Community Property California

Front 1

COMMUNITY PROPERTY

Back 1

Under California community property law, acquisitions before marriage, after permanent separation, or during marriage by gift, devise or bequest are presumed to be Separate Property (SP), even if changed in form. All other marital acquisitions are presumptively Community Property (CP.) These presumptions can be rebutted by tracing, prenuptial agreements or marital transmutations.

Front 2

TRANSMUTATION

Back 2

Under Community Property Law, any transmutation agreement after Jan. 1, 1985 must be by
1. an express, written declarationt
2. by the spouse whose interest is adversely affected.
3. Full disclosure is required.
NOTE: Statements in a will do not accomplish a transmutation.

Front 3

GIFT

Back 3

To be considered SP, a gift must be an item of tangible personal property that is used solely or principally by the spouse to who the gift is made and that is not substantial in value, taking into consideration the circumstances of the marriage.

Front 4

FIDUCIARY DUTY

Back 4

The fiduciary duties of loyalty, duty to disclose and duty of good faith and fair dealing are sometimes implied for spouses.

Front 5

GENERAL EVIDENTIARY PRESUMPTION

Back 5

Property acquired before marriage, while living separate and apart after a legal separation, or by gift, devise or bequest, is presumed to be separate property, even if changed in form. All rents, profits and issue derived from separate property without community effort are also presumed to be SP.

Front 6

APPORTIONMENT

Back 6

If both SP and CP are used to acquire the property, it will be apportioned.

Front 7

MARRIED WOMAN’S PRESUMPTION

Back 7

Under the Married Woman’s Presumption, any property a married woman acquired is presumed to be her SP if she acquired it by
1. written instrument
2. and in her own name
3. prior to 1975

Front 8

SOURCE RULE

Back 8

Following George v. Ransom, an asset is CP if the source of the asset can be traced to earnings during marriage; it is SP if it can be traced to some source other than earnings during marriage. Changes in the form of an asset do not change its character.

Front 9

TRACING

Back 9

Property can be proven to be SP if it can be traced back to a purchase with SP funds.

Front 10

TITLE PRESUMPTION

Back 10

The burden usually falls on the SP proponent to prove the property is not CP.

Front 11

JOINT TITLE PRESUMPTION

Back 11

At dissolution, all property held in any form of joint title is presumed to be CP unless there is a written agreement to the contrary.

Front 12

CHALLENGING THE JOINT TITLE PRESUMPTION

Back 12

The burden is on the SP proponent to show by clear and convincing evidence that the jointly title property is not CP. This could be done by
1. written evidence in the deed
2. prenuptial agreements
3. other agreements
4. fraud
5. undue influence
6. lack of consent

Front 13

JOINT TENANCY

Back 13

Joint tenancy is presumed to be SP, and H and W each have an
1. undivided one-half interest with rights of survivorship,
2. and either can partition the whole.

Front 14

TENANTS IN COMMON

Back 14

Presumed SP. Each has proportional ownership, with no rights of survivorship

Front 15

COMMUNITY PROPERTY TITLE

Back 15

Presumed CP, and each has an undivided one-half interest and neither can partition the whole.

Front 16

COMMUNITY PROPERTY WITH RIGHT OF SURVIVORSHIP

Back 16

Presumed CP. Combo of CP and JT – each has an undivided one-half interest with right of survivorship, but neither can partition the whole. Available after 2001.

Front 17

TITLE IN BUYER-SPOUSE’S NAME ONLY

Back 17

If the title is in the buyer-spouse’s name only, the presumption of CP is particularly strong, and burden is on the buyer-spouse to trace the funding to SP or to establish through clear and convincing evidence that the other spouse’s intended to transmute the property.

Front 18

REIMBURSEMENT

Back 18

Under community property law, in a dissolution, any SP contributions to the
1. acquisition of jointly held property must be reimbursed by the community if they are
traceable and t
2. the party seeking reimbursement did not sign a written waiver

Front 19

STATUTORY REIMBURSEMENT

Back 19

A spouse may seek reimbursement for these items

Front 20

REIMBURSEMENT RIGHTS
Use of CP to improve SP

Back 20

A spouse can be reimbursed for use of CP to improve one spouse’s SP and it will be
1, The amount of the investment or
2. the amount the improvement increased the value of the SP, whichever is greater Edit
Effective Jan 1, 2005, a spouse will be reimbursed for SP used to improve other spouse’s SP absent a written transmutation or waiver.

Front 21

REIMBURSEMENT RIGHTS
Payment traced to SP

Back 21

If payments can be traced to SP funds, reimbursement without interest or adjustment for inflation is required absent a waiver or written agreement.

Front 22

COMMINGLED FUNDS

Back 22

Commingled funds are created when SP and CP funds are in the same account. Absent agreement, if SP is used to pay family expenses, a gift to the community is presumed. This can be rebutted by one of these two methods of tracing: the exhaustion method or direct tracing.

Front 23

EXHAUSTION METHOD

Back 23

Under the exhaustion method, the assumption that the SP funds in a commingled account were intended to be a gift to the community can be rebutted by showing that at time of purchase account was already exhausted by family expenses, so SP must have been used.

Front 24

DIRECT TRACING

Back 24

Under the direct tracing method, the assumption that the SP funds in a commingled account were intended to be a gift to the community can be rebutted by showing that SP funds were available and were intended to be used.

Front 25

PROFESSIONAL GOODWILL

Back 25

Professional goodwill is CP to the extent that it was earned during the marriage.

Front 26

EDUCATIONAL DEGREES

Back 26

The value of a professional education or a professional license, even if earned during the marriage are held to be SP, but at dissolution, the community is entitled to reimbursement with interest if
1. CP funds were used to pay for the education or repay an educational loan
2. there was no agreement to the contrary
3. the training substantially enhanced earning capacity

Front 27

DEFENSES TO REIMBURSEMENT FOR ADVANCED DEGREES

Back 27

Defenses to reimbursement for contributions to education degrees include
1. the community has already benefited from the education, such as through enhanced income
2. other spouse also received training
3. need for spousal support of educated person is reduced by training

Front 28

PENSIONS

Back 28

Pensions are CP to the extent that the right to the pension was earned during marriage.

Front 29

TIME RULE APPORTIONMENT

Back 29

To apportion pension benefits, the length of time during the marriage that rights were earned is divided by the full length of time needed to earn the benefits. But this rule is not applied mechanically; the court may exercise discretion to select an equitable method of apportioning the benefits.

Front 30

STOCK OPTIONS AND PROFIT-SHARING PLANS

Back 30

Stock options are treated similarly to pensions, with the stock options being treated as earned from the time the employee jointed thc company, and the time rule apportionment applies.

Front 31

GILLMORE ELECTION

Back 31

If the employee who is eligible for a pension prefers to defer retirement, the spouse may elect to take his/her share of benefits immediately. Once a Gillmore election is taken, the recipient does not share in subsequent increases in pension benefits. The death of spouse does not end those benefits, but they do not survive a dissolution. In

Front 32

DISABILITY AND WORKER’S COMP PAYMENTS

Back 32

Disability benefits are CP is replacing marital earnings; they are SP if intended to replace separate post-divorce earnings. It does not matter when the payments were earned. If a worker who is eligible for a pension instead elects to take disability pay, it will be treated as CP to the extent that it replaces the CP interest in the pension.

Front 33

SEVERANCE PAY

Back 33

If severance pay appears to be a retirEment benefit, it is treated as if it is CP. If it is intended to support the worker while looking for another job, it is treated like disability pay.

Front 34

PERSONAL INJURY AWARDS

Back 34

If the cause of action (that is, the injury) arises during marriage, recovery is CP. If the cause arises after permanent separation, recovery is the injured spouse’s SP. CP gets reimbursed for injury-related payments. At dissolution, the injured party almost always gets the full award, unless the interests of justice require otherwise. Injury caused by the other spouse is always SP.

Front 35

PUTATIVE SPOUSE

Back 35

A party to an invalid marriage who erroneously had a reasonable, good faith belief that the marriage was valid, can ask to be found a putative spouse, with rights to Quasi-marital property, which on dissolution is distributed as if it were community property.

Front 36

PRENUPTIAL AGREEMENT

Back 36

A prenuptial agreement is a “separation of property” agreement made before marriage that says how property will be divided in the event of divorce or death. No consideration is required, and, because of the Statute of Frauds, it must be in writing.

Front 37

TRANSMUTATION

Back 37

Under Community Property Law, any transmutation agreement after Jan. 1, 1985 must be
1. an express, written declaration
2. by the spouse whose interest is aversely affected.
3. Full disclosure is required.

Front 38

WILLS

Back 38

Statements made in a will do not accomplish a transmutation.

Front 39

GIFT

Back 39

To be considered SP, a gift must be an item of tangible personal property that is used solely or principally by the spouse to who the gift is made and that is not substantial in value, taking into consideration the circumstances of the marriage.

Front 40

FIDUCIARY DUTY

Back 40

The fiduciary duties of loyalty, duty to disclose and duty of good faith and fair dealing are sometimes implied for spouses.

Front 41

GENERAL EVIDENTIARY PRESUMPTION

Back 41

Property acquired before marriage, while living separate and apart after a legal separation, or by gift, devise or bequest, is presumed to be separate property, even if changed in form. All rents, profits and issue derived from separate property without community effort are also presumed to be SP.

Front 42

SOURCE RULE

Back 42

Following George v. Ransom, an asset is CP if the source of the asset can be traced to earnings during marriage; it is SP if it can be traced to some source other than earnings during marriage. Changes in the form of an asset do not change its character.

Front 43

APPORTIONMENT

Back 43

If both SP and CP are used to acquire the property, it will be apportioned.

Front 44

TRACING

Back 44

Property can be proven to be SP if it can be traced back to a purchase with SP funds.

Front 45

MARRIED WOMAN’S PRESUMPTION

Back 45

Under the married woman’s presumption, any property a married woman acquired by a written instrument and in her own name prior to 1975 is presumed to be SP, regardless of the form of title. The Married Woman’s Presumption cannot be rebutted by tracing; it can only be rebutted by the husband’s intention.

Front 46

TITLE PRESUMPTION

Back 46

The burden usually falls on the SP proponent to prove the property is not CP.

Front 47

JOINT TITLE PRESUMPTION

Back 47

At dissolution, all property held in any form of joint title is presumed to be CP unless there is a written agreement to the contrary.

Front 48

CHALLENGING THE JOINT TITLE PRESUMPTION

Back 48

The burden is on the SP proponent to show by clear and convincing evidence that the jointly title property is not CP. This could be done by prenuptial agreements
1. written evidence in the deed
3. other agreements
4. fraud
5. undue influence
6. lack of consent

Front 49

JOINT TENANCY

Back 49

Joint tenancy is presumed to be SP, and H and W each have
1. an undivided one-half interest with rights of survivorship,
2. and either can partition the whole.

Front 50

TENANTS IN COMMON

Back 50

Presumed SP. Each has proportional ownership, with no rights of survivorship

Front 51

COMMUNITY PROPERTY TITLE

Back 51

Presumed CP, and each has an undivided one-half interest and neither can partition the whole.

Front 52

COMMUNITY PROPERTY WITH RIGHT OF SURVIVORSHIP

Back 52

Presumed CP. Combo of CP and JT – each has an undivided one-half interest with right of survivorship, but neither can partition the whole. Available after 2001.

Front 53

TITLE IN BUYER-SPOUSE’S NAME ONLY

Back 53

If the title is in the buyer-spouse’s name only, the presumption of CP is particularly strong, and burden is on the buyer-spouse to trace the funding to SP or to establish through clear and convincing evidence that the other spouse’s intended to transmute the property.

Front 54

REIMBURSMENT

Back 54

Under community property law, in a dissolution, any SP contributions to the acquisition of jointly held property must be reimbursed by the community if they are 1. traceable and
2. the party seeking reimbursement did not sign a written waiver

Front 55

STATUTORY REIMBURSEMENT

Back 55

A spouse may seek reimbursement for these items
1. CP was used to pay child support claims from an earlier relationship when SP was availablet
2. when one spouses’ SP was used to pay debts for the other spouse’s “necessaries” but debtor spouse had SP available
3. when an order of satisfaction for tort debts was not followed at divorce or death or within three years of time injured spouse gains actual knowledge of the violation

Front 56

REIMBURSEMENT RIGHTS
Use of CP to improve SP

Back 56

A spouse can be reimbursed for use of CP to improve one spouse’s SP and it will be
1. The amount of the investment or
2. the amount the improvement increased the value of the SP, whichever is greater

Front 57

REIMBURSEMENT RIGHTS
Use of SP to improve other spouse’s SP

Back 57

Effective Jan 1, 2005, a spouse will be reimbursed for SP used to improve other spouse’s SP absent as written transmutation or waiver.

Front 58

REIMBURSEMENT RIGHTS
Use of SP to pay CP debts or improve CP

Back 58

If payments can be traced to SP funds, reimbursement without interest or adjustment for inflation is required absent a waiver or written agreement.

Front 59

COMMINGLED FUNDS

Back 59

Commingled funds occurs when SP and CP funds are in the same account. Absent agreement, if SP is used to pay family expenses, a gift to the community is presumed. This can be rebutted by one of these two methods of tracing 1) Exhaustion method – At time of purchase account was already exhausted by family expenses, so SP must have been used 2) Direct tracing – SP funds were available and were intended to be used. Recapitulation accounting is not permitted; cannot trace by showing the total family funds spend exceeded all CP funds throughout the marriage.