Marital Property

Front 1

defining community vs. separate property interests - choice of law

Back 1

Situs of property not controlling—law of marital domicile applies. Marital interests in money and property acquired during a marriage are governed by the law of the domicile at the time of their acquisition, even when such money and property is used to purchase real property in another state

Front 2

defining community vs. separate property interests -Move from California to common law state

Back 2

no further community property ownership interests accrue in marital assets once the parties change their domicile to a common law state

Front 3

defining community vs. separate property interests -Move from common law state to California—quasi-community property law

Back 3

Property acquired in the common law state retains its common law (separate property) character and does not “ipso facto” become community property simply because the parties later become California domiciliaries.However, for purposes of determining marital estate debt liability and in a California proceeding to divide the marital estate upon marriage termination, all property that would have been community property had it been acquired while the parties were domiciled in California is deemed quasi-community property and treated exactly as if it were community property.

Front 4

How spouses may hold property

Back 4

Joint tenancy, tenancy in common, community property, community property with right of survivorship

Front 5

How joint tenancy or tenancy in common work with community property

Back 5

Community property ownership cannot coexist with joint tenancy or tenancy in common ownership in the same property between the same co-owners. Thus, each party's interest in joint tenancy or tenancy in common property is his or her own separate property.

Front 6

How out of state purchases are handled within the community

Back 6

A California domiciliary spouse's acquisitions fall under the § 760 “community property” umbrella regardless of whether the property is real or personal and no matter where situated.

Front 7

What if out of state title is held as separate property?

Back 7

However, as a matter of choice-of-law rules, a California court's judgment dividing out-of-state real property cannot directly affect the nature of title thereto unless allowed by the situs state's law. However the court can follow statute to effect a conveyance or monetary offset for the value of the property

Front 8

How is property divided with a null marriage but where the parties are putative spouses?

Back 8

Community property interests cannot be acquired by parties to an invalid marriage (but see ¶ 8:29). But if either party has “putative spouse” status (good faith belief in validity of marriage), acquisitions during the union which would have been community or quasi-community property had the marriage been valid are deemed “quasi-marital property” and must be divided in a nullity proceeding as if they were community property

Front 9

Exceptions—marital acquisitions not community property

Back 9

The general § 760 definition of community property is subject to several statutory exceptions (see Fam.C. § 760—“Except as otherwise provided by statute ... ”). Those exceptions are addressed in detail in later sections of this Chapter dealing with property characterization. Notably, they include:
• separate property acquisitions during marriage (Fam.C. § 770(a));
• marital earnings and accumulations while living separate and apart or after a judgment of legal separation (Fam.C. §§ 771(a) & 772);
• community property transmuted to separate property (Fam.C. § 850 et seq.); and
• certain personal injury damages recoveries (Fam.C. § 781).

Front 10

Community property with right of survivorship

Back 10

Spouses may take title to property as “community property with right of survivorship.” [CC § 682.1 (applicable to instruments created on or after 7/1/01; see CC § 682.1(c))]
Property held in this form possesses all the rights and liabilities of community property ... except that, upon the death of a spouse, the surviving spouse acquires the deceased spouse's 50% share “by right of survivorship” without probate administration. [CC § 682.1(a)]

Front 11

Community property with right of survivorship: Advantages:

Back 11

Holding community property in survivorship form allows spouses to avoid probate with respect to that property when the first of them dies. The property passes to the surviving spouse as if it were joint tenancy property, while retaining all the attributes of community property (which would not be the case if the property were held in joint tenancy title).

The community property with right of survivorship form of title also allows the surviving spouse to obtain the tax benefits of community property upon the first spouse's death. I.e., the surviving spouse's half interest in the property, as well as the deceased spouse's half, receives a new (stepped-up) income tax basis at the time of the first spouse's death if certain statutory conditions are satisfied. Conversely, if the property were treated as each spouse's separate property held in joint tenancy, only the deceased spouse's half would receive a new tax basis. [See Comm. Report for 1999 AB No. 2913, 1999–00 Reg. Sess.]

Front 12

Community property with right of survivorship: Spousal consent required

Back 12

A spouse cannot unintentionally or unilaterally cause the survivorship feature to attach to community property; nor may a CP right of survivorship be implied. The right of survivorship must expressly be designated on the transfer instrument or title document; and both spouses must affirmatively indicate, by their signatures or initials on the face of that instrument or document, their intention to take title as community property with right of survivorship. [CC § 682.1(a); see also Comm. Report for 1999 AB No. 2913, 1999–00 Reg. Sess.]

Front 13

Community property with right of survivorship:Severance of survivorship feature

Back 13

As with joint tenancy property, the survivorship feature in property held as community property with right of survivorship is only an expectancy. Before either spouse's death, the right of survivorship may be terminated in the same manner that a joint tenancy may be severed (see ¶ 8:500 ff.). [CC § 682.1(a)]

Front 14

Jointly held separate property interests:

Back 14

Spouses may hold coexisting separate property interests (as distinguished from community property interests) as tenants in common or joint tenants. [Fam.C. § 750; see CC § 683 (joint tenancy), §§ 685 & 686 (tenancy in common)]

Front 15

Jointly held separate property interests: Impact in property division proceedings:

Back 15

Generally, the court's jurisdiction in a property division proceeding upon dissolution or legal separation extends only to community (or quasi-community) property. However, to effect a complete disposition of the marital estate and avoid unnecessary partition actions, the court may also divide the spouses' separate property interests in joint tenancy and tenancy in common property at the request of either party. [Fam.C. § 2650; see ¶ 8:905 ff.]