formula (businesses, houses, stock, etc)
b. INSURANCE
i. Whole Life Insurance –

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Insurance with a cash value and investment feature.

1. Proration Rule Applies – Amount of payments made by CP / Total amount of payments made. This gives you the formula to determine what percentage will be SP.

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11. CP CONTRIBUTION INTO SP ASSET (Each asset has its own formula (businesses, houses, stock, etc)
b. INSURANCE
ii. Term Life Insurance –

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Pure insurance with no cash surrender (i.e. Car Insurance)
1. Final Payment Rule – Last premium payment received determines the character.

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11. CP CONTRIBUTION INTO SP ASSET (Each asset has its own formula (businesses, houses, stock, etc)
c. RETIREMENT PLANS (2 Categories DCP and DBP)
i. Defined Contribution Plan (Savings Account)

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1. A savings account contributed to by the employee and the employer.
a. I.e. 401k, 403b, employee stock option plan (Actual dollars)

2. RULE – Everything contributed in a defined contribution plan between the DOM and the DOS is community property. (i.e. even funds contributed by the employer)
a. Value as of the Date of Judgment – If the defined contribution plan has DECREASED IN VALUE then the amount of CP has decreased.

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11. CP CONTRIBUTION INTO SP ASSET (Each asset has its own formula (businesses, houses, stock, etc)
c. RETIREMENT PLANS (2 Categories DCP and DBP)
ii. Defined Benefit Plan (Promise to pay a Pension at a certain age)

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1. Employee Retirement Income Security Act (ERISA)
a. Terminable Interest under ERISA – ERISA gets rid of the terminable interest rule which says that the interest of the non participating spouse dies at their death. (i.e. The pension will continue to be paid until both parties die)
b. Survivor Benefit Plan under ERISA – If the participating spouse predeceases the non participating spouse, the payment will continue to the non participating spouse until her death.

2. Qualified Domestic Relations Order (QDRO) – If a non participating spouse divorces the participating spouse, her CP interest is recognized, and the nonparticipating spouse may get a QDRO and receive payments from the plan.

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11. CP CONTRIBUTION INTO SP ASSET (Each asset has its own formula (businesses, houses, stock, etc)
c. RETIREMENT PLANS (2 Categories DCP and DBP)
iii. MUST DO A BROWN AND GILMORE ANALYSIS
1. BROWN

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a. Proration Rule – # of months employed while married / # of months employed (date of employment to date of retirement)

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11. CP CONTRIBUTION INTO SP ASSET (Each asset has its own formula (businesses, houses, stock, etc)
c. RETIREMENT PLANS (2 Categories DCP and DBP)
iii. MUST DO A BROWN AND GILMORE ANALYSIS
2. GILMORE –

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(USE if spouse continues to work after Date of Maturity)

a. Maturity is a date set by the employer when the pension is first payable

b. Gilmore election may be made any time after the Date of Maturity

c. Formula: (CP % that the spouse must pay OUT OF POCKET)
i. # of months employed while married / Total # of months employed until Gilmore election.

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11. CP CONTRIBUTION INTO SP ASSET (Each asset has its own formula (businesses, houses, stock, etc)
c. RETIREMENT PLANS (2 Categories DCP and DBP)
iii. MUST DO A BROWN AND GILMORE ANALYSIS
3. Pros and cons of Gilmore election:

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a. Pros: client (unemployed spouse) may want the money now

b. Cons: The average salary in the last three years of employment could skyrocket – then the unemployed spouse would be out that increased share.

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11. CP CONTRIBUTION INTO SP ASSET (Each asset has its own formula (businesses, houses, stock, etc)
c. RETIREMENT PLANS (2 Categories DCP and DBP)
iii. MUST DO A BROWN AND GILMORE ANALYSIS
4. Disability Benefits &Workers Compensation

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a. SP – Disability benefits and workers compensation are SP.

b. May only choose one – If you are eligible for your DBP and a disability benefits or worker’s compensation you may only choose one or the other. You cannot choose to receive disability payments and the DBP.

c. Can’t defeat CP interest – The court may also look beneath the title to determine if they are disguised retirement packages.

d. Severance Pay – No clear rule. Argue that it is CP and SP.

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11. CP CONTRIBUTION INTO SP ASSET (Each asset has its own formula (businesses, houses, stock, etc)
d. STOCK OPTIONS

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i. Stock option: The option to buy shares of stock in a company at a preset strike price no matter how much the stock goes up.

ii. Vesting date: You have to be employed with the company at the date the stock vests or you will lose them. This forces the employee to stay working for the company because if you leave you will lose a lot of money. Thus, the company will stagger the vesting dates over an extended period of time to keep the employee working.

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11. CP CONTRIBUTION INTO SP ASSET (Each asset has its own formula (businesses, houses, stock, etc)
d. STOCK OPTIONS
iii. Need to choose which of TWO FORUMLAS to use:
1. Hug Formula

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a. CP% = Date of Employment (–) Date of Separation
Date of Employment (–) Date of Vesting

b. When used: If you are hired with the idea that stock option is an inducement to come and work for company because of ability and skill. The idea is that this was due to performance in past or a community effort.

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11. CP CONTRIBUTION INTO SP ASSET (Each asset has its own formula (businesses, houses, stock, etc)
d. STOCK OPTIONS
iii. Need to choose which of TWO FORUMLAS to use:
2. Nelson Formula:

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a. CP % = Date of Granting (–) Date of Separation
Date of Granting (–) Date of Vesting

b. When used: Stock options granted WHILE employed not as an inducement for you to come work for the company.

3. THEN take the community property % (x) the number of shares (x) (Current Value (–) Strike price)

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11. CP CONTRIBUTION INTO SP ASSET (Each asset has its own formula (businesses, houses, stock, etc)
e. REAL PROPERTY – Moore / Marsden

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i. Community and Separate are entitled to: (3 Things)
1. Reimbursement back for the PRINCIPAL REDUCTION
a. Including down payment and all principal reduction

2. Reimbursement back for IMPROVEMENTS
a. Spouse improving his OWN SP house with CP funds – Community has a claim for reimbursement due to the real property doctrine of fixtures. The community gets the greater of the value of the improvement, or the increase in value of the home.
b. Spouse improving the OTHER spouses SP house with CP funds – Split
i. Some courts find reimbursement, some find NO reimbursement.
3. A pro rata share of the CAPITAL APPRECIATION
a. FORMULA - CP % of capital appreciation:
i. CP Principal Debt reduction / Original Purchase price

ii. THEN take the Current Value of the house (-) the value at DOM (x) CP % of Capital appreciation.

iii. Note – Pre marital capital appreciation is the sole and separate property of the separate property holder.

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12. DEBTS (Must analyze Before, During, or After Marriage)
a. Before Marriage (pre-marital debts) –

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Community estate is liable for ALL debts created before or during the marriage.

i. i.e. You marry their debts; it does not matter what type of debt that it is.

ii. Note – If debt still exists at date of separation the debt will revert back to the SP of the one who incurred it, otherwise it will remain community until it is paid.

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12. DEBTS (Must analyze Before, During, or After Marriage)
b. During Marriage –

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Presumption that debts created during the DOM and DOS are CP

i. Only a presumption – can be overcome by a preponderance of the evidence

ii. Ways that the community debt presumption has been overcome:
1. Intent of the Lender – If the primary intent of the lender was to only bind one of the spouses then it is SP. (Not SP if based on spouses credit score)
2. Debt created in anticipation of dissolution of marriage (hiring an attorney, credit cards, moving) (regardless of how long before separation)
3. Debt created NOT for the benefit of the community –Debts for anyone other than the husband or wife (i.e. gifts to 3rd party lovers or others)
4. Debt created for an intentional AND wrongful act (illegal acts / DUI)
a. Must be intentional and wrongful

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12. DEBTS (Must analyze Before, During, or After Marriage)
c. Post Marriage (Between the DOS and date of Judgment) –

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The community remains liable for any debts created from the DOS to the date of Judgment for the necessaries of life of any spouse or child. (i.e. medical expenses)

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13. MANAGEMENT
a. Separate Property –

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Each spouse has exclusive management and control over his SP. Quasi CP is SP for the purposes of management and control.

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13. MANAGEMENT
b. Community Property –

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Each spouse has Equal management and control over CP. Either spouse acting alone may buy, sell, spend, or encumber all CP.

i. Exceptions:
1. Real Property – BOTH spouses must join in executing any instrument that sells, conveys, encumbrances or leases Community Real Property.
a. Anything dealing with real property including renting the property out for a year or longer needs to be in writing with BOTH spouse’s signatures.
b. Void Transaction – May void the transfer for up to 1 year is purchaser was a BFP. Can void the transaction with NO SOL if the purchaser had notice.
c. Exception – Spouse may unilaterally encumber her ½ interest in real CP to pay the family law attorney representing her in the divorce action.
2. Personal Property FMV – A spouse may not gift, transfer or sell any personal CP for LESS than fair market value, without the written consent of the other spouse.
a. i.e. Don’t have to tell your spouse as long as you get FMV for the CP
b. Set Aside – Spouse can set aside the gift in its entirety

c. Offsetting Payment – A Non-breaching party is entitled to one-half of, or an amount equal to one half of, any asset transferred below FMV.

d. Learning of Transfer After the Death of the Breaching Spouse – May set aside the gift as to her ½ of the CP or recover an offsetting payment from Donee or breaching spouses estate.

e. Exception – A spouse may give away CP through a US government savings bond because Federal Law preempts CA law.
3. Personal Belongings – The CP household furnishings or clothing of a spouse or minor child may NOT be transferred without the written consent of the other spouse.
a. Voidable – The transaction is voidable by the other spouse at ANY time.
4. Business Exception – Spouse can act alone in all transaction, but if the spouse sells, leases, or otherwise encumbers substantially ALL of the personal property used in the business, the spouse must give written notice to the other spouse.

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14. FIDUCIARY DUTIES (Every case will include a breach of fiduciary duty)
a. Spouse’s Fiduciary Duty

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i. Loyalty – Each spouse owes a higher duty to the community than to themselves and neither spouse shall take any unfair advantage of the other.

ii. Investments – A grossly negligent and reckless investment of community funds is a breach of a spouse’s fiduciary duty. (i.e. investing in a start-up company)

iii. Undue Influence – If a spouse gains an advantage from a transaction, a presumption of undue influence arises. That spouse has the burden to prove that she did not breach her fiduciary duty.

iv. Note – No rule to act in a practical manner (i.e. May blow all CP on Johnny Walker Blue)

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14. FIDUCIARY DUTIES (Every case will include a breach of fiduciary duty)
b. Fiduciary Duty Owed While Suing One Another –

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Each spouse owes fiduciary duties to each other from the DOS to the date of distribution of assets to all activities that affect the assets and liabilities of the other party

i. Disclose all assets and investment opportunities – Also makes an affirmative obligation on the parties to disclose in writing under penalty of perjury all assets, liabilities and investment opportunities the parties have or may have an interest in from the DOS to the DOJ.
1. This includes any financial matters that may affect the family

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14. FIDUCIARY DUTIES (Every case will include a breach of fiduciary duty)
c. Remedy for Breach of Fiduciary Duty

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i. Offsetting Payment – A Non-breaching party is entitled to one-half of, or an amount equal to one half of, any asset undisclosed or transferred in breach of the fiduciary duty, plus attorneys fees and court costs for any breach.

ii. Punitive Damages – If a spouse can prove by clear and convincing evidence that a party breached a fiduciary duty with fraud, malice or oppression, he may recover punitive damages

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2. TAX ISSUES

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a. Domestic Relations Tax Reform Act (DRTRA) – In dissolution proceedings, the division of assets between the parties is a NON Taxable event. (Domestic Partnerships are not recognized)

b. Attorney is Liable to Determine Tax Consequences – The responsibility to determine the true value of assets after tax consideration belongs to the attorney.

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3. FEDERAL BENEFITS

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a. Federal Benefits are not divisible by California State Courts UNLESS Congress has created an Enabling Statute to allow the division.

i. Federal Benefits: FICA, social security, federal insurance, military pensions

ii. i.e. Anything that comes out of the federal government remains separate property.

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4. CREDITORS –

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After divorce, a creditor cannot reach CP awarded to a spouse unless that spouse:

a. (1) Incurred the debt, or (2) was assigned the debt by the court.

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5. WIDOW’S ELECTION –

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Surviving spouse may either chose to take under the will, with the will read in its entirety, or take against the will in intestacy and relinquish ALL testamentary gifts in her favor.