Marital Property

Front 1

Example 1-Who gets the Chair?
A and B, who have lived in CA, their whole lives, have been married for many years. A is a lawyer who practices family law and B is a sculptor. A earns approx $100K/year. B has only sold a few sculptures. A has been able to save $10K/year to put the funds into a saving account in her name. A and B buy a rocking chair from funds from her savings account. An and B have separate. A's friend notices the rocking chair and it is worth $25K. How will the chair be characterized and divided?

Back 1

FIT:
Funds-->community property b/c they were earning during marriage. (even though in separate acct)
Thus proceeds would be split 50/50.

Front 2

Example 2-Alice uses Aunt Sarah's Bequest
A receives an inheritance of $10K from Aunt Sarah. Before garage sale, she withdraws $1K from account. Uses $25 to buy chair. IN a divorce proceeding, how will the rocking char be characterized and divided?

Back 2

A's inheritance reiceved during marriage would fal under separate property. Acquisition: untitled chair bought duirng marriage. Funds: bank account from separate property (inheritance). If A can trace to account, she would be able to rebut community property presumption. A would keep rocking chair.

Front 3

Example 3-Does the stock belong to Alice?
Assume that A and B used A's savings from her earnings to buy $10K worth of stock in XYZ Co. They direct their stockbroker to put the stock in A's name. The stockbroker does so. They also agree orally that the stock will be Alice's separate property. Unfortunately, A and B have separated. A wants to claim stock as her separate property, will she succeed?

Back 3

Funds: community property.
Title: in A's name but not determinate factor
Intentions: all stock will be A's property (oral)
Oral agreement insufficient-->transmutations must be in writing.

Front 4

Example 8-Thanks for the Treasure: A and B were married in 1970 in CA. A was an antique collection. She bought snuff boxes with earnings from her job as a bookkeeper. In 1979 she found earrings for $35 that were worth $10K. A gave box to B and said, I want you to have this as yours forever. B said, Thanks, I will treasure it. A and B have recently separate and are considering a divorce. She think the box belongs to her because she bought it. How would you advise her?

A) The snuff box is H's SP b/c H and W's oral agreement.
B) Snuff box is H's SP b/c there is an exception to the express declaration in writing requirement for gifts
C) The snuff box is CP b/c H and W's agreement was not in writing.

Back 4

A.

Up until 1985, oral agreements were enought. Here it will be A's word against B's word.

??? (What about Transmutation excluded gifts: not substantial, used solely by spouse to whom the gift is made, personal in nature)

Front 5

Example 9--Happy Anniversary!
Box is given as 20th anniversary present. Advise Alice on how a CA would treat the snuff box.
The court will decide that
A) The snuff box is H's SP b/c there is an exception to the express delcaratoin in writing requirement of gifts.
B) The snuff box is Bob's SP b/c the snuff box was acquired prior to 1985 when oral transmutation agreements were permitted.
C) The snuff box is community property b/c oral transmutations are not permitted as of Jan 1, 1985.
D) The snuff box is CP b/c exception to express decl in writing req applies only tangible items of a personal nature.

Back 5

Must consider whether the snuff box is personal in nature and whether the gift was substantial.

Front 6

Example 10--No more Mozart?
Wolfgang and Costanze were married in 2000 in CA. Wolfgang was an accomlsiehd concert pianist and ocmpser and played the piano all the time. Earned millions. C did not play piano but enjoyed listening to performances. Using earnings from W's performances during marriage, C purchased an antique for $25K. On W's bday she gave him teh piano and told him itw as his forever. He thank her and began playing. Who does the piano belong to?

Back 6

Funds: Duirng marriage w/ W's earnings
Intention: Transmuteded?
C would have to consent to trasnmuation of piano form community property, oral statement not enough. Gift exception. Limited ot personal items. At first seems like it could work b/c W used it and not substantial given W's earnings. BUT caselaw indicates more like an automobile (not personal).

Front 7

Example 11-Martha' Claim to the Stock?
M married S who prior to marriage was wealthy investor owning numerous stocks. All of S's stocks were held in brokering accounts. As S was recovering from a stroke, he wanted M to handle all of his investments. HE wrote a letter to firm instructed them to transfer his stocks in name of his wife. After M and S separate, M claimed the stocks as her separate property. How would a court in their dissolution proceeding characterize the stocks?

Back 7

Probably to to S. It's unclear that he inteded to transmute the stocks. No magic words.

Front 8

Example 12-Life and Love on Hockory Lane
E and M lived across from each other on Hicory Lane. M lived at 122 Hicory Lane, and E lived at 123 Hicory Lane. Each owned thier own home. Whyen tey married, M moved int E's home which was larger. M kept house and rented it out. Agreed to take steps to jointly own homes. Both singed deed stating property at 123 Hickory is owned by E and M. M promised to do the same for 122, but she did not. How would a court characterize and divide the homes?

Back 8

E would have to show that M breached her fiduciary duty.

Front 9

Example 13-Hank Storkes Out
In 2005, J married H who as an avid baseball memorbilla collector. In 2013, J set out to find perfect anniversary gift. She purchase a game baseball for $K. She used funds form an inheritance she received when her grandfather passed away. Turns out baseball is worth $25K. Jackie also put in her will the following statement: I bequeath to my beloved husband, Hank, the Babe Ruth baseball. Hank and Jackie file for a divorce. Who gets the baseball?

Back 9

Funds: separate
Intention: Transmute? Won't hold up as oral promise, and under Neighbors case (Porshe) probaby not persoanl enough in nature. Express declaration (will) cannot be used b/c before death of husband. Baseball would reamin J's spearte property because there was no express declaration in writing.

Front 10

Example 14-Hank Hits a HOmer
Assume same facts as 13 except that Jackie created a trust instead of a a will and the trust was executed in 2009. Additionally, assume that the agreement accompanying the trust contains the statement, "All of the Wife's separate property is hereby converted to the community property of H and W." J created trust so that they could receive favorable tax credit. J and H divorce. Advise on how CA law will treat baseball.

Back 10

Estate planning documents can be used, so present value woudl be split between Jackie and Hank.

Front 11

Example 1--Who gets the Divdends?
Frank and Gwen married in 1970. F came froma welathy family and opened a bank account in his own name soon after marraige. In the account, which we call the dividend account, he deposited all the dividends he received from teh stock that he owned before their marriage. By the time of their recent divorce, the account has $75K. Does G have any claim in the bank account.?

Back 11

NO. Even though presmption applies, it can be rebutted through tracing.

Front 12

Example 2-Bank Accounts--Separate or Community?
Both F and G have high paying jobs. F is an beginner and has his own business. G is an accountant. Each open bank accounts in their own names during marriage in which they deposit their earnings. Note Frank's account is a different one from his account with the dividends from his stocks. How would the bank accounts be characterized?

Back 12

Both bank accounts would be community property.

Front 13

Example 4-Can Gwen Sail into the Sunset?
In 1972, F uses some of the funds from his business account and buys a sailboat for Gwen's birthday. He puts the title in Gwen's name, and he arranges to have a huge "Happy Birthday" ribbon tied around the boat. How would the sailboat be characterized?
A) Is CP b/c the sailboat was acquired during marriage
B) Is CP b/c Frank cannot rebut the CP presumption
C) Gwen SP b/c the title si in Gwen's name and Frank intended to give the sailboat to Gwen
D) Is Gwen's S b/c Frank's actions are an implied agreement to transmute his CP into Gwen's separate property

Back 13

C)
Raises the special married woman's presumption. Hard for H to rebut with the evidence given.

Front 14

Example 3--The Cabin at the Lake. In 1972, Frank uses some of the funds from his dividend account and buys a cabin near Lake Arrowhead. He puts the title in his name. The cabin cost $20K at the time. At the time of divorce, it's wroth $100K. How would the Lake Arrowhead cabin be characterized?

The court will decide that the cabin at the lake:
A) Is Frank's SP b/c the title is in Frank's name
B) Is Frank's SP b/c he can rebut the CP presumption by tracing to SP in his bank account
C) Is community property b/c the cabin at the lake was acquired during marriage
D) Is community property b/c Gwen cannot rebut the community property presumption

Back 14

B)
F's SP. Business acct + earning
Acquired during marriage, so assumed to be community property. Frank can trace to separate property. Can and bank account in F's name are not determine. Conclusion: F's separate property.

Front 15

Example 5 Frank uses dividend account:
Same facts as 4, except F uses funds from divdend account to buy sailboat for G's bday. How would the boat be characterized?

Back 15

Again special married owmen statue applies. It is Frank's intentions, not the source of money for this statute! So, Boat will probably be G's!

Front 16

Example 6--Who Owns Thunderbird?
In 1973, G uses funds from her earnings accoutn and buys a thunderbird for F. She puts the itlte in F's name and arrages to have a huge Happy BDay ribbon tied around it. F always kept the Thunderbird in mint contion and it is very valuable at the time of their recent divorce. How would the car be characterized?

Back 16

Special married women's statute does not apply in this sitatuion. Title is in F's name.
Community property presumption would apply.
Frank could try to argue the trasmutation. B/c this is before 1985, an oral statement/agreement would be okay.

Front 17

Example 7--The Chalet at Mammoth
In 1995, G becomes a ski enthusast. F and G use funds from F's business acount and G's earnings account ot buy a chalet near Mammoth. Cost $100K and they put the title in G's name. G would like to claim the chalet as her sep property in their divorce. How would the chalet be characterized?

A) Gwen's SP b/c the title is in her name and Frank cannot rebut by tracing to earnings in his business account
B) Gwen SP if Gwen can trace to her earnings in her earnings account
C) Is CP b/c the community property presumption applies and Gwen cannot rebut by tracing to her earnings during marriage
D) Is CP b/c the CP presumption applies and Frank cannot rebut by tracing to his earnings in his business account.

Back 17

C)
Acquired during marriage, no evidence to rebutt presumption. So must split proceeds 50/50.

Front 18

Example 8-Frank uses Both Accounts
Assume same facts as Ex 7, except that $30K of the purchase price of the chalet is paid from F's dividend account, and the remaining $70K is paid from F's business account. At divorce, chalet is valued at $100K. How would the chalet be characterized?
A) Frank's separate property because he can trace to the separate property in his dividend account
B) Is part Frank's SP and part community property b/c Frank can rebut the community property presumption by tracing to the SP in his dividend account
C) Is CP b/c teh CP presumption applies and the property was purchased w/ both SP and community property funds
D) Is CP b/c the community property presumption applies and Gwen did not contribute any SP funds to the purchase price.

Back 18

B)
Use apportionment.

Front 19

Example 9--The Chalet Appreciates
Assume the same facts as Ex 8, except at divorce the chalet is now wroth $150K.

Back 19

Same, use apportionment for proceeds.

Front 20

Example 10--Who Owns the Cards?
In 2000, F uses funds from his dividend account and buys a baseball card collection. Collection cost $10K. IN divorce, how will the collection be characterized?

Back 20

Community property presumption applied, but here it can be rebutted by tracing to separate account.

Front 21

Example 11--Who gets the Mattress Money?
F and E grew up during the Great Depression. They married in 1980. B/c F's parent had lost all thier money, F did not bleiev ein banks. Kept savings under his mattress. E tried ot convince him that bank were insured, but he refused to listen. F recenlty died w/o a will. Ma tress money totals $50K. F's sistern claims the money is from an inheritance so some of it goes to her. How will the money be characterized?

Back 21

Use the possession argument. Presumption is probably conclusive given lack of evidence so $$ will go to wife.

Front 22

Example 12-F dies in his Sleep
Assume same facts as Ex 11 except F and E married two months ago. Assume that one month before F and E married, F recieved an inhertiance of $50K. F recnelty died w/o telling E about the $50K. Who does the money belong to?

Back 22

Since this is a short marraige, there is some preceent that a court will require E to prove that the $50K was acquired during marriage. It is easier to show possession than acquisition. If a court uses the acquired formulation, E cannot raise the generla community presumption. It would seem the court would be free to decide that it's separate property.

Front 23

H and W were married in CA in 1980. In 2000, they purchased a large RV that they wanted for traveling. Title stated that the owners were "H and W as JT" They had no agreements about the RV. They paid for the RV with savings from H's salary and an inheritance that W had received. They are now divorced. How would a CA court characterize the RV? What are W's rights?
The court will characterize the RV as
A) Wanda's SP if she can trace to the funds from her inheitance
B) Part W's SP and part CP if W can trace to the funds from her inheritance
C) CP b/c there is no reimbursement agreement
D) Community property b/c there is no written agreement regarding W's interest in the RV

Back 23

D)
Step 1: At divorce community property presumption. Here RV was purchased during marriage after 1984 so must be rebutted through written agreement. None here, so community property.
Step 2: W's inheritance was used to purchase RV. Because separate property involved, right to reimbursement. Family Code 2640(b) applies to acquisition in 1984 or thereafter. That is met here because purchase din 2000. IF W can trace her separate property, she can be reimbursed. She will be able to recover an amount w/o additional interest.

Front 24

H and W married in 1995. H came from a wealthy family, and a large chunk of his income came from a trust fund that his parents had set up for him as a child.l H also earned a big salary form job. IN 1998, they bought a home for $1 million. They paid cash, with $750K from H's fund and $250K from H's salary. THey put the title n JT, but they signed an agreement that stated: H's interest in the Malibu home is in proportion to his separate property contribution of $750K to the purchase price of $1 million.
H is considering a divorce The home has appreciated in value. How would the court divide the proceeds from the home?
A) Tom's SP if he can trace to his funds
B) Part Tom's SP and part CP if Tom can trace to funds from his Trust fund
C) Part Tom's SP and part CP b/c they have a written agreement that establishes Tom's SP interest
D) CP with a right to reimbursement of Tom's $750K b/c they have a written reimbursement agreement

Back 24

C)
Step 1: purchased during marriage and held in JR. Trust fund separate property. Rebutt presumption with written agreement. Here H and W have a written agreement. It is the agreement, not the funds, that gives H a separate property interest. FC 2640(b) doe snot apply.

Front 25

Assume same facts as Example 2, except H and W have no agreement. How would a CA court characterize the home?
A) Tom's SP if he can trace to his funds
B) Part Tom's SP and part CP if Tom can trace to funds from his Trust fund
C) As CP b/c Tom and Linda had no written agreement about the character of the home
D) As JT b/c Tom and Linda had no written agreement about the character of the home.

Back 25

C)
Step 1: Assumption that it is community property.
Step 2: 2640(b) would apply. Trace $750K to trust. Right to reimbursement for $750K. Appreciation is split evenly.

Front 26

H and W were married in CA in 1970. In 1982, the purchased a home in OC for $10K. They used $30K from an inheritance W received in 1981 and paid for the rest from H's earnings from marriage. Deed stated that the owners were H and W as JT. They have no agreements about the home. Their marriage has deteriorated. House is now worth $300K.

Back 26

Step 1: Community property presumption. No written agreements. No oral agreements either.
Step 2: Separate funds are counted as a gift to community. Everything will be split in half.

Front 27

Assume same facts as example 4 except H and W have an oral agreement that house is W's separate property. How will court characterize the home?

Back 27

Before 1984 so oral agreement is a valid way for property to be separate. So, all property would go to W.

Front 28

W married H is 2001 soon after she graduate from law school. W's grandfather gave her a gift of $100K. They used the money as a down payment on a condo near the ocean. The purchase price of the condo was $500K and they took title as joint tenants at the suggestion of W's grandfather. H told W, It's all due to your hard work at law school that we have this condo. If we ever split up, I think it should be yours. They discussed putting it in writing but W said, I know you and you know that the house is mine, and that is all that matters. W's commitment to her job as an attorney took its toll on the marriage and they field for a divorce. Condo has appreciated in value and is now worth $1 million. At divorce, how would a CA court characterize the condo?

Back 28

Step 1: Presumed to be community property; Whether community property presumption can be rebutted. Wirtten statement needed after 1984. Here only oral.
At step 2, W can trace her seaprate property ($100K).

Front 29

W and H were married in CA in 1990. H came from a wealthy family. When his father died in 1995, he received an inheritance and he used the inheritance to buy a cherry orchard near Fresno. Their tax adviser suggested that it would be a good idea to pur tht edeed to the orchard in community property. In the deed was the following language: H and W, H and W, as community property. At the time they orally agreed that the orchard was H's separate property. H and W separated.

The court would decide that
A) the orchard is CP and will be split in half
B) the Orchard is CP but George will have a right to reimbursement if he can trace to his inheritance
C) The orchard is George's SP if he can trace to his inheritance
D) the orchard is George's SP b/c of George and Martha's agreement

Back 29

B)
Presumption of community property. After 1987 so must be in writing. But, right to reimbursement. If the orchard has appreciated in value, that money will be split between H and W.

Front 30

Assume same facts as example 7 except that H and W have no agreements about the orchard. How would a CA court characterize the orchard.

Back 30

Same as previous example.

Front 31

Same facts as example 7, except H and W have a written agreement that orchard is H's separate property.

Back 31

Written agreement after 1987 is valid way to make separate property.

Front 32

H and W were married in CA in 1980. IN 1987, they bought a rustic cottage near Big Bear using earnings they accumulated during their marriage. The deed to the cottage stated that the owners were Abe and Mary, H and W, as community property. B/c Abe was considerably older than Mary and he was concerned about their financial security, they orally agreed at the time they purchased the cottage that it should be her separate property. Mary divorced Abe.

A) The cottage is CP b/c Abe and Mary's agreement was not in writing
B) The cottage is CP but they will each have a right to reimbursement if they can trace to Abe and Mary's earnings
C) The cottage is Mary's SP because of their agreement
D) the cottage is Mary's SP but the community will split the appreciation.

Back 32

A)
Oral agreement before 1987 is OK. BUT here it is 1987 SO needs written. Community property. No right to reimbursement because used community property to purchase cabin.

Front 33

Same facts as example 10, except cottage was purchased in 1984.

A) The cottage is CP b/c Abe and Mar's agreement was not in writing
B) the cottage is CP but they will each have a right to reimbursement if they can trace to Abe and Mary's earnings
C) the cottage is Mary's SP and because of their agreement
D) the cottage is Mary's SP but the community will split the appreciation

Back 33

C)
Now oral agreement is sufficient to make separate property.

Front 34

W owns a land before marriage & she sends her H out in the field to work & the land produces crops.
1. under George v. Ransom, what are the profits of the crops?

Back 34

SP, b/c profits of SP are also SP. H’s labor is CP.

Front 35

2. under Sharing CP concept of Apportionment (that the same property can yield both SP & CP), what are the profits of the crops?

Back 35

CP, b/c efforts of either spouse during marriage yield CP.

Front 36

H owns a business before marriage (SP). W stays home & takes care of kids. Should the appreciation in value from the business be SP or CP?
under George v. Ransom?
under Sharing CP concept?

Back 36

under George v. Ransom? SP
under Sharing CP concept? CP b/c his efforts are community. If you can say the appreciation came from his efforts during marriage.

Front 37

W buys painting & gives to H & he takes it saying, “I love it & I’ll treasure it forever”

Back 37

?

Front 38

Example 17-George's True Love is Sailing
George and Barbara met in San Diego in 1980. They married after. Bought a yacht in 1985 using George's separate funds. Title to the yacht was in joint tenancy and they had no agreements. Cost $50K but it was run down. Put $15K for cabin. Painting/improvements $10K. Insurance cost $1,500. Now divorcing. Any rt to reimbursement?

Back 38

Step 1: Jt tenancy presumed to be community property and no agreements.
Yacht was acquired in 1985-FC 2640(b) applies. Reimbursements $50K+$15K (improvements) BUT not maintenance ($10K) or insurance (expenses, not investment).

Front 39

Example 18-Quake that caused the break
Franklin and Elenor were married in CA and have lived in LA for many years. E had a trust fund that her parents set up for her as a child. Substantial amount of cash. E decided she wanted to live in Palm Springs. Bought a condo for $240K. Joint tenancy. No agreements. Earthquake damages the condo now valued at $50K. Now divorcing. Rt to reimbursement?

Back 39

Step 1: community property (jt tenancy)
Step 2: After 1984 so 2640 applies. Only $50k b/c cannot receive more than net worth.

Front 40

Example 19-The Lot and the Cottage
Norm and Rose married in 176. At that time, Norm owned a lot in Santa Barbara. Soon after their marriage, he conveyed the lot to himself and Rose as joint tenants. The lot was worth $25K at the time of the conveyance In 1987 Norm hired a construction company to build a small cottage on the lot. It cost $200K and was completed that year. He used his separate property funds to pay for the contribution of the cottage. They have no agreements concerning the lot or the cottage. Unfortunately N and M have separate. Rt of reimbursement?

Back 40

If we use the law of the date if improvement as the date of acquisition, 1987, then the separate property funds used to build the cottage would be reimbursed to Norm based on tracing. As of 1984, the legislature provided that right to reimbursement for separate property contributions to the acquisition of the property. For acquisition of property prior to 1984, there is no right of reimbursement absent a reimbursement agreement.

Front 41

H and W are married. Buy a Tiffany lamp for $10K. We use the W's separate property funds to buy.
So, we have untitled property. What if there was $6K in separate property and $4K in community property?
What if the original purchase price as $10K and the appreciation is $20K?

Back 41

Wife would get $6 plus 1/2 of community property. H would get $2K.
Wife would get $6K plus $2K plus 60% of the appreciation ($12K) (Total $20K)

Front 42

H and W are married. H and W hold a piece of land in JT. Land was bought at $10K with $6K SP from W. What if there was a $20K appreciation?

Back 42

W will keep the $6K, and 1/2 of the other half (total $8K)
The appreciation would be split in 1/2. $10K to wife and $10K to H.
So, W ends up with $18K.

Front 43

H and W purchase a home in Sac in 2000 for $100K. The put the title in JT. They used the $30K of W's separate property funds of the down payment and $70K of CP funds. The home is now worth $400K. Because they have no agreements about the home, it is characterized as CP. If W can prove the down payment came from her SP funds, what would be her rights at divorce/ the rights of the community?

Back 43

W would get the $30K from SP plus split the appreciation, so $150. Also 1/2 of CP, so $25K. Total-$215K for W. H gets $185K.

Front 44

H and W purchase a home in Sac in 2000 for $100K. The put the title in JT. They used the $30K of W's separate property funds of the down payment and $70K of CP funds. If the home is worth $50K now, how much will W get?

Back 44

W gets 30K?

Front 45

H and W purchase a home in Sac in 2000 for $100K. The put the title in JT. They used $30K of W's separate property funds for the down payment and $70K of community property funds. They have a written agreement that states that W has a separate property interest in proportion to the SP funds of $30K that she contributed to the purchase price of $100K. The home is now worth $400K. How would the court characterize the home? What would her rights at divorce be/ Rights of the community?

Back 45

W would get $20K plus 1/2 of CP, ($35K) plus 30% of 300K (90K). Plus, 1/2 of CP appreciation $105K).
Total: $260K.

Front 46

Example 20 page 112
H and W were married in CA in 2003. Prior to their marriage, W owned a farm valued at $1 million. Shortly after their marriage, W wold the farm and deposited the proceeds of the sale in the bank. H received $5 million inheritance which he used to buy a run-down apartment building in Beverly Hills. W is considering using $500K of the farm sale proceeds to removal H's apartment building. H and W come to you for advice. They want to know if W gains an ownership interest in the property by contributing the $500K. Would would happen in the event of a divorce?
A) W will gain a SP ownership interest in the partment building in prop tothe funds used for the improvement
B) W's Sp funds will be considered a gift to the community absent a reimbursement agreement
C) W's Sp funds will be considered a gift to H's SP absent a reimbursement agreement
D) W's Sp fund swill be reimbursed absent a written waiver or transmutation.

Back 46

Characterize property: W's farm is SP b/c owned in prior to marriage. Proceeds are laso Sp as the rents, uissues and profits for SP are also SP. The aprtment building acquired with inheritance also SP.

Would W obtain an ownership interest by contributing to an improvemtn? No. Improvement are attached to property itself an ownership interest is not created.

In the event of divorce, depends on if 2640(c) applies. This is prior to 2005, so if W chooses to use $500K of his SP to remodel H's Sp, that would be a gift. Under 2640(c), W would have right to reimbursement. If both acquisition of apartment and Sp funds occurred prior to 2005, H would have a good argument that amendment should not apply.

Front 47

Example 21--Down on the Farm in Fresno?
Frank and Fran were married in CA in 1990. In 1999, H inherited a farm near Fresno from his parents that was valued at $1 million. The farm was quite run-down, but it had a vineyard that Frank was advised could become very productive and profitable with some attention. He talked it over with Fran, who handled all their finances. Frank thought it was worthwhile to invest some of their savings from their earnings in upgrading the vineyard. They spent about $300K on a drip irrigation system and upgrading the vineyard. IN about three years, the vineyard was producing quality grapes that were producing fine wine. The farm wand vineyard are now valued at $3 million, due mainly to vineyard. Who gets what at divorce?

Back 47

Farm=SP
Improvement funds=CP
Traditional rule: Fran will receive nothing.
Wolfe: in the event of divorce community should have right to receive reimbursement. W would get $150K.
Where the managing spouse has agreed or consented to use the CP funds for the improvement, reimbursement is the proper remedy.
What about appreication??

Front 48

Example 22--Fraud on the Farm in Fresno?
Same facts as 21 except Frank uses $300K of their savings w/o Fran's consent. What are her options at divorce?

Back 48

Community will be reimbursed for fund used for improvement. If spouse consent to the use of funds, there would be no reimbursement. However, b/c there was a breach of trust, Fran could get as much as 1/2 of appreciation, which in this case would be $1 million.

Front 49

Example 23: What if Fran Consents?
Assume same facts, except Frank manage all the finances. And, Fran agreed to investment.

Back 49

Under Jafeman and Frick, there would be no right to reimbursement. But, under Wolfe, there would be.
SO WHAT DO WE USE?!

Front 50

Alex and Natasha are immigrants from Russia. They arrived in CA several years ago and have become U.S. citizens. They married in 1996. Their distaste for communism and its property system has turned into admiration for capitalism. After they married, they started a business in LA, and by 2002 they saved enough money to purchase a home. Their friend Sergei, who is an attorney, suggested that they should hold the title in community property with right of survivorship. They trusted Sergei so much, they took his advice and the deed expressly stated the home was CP w/ rt of survivorship. They have recently initiated divorce proceedings. How would a CA court characterize and divide the home?

Back 50

Since the home was purchased after effective date of July 1001, CP w/ right of survivorship is available. At divorce, home would be CP and right of survivor would be inapplicable. Under Step 2, it would b necessary to determine if either spouse has a right to reimbursement of separate property funds. Since home was purchase from savings they started during marriage, those savings would be considered CP.

Front 51

Example 14-Natasha Buys Stock
In 2003, N received an inheritance of $5K from her Uncle Boris. N took the $5K and invested in stock in a corp that was reviving a cartoon series. Remembering S's advice, she asks the title of the stock state that it belongs to A and N, H and W, as community property with right of survivorship. The cartoon series was a great success and stock has tripled. If A and N divorce, how would a court characterize and divide stock?

Back 51

Stock was purchased after effective date of 682.1, July 10, 2001 so this type of title was available to Natasha. If title was sufficient to create survivorship community property, the analysis sis the same as any community property title.
Step 1: CP titles are presumed to be CP
Step 2: N would have a right to reimbursement under 2640(b) if she can trace the stock purchase to her inheritance from Uncle Boris. The increase in value of stock will be considered CP and split b/w A and N. Right to survivorship is again not applicable.

Front 52

H and W marry in 1980. They buy a home in 1981 partly w/ W's separate property funds and party w/ community rpoeprty funds. The title says "H and W, as joint tenants." they orally agreed that W ill have a separate property interest in the home. How would the home be characterized under Lucas rules? Under 2581? What rights does W have to the home under Lucas rules? Under 2640?

Back 52

Lucas: Separate property
2581: No separate property. Need written agreement.

Front 53

Same facts as #1, except that H and W have no agreements about the home. How would the home be characterized under Lucas rules? Under 2581? What rights does W have to the home under Lucas rules? Under 2640?

Back 53

Lucas: Gift to community
2581: Community (no written agreement)
2640: Right to reimburse

Front 54

Mr. Fabian is planning to contribute $275K of his separate property to improvement of a motel that he and his wife own. The title to the motel is held as H and W as community property. He comes to you for advice concerning protection of his separate property contribution. Which of the following formulations give him the most protection?

Back 54

In the even tof disslution, we agree that Mr. F's $275K is his separate rpeorpty and represents a seaprate proeprty itnerest in proprotin to the valu eof thie proeprt at the time of the contriubiotn. (Best b/c gives him a right to appreciation)
NOT
1) In the event of dissolution, we agree that Mr. F will have the right of reimbursement of his $275K separate property before the property is divided.
OR
2) In the event of dissolution we agree that Mr. F's $275K contribution is separate property and will remain so even though the property is titled as community property.
-->Because both already have this right as long was Mr. F can trace

Front 55

Assume that Mrs. Fabian will not agree to any of the above formulation because she feels that the $275K should be considered community property because it is being contributed to their community property motel. What kind of writing would preserve her view?

Back 55

Mrs. F would want a written waiver to right to reimbursement at the time of divorce.

Front 56

EXAMPLE 1--CLASSIFICATION OF SPEC TYPES OF PROPERTY
Merril Marries Lynch: Commingling Begins
When M was a teenager, she took her bday money and bought shares in co called Microsoft. Her holdings were worth $10K when she married L. Also had bought other stock before marriage. She receives monthly income total $1K. M also had trained stock analyst and a salary of about $5K/mo.
At time of marriage, M's bank account had balance of $20K. M paid for their honeymoon trip from that account. Trip cost $7K. M planned to put her expenses tht were approx $2K that month. Merrils pent $1K and deposited $1K of her stock income and her $5K paycheck onto their account. In second month of marriage, M bought stock in a biotctech firm for $5K. Stock in her name. Increased in value. How will court character stock at divorce?

Back 56

Stock acquired during marriage, so presumed to be CP.
Comingled accounted b/c M deposited her salary into account which is CP.
Exhaustion Method: Because $50 of CP was deposited into her account before she bought the Genetics stock, she could not show that the $5K was exhausted at the time of acquisition.
Direct Tracing Method: This would require showing all the expenditures form the account and exactly when they were made and what fudns were used for each expenditure. Amount of Sp was $11K and amount of CP funds was $5K. SP funds were available. She would testify that she intended to use those funds to buy Genetics stock. Difficult to show which funds were used to buy the stock. Amount of the purchase of the stock was exactly the same amount as her salary deposit. A court may be unwilling to find the stock is Merrils SP.

Front 57

EXAMPLE 2--CLASSIFICATION OF SPEC TYPES OF PROPERTY
Meril Pays the Architect-Family Expense
Assume that in the 2nd month after they were married they mired an architect to designed a home for them. The architect required a retainer of $5K. Merrils gave the architect a check for $5K from her account. Soon after, in that same month. she bought the Genetics Inc stock. If M and L divorce, how would the court characterize the stock?

Back 57

Payment to architect is a famiy expense. Presumed to come from Cp.
Therefore, only funds left are SP.
Assume she bought Genetics stock before she deposited any more CP funds. She would be able to meet the Exhaustion Method. (WHAT ABOUT DIRECT TRACING?)

Front 58

EXAMPLE 3--CLASSIFICATION OF SPEC TYPES OF PROPERTY
Check for $3K
Assume the same facts as Ex 2, except the check tot he architect was for $3K. If M and L divorce, how would the court characterize the stock?

Back 58

Funds were available to pay for only part of the Genetics stock. Under this method, M could rebut the CP presumption by showing that $3K of the purchase was made with SP funds.
Court would then character the stock as 40% CP and 60% SP.

Front 59

EXAMPLE 4--CLASSIFICATION OF SPEC TYPES OF PROPERTY
M comes to you for advice before she gets married. How owuld you advise her about setting up her bank accounts.

Back 59

SEPARATE ACCOUNTS

Front 60

EXAMPLE 11-CLASSIFICATION OF TYPES OF PROPERTY
Does W share H's J.D.?
H and W married in 1979. H then entered law school. H graduated in 1982 and began practicing in LA. Tuition for law school was $10K. GI educational benefits paid $5K of that amount. H took a loan for $2K and the remaining $3K was paid from W's earnings. Loan was paid off in 1983 w/ H and W's earnings. W worked until 1984, when she became a full time homemaker who took care of couple's three children. Ha and W separated recently. H's law practice has assets of $200K and his salary is $100K/yr. What are W's rights upon dissolution of marriage?

Back 60

Since GI bneefits were probably erned before H and W married, would be classified as Sp and not reimbursanble under FC 2641. The $3K loan repyament and the $2K tuition payment are from spuse's earnignas and are classifried as CP.
Interest rat will be added to $5K.
At divorce, community splits the reimbursement amount so W would receive $2,500.
H would say that community has been substantially benefit. Divorce occurred over 10 years ago. W would not be able to rebut presumption b/c H's law practice shows community has benefit. She would however prob get spousal support.

Front 61

EXAMPLE 12-CLASSIFICATION OF TYPES OF PROPERTY
Does W share H's M.D.?
H and W married in 1999. H entered medical school and H not only wanted to help people. he also thoguht a medical degree would secure more income. Graduate in 2005. Couple moved ot Oregon. H took a loan for $40 for $60K tuition. Remaining was paid from W's earnings. Move to Oregon cost $2K. Stayed until 2009. W worked full time and took one year off to care for their baby. $6K in child care expenses. 2010, H took a high paying job w/ successful medical practice. Recently separated.

Back 61

Not able to accumulate substantial benefit from time of degree. SO, $20K from tuition and @2K for moving would be considered community contributions to H's education. Plus interest.

Front 62

EXAMPLE 13-CLASSIFICATION OF TYPES OF PROPERTY
Will Bill Succeed?
B and M met while they were both enrolled in Cal Tech. Graduated in 2007. Most likely to succeed by his class. Parents paid for half of B's tuition and took student loan for remaining half. Marie who weeks after graduated. Used M's salary to pay back part of B's student loan. Balance on loan was $20K.
It is likley that the court will decide:
A) M will recieve $30K plus interest for her contributions to paying B's loan for his education
B) M will reiceve $15K plus interest for contributions from her salary used to pay off B's loan for his education
C) Melinda will not receive any reimbursement because the degree is Bill's SP
D) Melinda will not receive any reimbursement because the degree was earned by Bill's efforts alone

Back 62

B)
Since loan was not incurred during their marriage, Bill should be assigned to loan.
M's salary is considered CP and $20K of her salary repaid B's student loan. M would be entitled to $15K plus interest.

Front 63

EXAMPLE 14-CLASSIFICATION OF TYPES OF PROPERTY
Mary Jane Takes a Leap to Higher Education
When P and MJ were married, they were both idealists. P works as a journalist and moonlights for PD. MJ loves children and is a teacher. She thought she could advance her career if she got an additional degree in special education. MJ and P took loan for $25K t cover remainder of education expenses. MJ continued to work at school. Now they divorce. How will a court assign student loan and the savings spent on tuition?

Back 63

If her degree substantially benefited community, she would have aright ot 1/2 of the CP contributions to her tuition, $5K.
N will be assigned student loan
FC 2641(c)(1): Assignment shall be reduced or modified to the extent circumstances render such a disposition unjust. There is an argument that it would be unjust to assign her the entire loan if she didn't ACTUALLY SUBSTANTIALLY BENEFIT from degree.

Front 64

Untitled Property
H and W purchased an antique piano for $10,000. They used $3,0000 of W's separate property and $7,000 of community property. The piano is now worth $30,000. H and W are presently seeking a divorce. How will the court characterize the piano? How will the court split the appreciation?

The presumption is that the property is__________.
The presumption can be rebutted by ________.
If rebutted, the property is characterized as ______.
At divorce, H will receive ___ and W will receive ____.

Back 64

1) CP
2) tracing
3) SP (30%), CP (70%)
4) $3,000 SP and $3,5000 CP. W will recieve $3,000.

Front 65

H and W purchased a sailboat for $10K. They used $2K of H's SP property and $7K of CP. They put the title in H's name. The sailboat is now worth $30,000. H and W are presently seeking a divorce. How will the court characterize the sailboat? How will the court split the appreciation?

Property titled in one Sp's name: Sailboat in H's name.
Presumption is that the property is ___.
The presumption can be rebutted by ___.
If rebutted, the property is characterized as___.
At divorce, H will receive ___ and W will receive ___.

Back 65

1) CP
2) Tracing
3) If rebutted, 30% H and 70% CP

Front 66

Property Acquired prior to Jan 1, 1984 in JT
H and W purchased a home in Sac in 1983 for $100K. They put the title in JT. They used $30K of W's SP for a down payment and used $70K of CP. The home is now worth $400K. They have no agreements about the home. How will the court characterize the home. Will W have a right to reimbursement? How will the court divide the home?

The presumption is that the property is ___.
The preumption can be reubtted by ___.
If NO agreements, the home is ___.
Reimbursement? ___
Result:
If Oral agreement:
Reimbursement or Pro rata?
Result:
If written agreement?

Back 66

1) CP
2) Oral, written, or implied agreement
3) JT
4) No
5) Gift to community (50/50)
If ORAL, home is part SP part CP
if Written, same as oral agreement

Front 67

Property acquired on/after Jan 1, 1984 in JT
H and W purchased a home in Sac in 1984 for $100K. They put the title in JT. They used $30K of W's separate property for a down payment and used $70K of community property. The home is now worth $400K. They have no agreements about the home. How will the court characterize the home? Will W have a right to reimbursement? How will the court divide the home?

The presumption is that the property is____.
The presumption can be rebutted by ___.
If NO agreements, the home is ___.
Reimbursement? ____.
Result? ___.

IF ORAL AGMT THAT W HAS SP INTEREST, HOME IS:
Reimbursement or Pro Rata Apportionment?
Result?

IF WRITTEN AMT THAT W HAS A SP INTEREST?

Back 67

1) CP
2) Written agreeement or in deed
3) Yes
4) Box #2 on page 45
If ORAL...
Oral agreements don't work so CP
If Written...
Right to reimbursement

Front 68

Property acquired pre-1984 titled as CP
H and W purchased a home in Sac in 1983 for $100K. The deed specified that the home was CP. They used $30K of W's separate property for a down payemnt and used $70K of CP. The home is now worth $400K. They have no agreements about the home. How will the court characterize the home? Will W have a righ tot remibrsument? How will the court divide the home?

The presumption is that the property is ___.
The presumption can be reubtted by ___.
If NO agreements, the home is ___.
Reimbursement? ___
Result___
If ORAL agreement that W has a SP property interest, the home is ____.
Reimbursement or Pro Rata?
Result:
If Written agreement that W as ah SP interest?
Same as oral

Back 68

1) CP
2) Oral, written, or implied agreement
3) If NO agreements, the home is still CP
4) No, gift to community
5) 50/50-->SP gift to community
If ORAL...
30% of SP to W and 70% CP
Pro Roata Box 3 on pg 45
If written same as oral

Front 69

Property acquired between 1984 and 1986.
H and W purchased a home in Sac in 1984 for $100K. The deed specified that home was CP. The used $30K of W's separate property for a down payment and used $70K for CP. The home is now worth $400K. They have no agreements about the home. How will the court character the home. Will W have a right to reimbursement? How will the court divide the home?

If H and W orally agreed that W will have a sep property interest in the home in proportion to her contribution to the purchase price--a 30% interest. How would the court characterize the home? Will W only receive a reimbursement or a pro rate share of the home? How will the court divide the appreciation?
Same facts as ii, but H and W agreed in writing that she will have a 30% Sp interest. How will the court characterize the home? Will W receive only reimbursement or a pro=rate share of the home/ How will court divide appreciation?

Back 69

1) CP
2) oral or implied or written
3) If No agreements, home is CP
4) Yes, reimbursement
5) Result: Box 2 on page 45
6) If ORAL 30% SP and 70%CP
Reimbursement or Pro Rata: Box 3 on page 45
If Wirtten agreement that W has a Sp interest? SP

Front 70

H and W purchased a home in Sac in 1987 for $100K. The deed specified that the home was CP. They used $30K of W's SP for a down payment and used $70K of CP. The home is now worth $400K. They have no agreements about the home. How will the court characterize the home? Will W have right to reimbursement? How will the court divide the home?

The presumption is that the property is___.
The presumption can be rebutted by ___.
If NO agreements, the home is ___.
Reimbursement? ___.
Result___.
If ORAL...
Reimbursement or Pro Rata?
Result:
If Written...

Back 70

Presumption that property is CP.
Presumption can be reubtted by written agreemetn or express deed.
If NO agrements, home is Cp.
Reimbursement? Yes
Result: Box #2 on page 45.
If ORAL agreement that W ha a SP interest, home is CP (presumption not rebutted).
Reimbursement or Pro Rata apportionment? Reimbursement.
If Written agreement that W as SP interest? SP.

Front 71

Example 5 Ch 5 How Much do Tacos Cost?
Tacos "Linda Tapatia" is a well patronized taco stand that has been in busienss for 35 years in Pasadena. It is owned by Mr. Z, a windower. Mr. Z found the place and used to be a cook there, but he has not worked there for the last 15 years. Its assets consist of $35K worth of real property and fixtures and $10K worth of supplies and equipment. Yet it generations $150K a year in profit. The entity has no liabilities.
Mr. Z has decided to move back to his hometown in Mexico and is accepting offers to purchase Tacos.
a) If you wanted to buy the business, how much would you offer Mr. Z? More than $55K? If so, why? If you were Mr. Z How much would you sell Tacos for?
b) Why might T be wroth more than $55K?

Back 71

a) There is probable an established clientele. Also reciples. No rent.
b) Goodwill: (see a)

Front 72

H and W were married in Sunnyvale in 1985. At the time, H was an accountant with H&R Block. IN 1990, H decided he wanted to open his own financial services office. He purchased a small office building, furniture, and equipment, and opened for business. In his first year he generated only $20K profit. His buisness has a good reputation. His revunes have steadily increased over the last 11 years.
W soon became distressed. Part of CP included $300K which the court characterized as the goodwill of H's practice. This figure was derived from expert testimony. H contends goodwill is not CP.
A) Henry's accounting practice does not have goodwill b/c it is based on Henry's personal skills and education
B) Henry's accounting practice does not have goodwil because goodwil is too difficult to value
C) H's accounting practice was goodwill but the value of the goodwill may not be based on H's future earnings D) H's accounting practice has goodwil and must based on capitalization method

Back 72

C)
H is wrong. The value of his professional goodwill is property interest.

Capitalization: take into account past earnings and project hese into he present vlae of the goodwill.
We can see testimony that W's expet is basing is valuton of godwill on what H's future earnigns are prjected to be. This is not a proper method of valuing goodwill, and a court would be abusing its discretion to base its finding on this testimony. In Marriage of Fortier, the Court reason that it would be inconsistent with that philosophy to assign to any community interest the value of the post marital efforts of either spouse.
Value of goodwill must exist as a property interest at the time of the dissolution.

Front 73

How to Value a Hot Spot?
H and W were married in E in 1978. In 1985, they moved to SC and purchased a small nightclub. W managed the nightclub and H stayed home and riased their childrne. SC has become a hot spot. Generates $150K a year in profit.

H and W got a divorce. H and W stipulated that nightclub is worth $250 in tangible assets. H testified goodwill of nightclub is worth an additonal $250K. H's expert based his vlauioation on a variety of considerations, which included among other things market competition, projected city growth, and a variety of technical economic indicators. W's expert testified that goodwill was wroth $100K.
What is value of nightclub? Would court be abusing its discretion in finding the value to be $75K or $100K?

Back 73

Could be anything.
No set rules of valuing goodwill.
Courts defer to trial corut ruligns, applying only an abuse of discretion standard of review. As stated in Fortier: Problem is not whether some formula which was suggested.
Court would probably not be abusing its discretion. But a court may be abusing its discretion by picking a middle ground w/o giving a reason.

Front 74

Example 8--H's Does Surgery Goodwill
H and W have been married since 1987. H is a cosmetic surgeon. In 1990 he opened a partnership with three colleagues. Partnership has been successful generating about $350K in profits annually. H and W have divorced. W presented expert witness testimony that value of partnership is $500K, $400K H's interest.
H contends that if he would have left the partnership on the date of separation, he would only have been entitled to $100K payment for assets and $25K for goodwill.

Back 74

When determing the CP interst in partnership, we consider worth of interest as a going business and not the price that the partners get to pay to buy each other out.
The alue of the cotnractual withdrawal right may provide a bsis for ascertaining the vlau eof the community property interest. However, it does not preclude a consideration of other facts. In Slate,r trial court abused its discretion by only looking at contractual withdrawal rights of the professional spouse and not other factors. Look at buy out agreement price to ascertain as a going concern.

Front 75

Does H need Legal Support ?
H and W are best friend and worst marital partners. They have decided to get a divorce after 6 years of marriage. When they were married, H began a legal support services business which, on accountof his hard work, hs grown. Nets $200K annual revenue. H and W have sipulated that busienss has a vlaue of $200K and that $100K of that figure constitutes H's goodwill. H cotends the vlaue should be reduced by $75K since in teh event that he sold the business, he would be required to give a covenant not to compete. W, on the other hand, contends that the value should be increased by $50K which would be the amount of consideration H would receive for covenant not to compete. Who is right? How should court value H's business?

Back 75

Neither H nor W is correct.
Est a value for a future covenant not to compete is entirely too speculative. Court should evlaute stipulated values as final (IS 6 years a long marriage?)
The consideration he receives from a covenant not to compete will be his own spearte property.

Front 76

Example 10 Chapter 5--W is not Amused
When H and W were married, H was struggling comedian. W was a nurse. H got lucky break. W decided to divorce. She wants to know her property rights. What is W's rights?
A) Hal's comedy success is not goodwill because it is based on his talent and that cannot be transferred or sold
B) Hal's comedy success is not goodwill because it would be too difficult to value
C) Hal's comedy success has goodwill because is like a professional whose practice can have goodwill
D) Hal's comedy success has goodwill because it is based on his past earnings as a comedian

Back 76

In McTeirnan v. Dubrow, a business that would generate goodwill excludes a person doing business.

Front 77

Example 27 Chapter 5
Who Owns Tofu Toots?
Anfter H and W married, H received $100K inheritance from his grandfather. H has always liked icre cream but also worried about his weight and health. He developed a Delicious frozen dessert from tofu. He used $100K inheritance to start a small business manufacturing Tofu Toots. H spent long hours supervising every aspect of the business. His business was very successful.
H and W get a divorce. His business is now valued at $500K. How would court characterize busienss?

Back 77

H's business is SP even though it was acquired during marriage. H would be able to trace the inception of the business to his inheritance.

W would argue that it was H's efforts that caused increase in value.
She would present evident of his research and long hours.
H would aruge it was hte health food fad.
If court decides to use P approach, B would receive reasonable rate of return on his initial investment. That would be deducted from $400K increase in value and remaining would got community and be split between H and W.
If Cour tuses VC formula, it is necessary to determine two items: 1) B's actual salary or reasonable value of his services in a comparable business; 20 CP expenses while business was owned. Court would calucate the community income (ex. $50K). Suppose H and W only spent $40K/yr on expenses. If ten years, the court would calculated community income as $500K and would deducted $400K in community expenses, $100K left. Split $100K 50/50 between H and W.

Front 78

It was G's Idea
Assume same facts, excpet it was G's idea to start the business, and she as the one who did the research and developed the delicious dessert. Also assume she worked the long hours supervising every aspect of the business. How would the court characterize the business? How would the increase in value be allocated?

Back 78

Still H's property. However, court may be sympathetic and use P approach which would give W a greater share in increase in value.

Front 79

It was Ben's Salary
Assume same facts as Example 26 except H started the business from funds he saved from his salary. Also, at time B and G separated, business is wroth $100K. However, during their separation but before trial, business increases to $500K. Court has determine increase was due to an article explaining benefits of business. How would court characterize business? How would court allocate increase in value?

Back 79

Business is CP.
After H and W have separate, earnings are separate.
If a community business increases in value after date of separation, courts are instructed to use reverse P/VC. If increase in value can be attributed to spouse's efforts during separate, considerate separate effort.
H would try to argue increase in value was due to his efforts, perhaps meting with a reporter for health journal. W would argue the value increased because of journal, not separate efforts. W would have the better argument, and increase in value would belong to community.

Front 80

H and W acquire a home as "H and W, as joint tenants." They use community funds to purchase the property.

The home is acquire din 1980. W dies in 2010. W's will left her share of the community property to her children. The children can bring evidence that H and W orally agreed when they acquired the home that the home was community property.

LAW: Presumption at DEATH is that JT=JT unless there is an oral, written or implied agreement to the contrary. BOP on the party arguing to the contrary.

RESULT:

Back 80

Transmutation b/c acquired in 1980 (before 1985)

Front 81

H and W acquire a home as "H and W, as joint tenants." They use community funds to purchase the property. Home is acquired in 1985.
LAW: Presumption at death is that JT-JT unless there is an agreement to the contrary. Under FC 852(a) and (e) transmutations as of Jan 1, 1985 are not valid unless "made in writing by an express deceleration" by the spouse whose interest in the property is adversely affected."
RESULT:

Back 81

Oral agreemetn is no good: Need express declaration in writing.
H's interest would be adversely affected, so he would need to give up 1/2!
Agreement would be CP
IF it were at a divorce only, transmutation statute would not apply.

Front 82

Assume the home is acquired in 1990 and H and W have tno agreements regarding the home. W dies AFTER the petiton for dissolution was filed but BEFORE the divorce was granted.
LAW: Presumption at death, JT=JT. Applies be/c the divorce proceedings "abate" and this would be considered a death case.
RESULT:

Back 82

Still JT. H gets home. B/c this is similar to Blair case (no agreements)
PRACTICE TIP: Dissolve JT @ divorce proceeding.

Front 83

Same facts as #3 except W dies AFTER the divorce was granted but BEFORE the property issues were determined.
LAW : According to HIlke, FC 2581 (4800.1) applies to these cases. Presumption is JT=CP, rebuttable by a a writing, either in the deed/title or a written agreement that the H had a separate property interest--that the home as held in joint tenancy.

How did Probate Code 5601 change the LAW?
Hilke:
Probate Code 5601:
Which Controls?

Back 83

5601: Automatic severance of JT (at petition for or dissolution of divorce?)-->T.I.C. (Note: T.I.C. does NOT =CP!)
Hilke: JT-->CP
Probate Code: JT-->T.I.C.
Here, the result was the same (1/2 goes to each spouse)
Which controls? 5601 (AS OF 2001?)

Front 84

In 2007, H and W acquire home as "H and W, as community property with right of survivorship." They use community funds to purchase the property.
1. W dies in 2013. W's will left her share of the community property to her children. Who will receive the home, H or W's children?

Back 84

H. Right of survivorship presumption.

Front 85

H and W separate in 2013. They have no agreements about the home. H and W dispute the ownership of the home. How will a court characterize the home in a divorce proceeding?

Back 85

Presumed CP so split 50/50.

Front 86

H and W separate in 2013. They have no agreements about the home. H and W dispute the ownership of the home W used $100K of the separate property to improve the home. How will a court characterize the home in a divorce proceeding? Will W receive reimbursement of $100K? If the home appreciated in value, how will that appreciation be divided?

Back 86

Step 1: CP
Step 2: If she can trace, there is a right to reimbursement and a right of improvements. Appreciation belongs to the community.

Front 87

Exhaustion v. Total Recapituation Method

Jan 2013 Deposits:
50K in CP and 10K in SP.
Feb 2013 Withdrawal:
30K (CP) Farm Exp
March 2013 Withdrawal (20K Google stock)
April 2013 20K (CP)
May 2013 30K (SP)
Aug 2013 Sp's separate and file for divorce

Under the Exhaustion Method endorse by CA Sct See v. See, Google stock is ____ b/c ____.

Under Total Recapitulation Method argued by Laurence See in See v. See, the Google stock is ____ because ____.

Back 87

Exhaustion method:
Google stock is CP b/c CP has not been exhausted.
Total Recapitulation Method:
Google stock is SP b/c fam expenses (50K+30K)= total community property (50,20,10)

Front 88

Family Expense Presumptions and Comingling Examples and Explanations
HYP #1:
H and W marry March 31, 2013
April 2013: 1,000 (H's paycheck before marriage)(SP)
May 2013: 1,500 (H's paycheck from April) (CP)
2000-Trip to Ireland
June 2013: 1500 (H's paycheck from May) (CP)
10,000 (H's inheritance from Uncle Max) (SP)
1,500 (C)
10,500 (SP)
2000 in medical expenses
0 (CP)
10,000 (SP)
Car is bought for $10K

The vintage car is presumed to be ____ because. The presumption can be rebutted by____.
The court will conclude the car is ___ because ____.

Back 88

The vintage car is presumed to be CP b/c it was acquired during marriage. The presumption can be rebutted by tracing.
The court will conclude that the car is SP because only SP left (we can apply exhaustion method).

Front 89

HYPO #2 (Transfer Bank Account info from prior page)

June 2013: 1500 (H's paycheck from May) (CP)
10,000 (H's inheritance from Uncle Max (SP)
1500 (CP)
10,500 (SP)
2000-medical expenses

0 (CP)
10K (SP)

4,000 (CP)
10,000 (SP)
10,000 Vintage car

Under exhaustion method car is
Under Mix Direct Tracing car is

Back 89

Exhuastion method:
Car is Part CP, part SP.
0 (CP)
4,000 (SP)

Mix Direct Tracing
Car is SP, CP
4,000 (CP)
0 (SP)

But needs to show intent

Front 90

Joint Bank Account at Divorce
H and W marry in 1995
They open a bank account in 2008 with $25K CP and $75K SP (W). Title states that bank account is in JT. They have separated and petitioner for dissolution. How will court characterize the bank account?
They have no agreements about the account.

What would be the result if the court applied FC 2581 and 2640?
What would be the result if the court applied probate code 5305?
Which Code should the court apply?

Back 90

FC 2581 and 2640:
JT is presumed to be CP at divorce
Step 1: CP, no agreements
Step 2: Right to reimbursement for $75K
What happens to interest on account?
Belongs to community (split 50/50)

What would the result be inf 5305?
75% to W
25% to H's CP
Interest is pro rata apportionment
Court should apply 5305 because statute supersedes 2581 and 2640

Front 91

Ch 6 Example 1
Should Daisy Rely on Abner?
Abner and Daisy have been married for 16 years. During that time, A kept his earnings in a bank account in his own name. D comes to you to complain that she does not know anything about her financial situation, and Abner has refused to tell her. He says, "Don't worry, I'll take care of everything." Advise Daisy.

Back 91

A's earnings are CP. Under FC 1100(a) either puse has management and control of CP. But under FC 851, D will be refused access to that account.
A has a duty to fully disclose assets and transactions upon request 1100(e).
Walter--disclose info w/o demand.

Front 92

Ch 6 Example 2: A trip to New Zealand?
J and A both have high-paying jobs. They decide at the beginning of their marriage that they will take 100 a month from each of their salaries and put them in separate savings accounts in their names. After two years, each has a savings account of $2,400. John wants to take their savings and spend two weeks in New Zealand. A wants to take their savings and invest it in a mutual funds. You are good friends with John. He wants you to help resolve the impasse with A. He asks you about his legal rights.
A) Not have access to Abigail' account because it is in her name
B) Not have access to Abigail account because it contains her earnings and she has management and control of her earnings
C) have access to Abigail's account because they are married and there is equal management and control
D) have access to Abigail's account because it contains community property

Back 92

A)
J and A's earnings are CP.
Not affected by title of accounts, but affects equal managmenet and control rights. J and A dont have access to each other's accounts under 851. Neither transaction would be considered gross negligence or reckless conduct that would be a beach of fiduciary duty. They need to work out their differences regarding their attitude to their savings. Law cannot resolve all marital differences.

Front 93

Example 3--Abigal's Risky Investment
John asks you another question about their financial situation. A received a $10,000 inheritance from her Uncle George. She wanted to use the inheritance and invest in a bio engineering company that is developing gene therapy. John thought the investment was very risky and asked her not to invest in the company. She did so anyway. Advise.

Back 93

A's inheritance was SP. She has exclusive management rts. She does not need to consult w/ J. Also no fiduciary duty.

Front 94

Ch 6 Example 4: A's Investment Fails
A received a $10K bonus from her employer. She took that money and also invested in the bio co w/o telling J. The gene therapy that the company was working on caused serious side effects. A's investment in the company has been wiped out. When John finds out, he is very upset and consults you for advice. Did A breach her fiduciary duty? What remedies could J puruse if she did?

Back 94

Either spouse has managment and control of the community personal property. A's bonsu from her employre would in most cases be CP. Both FC 721 and 1100 (e) premise the disclosure upon request. If investment occurred in 2003 or thereafter, Walker case held that disclosure is required w/o demand. If A breached her duty she would be liable for at least 50% of the lost investment.

Front 95

Ch 6 Example 5--False Teeth for Dogs and Cats
John received a $10,000 bonus from his employer and he took the money and gave it to his brother. His brother is a Vet and started a company to manufacture false teeth for dogs and cats. John received shares in his brother's company. Because of problems with production of the false teeth, J's brothers company failed, and the stock is worthless. John had told A about how he planned to use his bonus, and she objected, but J went ahead anyway. Did J breach his fiduciary duty? What remedies could Abigal purse if he did?

Back 95

J has managment and cntrol of CP. Bonsu from his employer would be considered CP. A knew what J palnned to do with money. Her dispproval does not limit J's managment and cntorl rights.
Was money J gave to his brother a gift?
J would have no right to recoup a gift but A could attempt to argue that the money given to J's brother was a gift. if $10K was an investment, remaining question would be whether this would be a breach of fiduciary duty.

Front 96

Ch 6 Example 6-Financing Leads to Failure
R and M bought a house in Gendora taking title in Ron's name only "as his separate property." Because Martha had a poor credit history, their loan broker suggested that they qualify for a better interest rate if the home were taken in Ron's name. The broker also told him that they could add M's name back onto the tile within 45 days of the close of escrow. Ron said he would do that. For that reason, M signed the quitclaim deed freely and voluntarily. She trusted that R would add her name to the title, but he never did. M recently filed for divorce and is now claiming house is CP and R breached his duty. How will a CA court decide?

Back 96

Court will find house CP and R breached fidcuiary duty. Although title is in R's name and M's quitclaim deed would meet standards of valid transmutation, M's breach of fiduciary claim will undo that transmutation. Because R is advantaged by the transaction, presumption of undue influence arises. He abused his position as a fiduciary and confidant.

Front 97

Ch 6 Example 7
The Art Collection Disappears
H and M were married for many years. Over the years they had purchased an art collection of silk screens by many famous artists. The art collection ha been cpurchased w/ CP funds. About two eyars ago, H started acting strangely. Mattie noticed that many of the pieces of their art colleciton were disappearing. H told her that he had loaned them ot a small museum that his frined had opened. Recently, H disappear and was found dead from a drug overdose. The pieces from the art collection had not been loaned to a museum but had been sold to drug dealers in exchange for drugs. The missing pieces of the art collection were wroth $50K. H's will left his share of the CP to his brother V. Mattie thinks that she should have some right to recover the $50K that disappeared. Advise.

Back 97

H violated duty of care 16404 that is incorporated into C 721. Duty of care includes grossly negligent or reckless conduct, intentional misconduct, or knowing violation of the law. B/c H was purchasing illegal drugs, his conduct at the very least was grossly negligent or reckless. M could argue appropriate remedy is under 1101(h) where she would get 100% of any asset undisclosed transferred in breach of fiduciary duty.

Front 98

Example 8: Avis Sells Out
Soon after 9/11, A and B took their CP savings and started an Airport Car Service. They bought a fleet of cars and hired several drivers. Boris did the driving, and A did the bookkeeping. B become bored dirivng back and forth to airprot and got a job working at an auto dealership. A then handled ACS herself. Business prospered until cost of gas and downturn in air travel began eating at ACS profits. Avis received an offer to sell the business. She told Boris about the offer and he said that they should think it over. The buyer pressured Avis by giving her two weeks to decide, or he would withdraw the offer. Boris was unsure about whether they should sell. A went ahead and sold ACS before Boris made up his mind. They broken even. But B was furious. B comes to you for advice.

Back 98

A became the "primary" manager of CP business. Primary management means A may act alone in transactions. However, A was required to give prior written notice to B of sale of personal property.
Failure to give prior notice does not affect validity of sale.

Front 99

Ch 6 Example 9: Avis Checks OUt
A and B's marriage deteriorated. Proceeds of ACS are in both of their names. B files for divorce and TRO given. After receiving summons, A write three checks from that accounts. First is to pay rent on apartment she now lives in second for a retainer for attorney, and third for her tuition to become a paralegal. Now $1K in back account. B writes a check for $2K and it bounces. Did A violate TRO? Did she breach fiduciary duty?

Back 99

Avis wrote three checks from bank account that contained proceeds from ACS. Those funds were CP. Rent would be a necessity of lie which is an exception to restraint. Second to retain divorce lawyer is also not parceled. Tuition is questionable.

Front 100

Ch 6 Example 10: Get Out of Jail Free?
Ira Iron met Terr T at a Monopoly tournament. Their love led to marriage. I worked a real estate co and was very successful. Purchased several pieces of property with funds from I's earnings. Had a place called Park Place. Title was in I's name. I was arrested for illegal gambling. He borrowed money to post bail and executed a deed of trust on Park Place to secure the loan. He neglected to mention to the bail bond company that he was married. Soon after I was released from jail, he disappeared. T has not heard from him. T found out about deed of trust on Park Place when she was contacted by bail bond co who threatened to foreclose. She has come to you for advice.

Back 100

Cp even though title is in Ira's name. Ira acted aone when he borrowed money to post baile, and he acted alone ewhen he executed the deed of trust on Park Place. Bail bond company also seems to fit dexcripton of innocent lender. W can void instrument created deed of trust as long as she acts within one year of SOL in 1102(d). She will be responsible for debt that I incurred during marriage. She would have a good claim that I breached his fiduciary duty.

Front 101

Ch 6 Ex 12--Terry Rents the Beach Cottage
T also needs to raise cash to pay for her everyday expenses. She seeks to rent a beach cottage on Pacific Avenue that is community real property. She finds a couple that want to spend six months i CA and they sign a lease to that effect. Is that lease valid?

Back 101

Either spuse has the right to manage community real property. JOinder requirement is limited to major transactions. A lease of ra longer period tha one year is considered major transaction that requires both spouses to join. Here lease is for exist months so Terry can enter into a valid lease w/o Ir'as signature. I never reappears or objects. T has power ot lease beach cottage.

Front 102

Ch 6 Ex 11
T decides to file dissoltuion proceedings against Ira. During their marraige, they had pruchased another parcel of property called Marvin Gardens. Since Terry exhausted all their savings in fighting the bail bond company, she wants to be able to borrow against Marvin Garden to pay her attorney in the dissolution. Can sh execute a deed of trust on Marvin Gardens in favor of her attorney?

Back 102

This exception to the joiner rule is found in 1002(e). T can encumber her interest in community real property to pay reasonable attorney's fees in a dissolution proceeding. Interest encumbered is only one half of the real property.

Front 103

H and W married in 1988. H then entered law school. H graduate din 1991 and began practicing in Los Angeles. Tuition for law school was $30K. GI education benefits paid $5K of that amount. H took a loan for $12K and the remaining $13K was paid from W’s earnings. The loan was paid off in 1993 by H and W’s earnings. W worked until 1990 when she became a full-time homemaker who took care of the couple’s three children. H and W separated at the end of 20123. H’s law practice has assets of $250K. H’s salary was $150K/yr. What are W’s rights regarding H’s education

Back 103

$5K from GISP
$13K tuition payments and $12K in loan paymentsCP
BUT because this is more than 10 years, then the original amount she would get ($12,500) would be reduced to $0. She would just get ½ of CP assets. Also: possibility of spousal support b/c she hasn’t worked since 1990.

What if the last payment in 1993 was MOST of the loan?

Front 104

H and W married in 2005. H then entered medical school. He graduated in June 2009, and they moved to Oregon for his internship. Tuition for medical school was $100K. H took a loan for $60K and the remaining $40K was paid from W’s earnings. Their move to Oregon cost $1K. They stayed in Oregon until H finished his residency in 2012. W worked full-time during that time, but took a year from 2010 to 2011 to care for their baby. When she returned to work, they had child care expenses of $4K. IN 2012, they returned to CA. They have recently separated and have filed for dissolution. What are W’s rights regarding H’s education degree?

Back 104

W/in a 10 year window W would rely on presumption that community has not benefited yet.
W probably won’t get spousal support.
$60K loan was not paid off so it’s H’s problem.
$40KCP (W gets ½)
$4KFamily expenses
$1KCP (W gets ½)
Total: W gets $20,500.

Front 105

H and W are both professions and successful. H is a physician and W is a psychologist. The never had children and, by age 50, they had saved enough from their earnings to live comfortably. They decide to retire and enjoy life. H had always loved reading and felt that he had missed out on pursing an advanced degree in English Literature. After they retired, he enrolled in a Masters of Arts Program at $50K. The tuition was paid form H and W’s savings from their earnings. H also became romantically involved with one of this professors and now H and W have separated. W seeks reimbursement for the $50K spent on tuition for H’s degree. What are W’s rights regarding H’s education degree?

Back 105

NOTHING—NO SUBSTANTIAL BENEFIT TO COMMUNITY

Front 106

H is police officer in the Costa Mesa Police Department and W works as a registered nurse. H enrolled in law school at night and continued to work as a police officer. He wants to become an attorney so that he will be able to advance in the Police Department. After graduating he passed the Bar Exam, but because of a freeze on police salaries, he has received no raises since graduation. H and W recently separated. H financed law school with a student loan and with their earnings. Tuition and to her education expenses paid from their earnings were $12,000. W seeks reimbursement of those expenses. Whata re W’s rights regarding H’s education degree?

Back 106

Garahm: As a matter of law, law degree is NOT substantial benefit. Need to actually substantially increase earning capacity.

(What if G JUST graduated BUT has a job offer?)

Front 107

W graduated medical school in 2008. In 2009, she married H. They have recently separated. During their marriage, they used $20K of their earnings to repay W’s loan incurred during medical school. H argues that there should be reimbursement. W argues that because the loan was incurred before marriage, there is no reimbursement remedy. Who is correct?

Back 107

Loan incurred during marriage for education does NOT equal CP.
2461©unless assigning would be unjust (ex. Deferred payment to pay for other things)
Loan before marriage assigned to W.

Front 108

Chapter 7 Example 1:
For Better or Worse and for Debts?
You are at a party and one of your friends comes to you for advice. He is planning to marry soon but has some doubts about his fiancée. Although she has a very good job, it seems that she has a problem with credit card debt. He wants to know if he will be responsible for her debt after they are married. Advise.

Back 108

CP would be liable for her debts, but not SP. Shilled earnings from premarital debt: 1) open an account in his own name; 2) Deposit only his earnings and no other property. Make sure W is not on account.
Can also enter into a premarital agreement specifying that all earnings are the separate property of each spouse.

Front 109

Chapter 7 Example 2: Who’s Responsible for Child Support?
Your friend also explains to you he was married before and has a child support obligation to his children from a prior marriage. He wants to know if his fiancée can be obligated to help pay for that obligation. Advise.

Back 109

Child support obligations for a child from a prior marriage are treated as a premarital debt. W can laso take advtange of the shild by putting those earnings in a bank account in her name. But friend’s separate income and CP is applied to child support. (EVEN IF HE HAS A SEPARATE ACCOUNT?)

Front 110

Example 3-Who’s Responsible for the Wreck?
Your friend also explains that he was involved in a car accident about a year ago, and there is a lawsuit pending against him. He is almost sure that he will be held liable for the accident, but it has not yet been decided. If he has a judgment against him, he wants to know if his fiancée can be obligated to help pay the judgment. Advise

Back 110

Assuming that a judgment is entered against the friend after he is married to his fiancée, the issue is when the debt incurred. It is possible to argue that the debt was not incurred until the judgment was entered which in this case would make it a marital debt. However, FC 903 states that a debt is incurred in the case of a tort, at the time a tort arose. In this case, that is before the friend’s marriage. The tort judgment would be treated as a premarital debt. CP and friend’s SP are liable for tort debt. Because the act occurred before marriage it was not the benefit of the community.
First SP, then CP?

Front 111

Chapter 7 Example 4: Mickey Wants Minnie to Pay
Mickey and Minnie married recently. Both come from extremely wealthy families and live off trust funds that were set up for them when they were children. They keep the proceeds from their trust funds in separate bank accounts. Mickey owns a large home in Hollywood Hills. His accountant suggested it would be a tax advantage for him to take a loan to decorate the home before he married Minnie. He hired an interior designer to decorate the home, and the loan was for $100K. After they married, Mickey asked Minnie to contribute to the repayment of the loan. She asks you if she is obligated to help pay the loan

Back 111

No CP involved. Debt was incurred by Micky prior to marriage. According to FC 913(a), M’s SP is liable for a debt incurred before marriage. FC 913(b)-Minnie’s SP is not liable for a Sp’s debt incurred before marriage.
Obligated as a “necessary of life”
But, only covers debts incurred during marriage, while Sp’s are living together. Interior decoration incurred before marriage.
CONCLUSION: NO legal obligation for Minnie to repay the loan.

Front 112

Example 6—Who Pays the Doctor’s Bill?
Ben and Casey were married for several years. Ben worked outside the home, and Casey was a homemaker who took care of their children. Ben moved out of the family home about six months ago. After Ben let, Casey saw Dr. X for sever case of depression. Over a period of three months, her bill for medical services was over $5K. Ben has recently received letters from Dr. X demanding payment for C’s medical treatment. They have not yet filed for divorce and have recently consulted a family counselor about reconciliation. Ben wants to know if he is responsible for Dr. X’s bill. Advise.

Back 112

Ben would have to pay Dr. X’s bill. Liable for debts until Sp’s are “separate and apart.” Here they have not reached point of parting of ways.

Front 113

Chapter 7 Example 7: Does Ben Have to Pay?
Assume the facts are same as Example 6, except that B and C have filed for divorce and there is no hope for reconciliation. B wants to know if he is responsible for Dr. X’s bill. Advise.

Back 113

Ben may still be liable under 914(a)(2)—common necessaries of life.

Front 114

Example 8—Who Picks Up the Debt?
While H and W were married, H bought a pickup truck that he used in his pluming businesses. He borrowed $15K to pay for the truck. When they separated, $10K was still outstanding on the loan. Who will be assigned the loan if they divorce?

Back 114

Debts incurred by a Sp during marriage and before date of separate are not automatically community debts. A separate debt is not incurred for the benefit of the community and must be confirmed w/o offset. Debt to buy a pickup truck was incurred while H and W were married. Benefit for community b/c H used it if or businesses. The $10K will be split even though H alone incurred the debt.

Front 115

Example 9—Want is Nabbed
W, unfortunately, has a habit of shoplifting. She was nabbed by security offer as she was leaving Saks Fifth Avenue in BH. Because this was the third time she had been caught shoplifting, she had to stand trial and was in danger of incurring a substantial penalty. She hired an attorney and ran up attorney’s fees totaling $15K. When H and W separated, $10K in legal fees was still outstanding. Who will be assigned the debt if they divorce?

Back 115

Separated debt b/ W was arrested for a crime (not a benefit to community)

Front 116

Ch 8 Example 10—Wanda Diets and Exercises
In an effort to lose weight, W started on a vigorous exercise and weight loss program. She enrolled at a gym and bought yearly membership for $1,500. The Dieter’s Club she joined provided all the food for six months and cost $3,500. Wanda charged both on her credit card. When H and W separated, the total debt of $5K was still outstanding. Who will be assigned the debt if they divorce?

Back 116

Community debt—activities to improve W’s health and appearance would be for the benefit of both. H would try to argue that debts were for W’s personal benefit and therefore are her separate debts. If the debts are community debts, they are split equally upon divorce.

Front 117

Ch 8 Example 11-W Suffers from High Blood Pressure
After H and W separated but before a judgment of dissolution of their marriage was entered, W was hospitalized for high blood pressure. The hospital bills totaled $1,500 and were not covered by health insurance. Who will be assigned the debt for the hospitalization when they divorce?

Back 117

Medical care is usually considered common necessary of life. H would probably have the ability to pay the debt. If those are the facts, a court has the discretion to assign a portion or the entire debt to H, even though W incurred debt and couple had separated. Common necessaries of life are still responsibility of both spouses.

Front 118

Ch 8 Example 12—Henry Seeks Peace on the Pacific
After H and W separated but before a judgment of dissolution of their marriage was entered, H decided to buy a sailboat. H felt it gave him peace of mind to spend his weekends on the clam of the Pacific Ocean. He took a loan to pay for the sailboat in the amount of $25K. Who will be assigned that loan when they divorce?

Back 118

Sailboat is probably not a common necessity of life. So loan would be assigned to H.

Front 119

Ch 8 Example 13—H goes to Palm Springs
The court recently entered the judgment of dissolution of H and W’s marriage. Before the dissolution became final, H bought a condo in PS and fixed it up. He incurred debts of $10K for painting and furniture. Who will be assigned that debt?

Back 119

Debt for painting and furniture will be confirmed w/o offset to H. (Common sense, FC)

Front 120

Ch 8 Example 14—Too many Debts
Assume that all of H and W’s community property was split equally. H received the community business, and W received the community home. At the trial, the court determined that after valuing the community property and the community debts, there was an excess of $50K in community debts. How will a court divide those debts?

Back 120

If H has ability to pay and W does to, court could assign more than half or even all of the excess of debt to H. FC 2622(b) injects “just and equitable” factors into debt division, that are absent in the division of community assets.

Front 121

Chapter 2 Example 1--Lonely and Neglected?
Harr is a former construction worker currently not working due to disability. W is the CEO of a fortune 500 company. Prior to their marriage in 1995, H and W orally agreed to waive any and all interest in the other party's earnings and acquisitions during marriage. Due to W rigorous work schedule, H filed for divorce. At divorce, H argues that premarital agreement is unenforceable b/c needs to be in writing according to SOF. How would a court rule on H's argument?

Back 121

Unenforceable according to 1986 Act

Front 122

Chapter 2 Example 2
H and W were bicoastal couple. H and W wanted to get marrieg but could not decide where to live. In 2001, H orally promised W that if she would quit her job and move to CA upon divorce or his death he would give her title to Manhattan Beach apartment. W agreed and quit job. Divorced. W wants to enforce the orally executed premarital agreement and take title to Manhattan Beach home.

Back 122

Enforceable under SOF exception.

Front 123

Chapter 2 Example 3: Spousal support waiver valid?
George, lawyer at a sucessful law firm, and Brenda, school teach at a prestigious private school contemplate getting married. In 2000 they executed a written premarital agreement w/ a term that provides oath parties would waive spousal support at event of divorce. Agreement was drafted by G's attorney. Brenda was advised to seek independent legal counsel but declined. Indicated B waived her rights and she was also informed of them. B wants to invalidate agreement under public policy. Will she prevail on that argument?

Back 123

Amendment of 2002 requires independent counsel. Unconscionability argument--disparity in income but b/c they've been married since 2000 probably acquired enough CP/as long as she's not on state support.

Front 124

Chapter 2 Example 4--Will Success Spoil Lucy and Ricky's Marriage?
L and R executed a writen premarital agremen in Jan of 1990, prior to their wedding of June of that year. Lucy and Ricky decided a premaritial agrement would be prudent to simplify matters in the case of divorce. Ricky was rep by his attorney friend, who offered his services pro bono. Lucy is unrepresented despite numerous admonitions from R's attorney to seek independent counsel. Premarital agreement waives all real property rights.
R is immigrant breaking into show business and Lucy is 30 year old housewife with a high school diploma at the time of their marriage. Now R is making millions. R files a divorce. What defenses to enforce-ability may Lucy raise? How successful will she be?

Back 124

This agreement doe snot cover spouseal support. Enforceability of agreement depends on FC 1615 not 1612. Property rights are a proper subject of premarital agreements. Under 1615, Lucy can invalidate the premarital agreement in only one of two ways--1)POP b/c she is a party against whom enforcement is sought. She can first argument she did not exeucte agreement voluntarily. Her second option is to argue that agreement was unconscionable.

Lucy's lack of independent counsel: does not apply retroactively

Unconscionable argument will fail b/c not unconscionable AT THE TIME they entered into agreement.

Front 125

Ch 2 Example 5--Chris, Get Your Own Lawyer!
J is a highly successful actress and singer worth millions of dollars. She meets Chris, a struggling backup dancer at one of the auditions for her music video. They instantly fall in love and become engaged to be married. On Dec 1, 2002, J's attorney presents Chris with a premarital agreement in which each party's earnings and acquisitions during the marriage will be treated as their own separate property. Chris is not represented by independent legal counsel, despite the multiple admonitions from Jenner and her attorney that he should seek his own lawyer. Because of Chris' stubborn refusal to seek counsel of his own, J's attorney calls Chris on his cell and fully informed him of the terms and effect of the premarital agreement and the rights and obligations he would be giving up by signing it. Chris says he is fully aware of what he is relinquishing by singing the agreement and accordingly executes the agreement on January 1, 2003. They marry that day. Upon divorce, would this be an enforceable premarital agreement?

Back 125

Chris did not execute an express waiver in a separate writing, represented by independent counsel later being advised to seek counsel. So, the premarital agreement is unenforceable.

Front 126

Chapter 2 Example 6: Chris Gets His Own Lawyer
Assume the same facts as Ex 5 except that Chris takes the advice of J's attorney and is represented by his own independent legal counsel. On Dec 6, 2002, they sign the agreement and are married the same day. What result?

Back 126

This agreement would likely be enforceable. The only question that remains is whether the seen day requirement was met. If the seven day requirement applies, it's not enforceable. However, under Marriage of Cadwell-Faso an Fase, seven day only applies to rep'd parties.

Front 127

Ch 2 Example 7--What about Spousal Support?
Assume the same facts as Ex 5, except that there is an additional provision in the premarital agreement that spousal support will be limited to $50/mo. Will this provision be enforceable? What if Chris had been represented by independent legal counsel?

Back 127

Chris is unrepresented, thus the agreement is unenforceable. Even if Chris was represted by independent counsel, this spousal support proviosn is likely to be held unenforceable. A limit of $50 of spousal support a month is likley to be considered unconscionable, esp in light of J's wealth and earning capacities.

Front 128

Chapter 11 Example 1--Henri Meets Jeanne
Henri and Jeanne met while Henri was on a business trip to LA. They soon began a sexual relationship, and H rented an apartment for J. Whenever H cam to LA he stayed in the apartment with J. She often accompanied him on business trips and to many social events. While hew as away, she took care of the apartment and when he visited she cooked. After their relationship terminated, J wishes to sue H, claiming that he promised to support her as long as she was in need.

Back 128

Unlikely that she will be able to recover. Court may hold that the were not even cohabitants. Court may view this as meretricious (only for sex). Domestic tasks could be be part of relationship but not adequate consideration. Could not recover quantum meruit because court would consider living situation as compensation.

Front 129

Chapter 11 Example 2--Almost like H and W
Steve and Joan lived together for 12 years. They had three hcldren during their relationship. THey held hemselves out as H and W, and J took S's last name. Steve worked outside the home and put earnigns in a joint bank account Joan managed the properties by collecting rents, paying bills, and arranging repairs. When their relationship terminated, Steve claimed that all the property was purchased with his earnings and therefore belonged to him. Joan claimed that they had an implied in fact agreement ot share the property accumulated during their relationship.

Back 129

Explanation 2--Almost Like H and W
Most favorable facts for an implied in fact agreement. Even if Steve denies they ever had an oral agreement, their conduct shows an agreement. Because the courts since Marvin seemed to require additional conduct to show an implied in fact agreement, Joan would be able to meet that requirement by showing business as well as domestic services.

Front 130

Example 3-Teri Needs Back Support
T and E lived together for more than 15 yeas. They had two children during their relationship. Terri worked at the beginning of their relationship but stayed at home after they had the children. E practiced law and T cared for their home, took care of children, and planned social events. They also took title to their home jointly. At end of relationship, T asks for support b/c of back injury. Will she be successful?

Back 130

T will not succeed. There are no rights to support after cohabitation. And, doubtful she could prove an oral agreement. Hard to find implied in fact agreement for SUPPORT.

Front 131

Chapter 11 Example 4: Jan and Leslie live together.
J and L were same sex lovers. They believed that their relationship was a committed one and has a "marriage" ceremony before friends. They knew that they could not be legally married n CA, but they used the occasion to proclaim their love. They also shared vows.
During relationship, J opened a medical practice. Had joint checking account. They bought a condo using funds from that account, but the title was taken in J's name b/c he had a better credit rating. Lived in condo for ten ears. J is seeking a share of the condo as well as support from J. Would he be sucessful?

Back 131

J and L must rely on Marvin principles to assert rights. Oral agreement said in front of friend-->difficult to deny Jan promised to share property.
BUT, L would have difficulty providing an agreement for support after the relationship ended. "Lives"-->Needs to be more specific.

Front 132

Example 5-Mark Was never Divorced from Laura
M and P met in 1990. At that time, M told P that he wasseparated from his wife Lura They began living together adn in 1991 Mark told P that his diovrce from Laura was final. Soon afer, they decided to marry. After obtaining the marraige license, they had a small ceremony at the courthouse. Marriage was recorded. They acted as if they were married.
P changed her name, jt tax returns. P found out M was with Laura. When P confronted M, M admitted that when they married his divorce from L was nto final. P demanded a divorce. What rights does P have to property accumulated during "marriage"

Back 132

P will not obtain a divorce b/c their marriage is void.
Issue: did P act in good faith?
Attempted compliance-->Yes, marriage license.
M would claim his earnings and property in his name belong to him. However, P was the better argument that property acquired during marriage is quasi-marital.

Front 133

Ch 11 Example 6-Pauline Bought parcels of Property
Assume same facts as 5, except M's earnings were spent on household expenses. P's earnings were used to buy several parcels of property and they were all put in P's name. After M and P separate, M comes to you for advice. What are M's rights to property accumulated during their marriage?

Back 133

Under Marriage of Tejeda, M could be entitled to P's property. Under Guo, NO.

Front 134

Ch 11 Example 7--Roger and Sarah Live in Fantasyland
R and S both work behind the scenes at Disneyland. Start living together in 2000. The following year, they decide to have a costume party where eveyrone comes dressed as their favorate person at a wedding. One of Roger's frinedsdresses as a justice of the peace. Roger's rineds perform a ceremony for all of the "brides" and "grooms." R and S even wrote out vows. R and S went on a honeymoon. R died in an accident. Death benefits are payable to surviving or putative souse. Putative sp is defined as Sp of a void or voidable marriage who is found by court ot have believed in good faith that the marriage to the decedent was valid.

Back 134

Sarah cannot be considered R's surviving Sp. They did not marry according to req's of CA law. Similar to Wagner case.
W may be able to testify that she though they were married because they had a ceremony and lved together after their honeymoon. Most courts would doubt S had a good faith bleif she was married in a constume party.

Front 135

Ch 11 Example 8
S and B met a Fourth of July celebratonin 2000. S told B that he was celebraitng his indpendnce form his ex wife. B. They foudn tha they shared an interest in collecting hostircal artifacts. B was impressed with collection of antinque flags. They married acc to CA procedures, but S did not tell B that this divorce from B was not ey final at the time S and B "married." Sam recently died w/o a will, and his children from his marriage to B ware contesting B's rights to S's collection of antique flags. B was conceded that she has no rights to S's estate. What rights does B have to flag collection?

Back 135

X

Front 136

Ch 11 Example 9 Who Collects the Art?
Michael was an art history teacher in San Francisco when he married Angela in 1990. In 1995, he began giving lectures twice a month in LA. There he met Pam and also "married" her. He told Pam that he was divorced from Angela, but he still saw her often, b/c they had jt custoy of their two chldren. In 2000, Michael acquired an art collection using a savings account containing funds that were earned form hs lectures in LA. Michael recently died w/o a will, and Pam then discovered that Michael was never divorced from Angela. Ina probate proceeding, both A and P are claiming the art collection. What theories support A's claim to the art collection? Pam's?

Back 136

X

Front 137

Ch 11 Example 10--Pam Discovers the Truth
Assume the same facts as Ex 9, except that Pam is 2001 discovered that M is still married to Angela. Does Pam ave any rights to the art collection acquired in 2000?

Back 137

X

Front 138

After H and W married, W decided to go to law school. Unfortunately, law school took its toll on their marriage and they divorced. W took a student loan for $60K to finance education. To whom will the loan be assigned?

Back 138

To W under 2641(b)

Front 139

Before A and B married, B ran up a credit card debt of $20K. When A and B divorced, $15K of that debt remained unpaid. To whom will that debt be assigned?

Back 139

Debt was incurred before marriage, so loan is assigned to B.

Front 140

During A and B's marriage, A both every new digital invention that was available. The total debt was $6K. At the time of their divorce, $5K of the debt remains unpaid. To whom will the debt be assigned.

Back 140

Debt will be assigned to community (divided equally).

Front 141

During X and Y's marriage, X incurred a debt of $10K in attorney's fees when X defneded against criminal charges of embezzlement. X was convicted of embezzling from her employer. The debt is unpaid. To hwom will that debt be assigned?

Back 141

To X.

Front 142

During S and T's marriage, S incurred a debt of $10K in attorney's fees when S defended a lawsuit based on negligence. S was found liable for failure to follow generally accepted accounting principles in his audit of his employer's books. The debt is unpaid. To whom will that debt be assigned?

Back 142

Community property
Difference b/w negligence & embezzlement: intention vs. non intentional.

Front 143

After C and D separated but before their marriage was dissolved, C ran up a credit card debt of $5K at the supermarket. All items were for food and other household supplies. C is unemployed, but D is a professional who earns $100,000 a year. To whom will that debt be assigned?

Back 143

D-->$5K b/c common necessity.

Front 144

After C and D separate but before their marriage as dissolved, C ran up a credit card debt of $5K to Las Vegas. To whom will that debt be assigned?

Back 144

C

Front 145

C and D's attorney have determined that their community debts exceed their community assets. How will a court assigning those debts?

Back 145

Just + Equtiable 2622

Front 146

Herb and Wanda were married in 1983. In 1985, they bought a painting for $20,000. They used $10,000 that Herb had inherited in 1984 and $10,000 that Wanda had received as a bonus from her employer in 1984. In a dissolution action, a California court would characterize the painting as

A. One half Herb's separate property and one half community property if Herb can prove that $10,000 used to buy the painting came from his inheritance

B. One half Herb's separate property and one half community property only if Herb can show an express declaration in writing

C. Community property unless Herb can prove an agreement in writing that he was to retain a separate property interest

D. Community property with a right to reimbursement if Herb can prove that $10,000 used to buy the painting came from his inheritance.

E. C and D

Back 146

Answer: A
Herb’s inheritance is his SP, Wanda’s bonus is CP. The general community presumption is that property acquired during marriage is CP. That presumption can be rebutted by tracing to SP. The SP proponent has the burden of rebutting the presumption. If rebutted, the property is either all SP or apportioned—part SP, part CP. A applies the presumption and rebuttal correctly.

B is incorrect because an express declaration in writing is NOT required to rebut the general community property presumption. The transmutation statute applies to transmutations as of Jan. 1, 1985 but it does not apply here. Tracing is sufficient to rebut the general CP presumption.

C and D are incorrect because they apply when the TITLE is in joint tenancy not when the property is untitled. Tracing is sufficient to rebut the general CP presumption.

C and D are incorrect because they apply when the TITLE is in joint tenancy not when the property is untitled.

Front 147

Tom and Roseanne married in 2005. In 2004, while driving to work, Roseanne was in an automobile accident. She was found negligent and the court has entered a judgment against her for $50,000. This amount is not covered by insurance. Tom is considering a divorce. He asks you if he will be responsible for Roseanne’s $50,000 debt. Which of the following is true?

A. Roseanne’s debt will be assigned to both spouses if just and equitable depending on the parties’ relative ability to pay

B. Roseanne’s debt will be assigned to both according to their respective needs and ability to pay at the time the debt was incurred

C. Roseanne’s debt will be considered her separate debt because Roseanne’s negligence is not for the benefit of the community

D. Roseanne’s debt will be assigned to her because it was incurred before marriage

Back 147

Answer: D
Tort liability is an exception to equal division of debts. FC §2627. Alternatively, D would be correct if you assumed that the debt was incurred before marriage when she was negligent. FC §2621. Debts incurred before marriage are confirmed to the spouse who incurred the debt. There is some question about whether the debt was incurred when she had the accident or when judgment was entered (facts are not clear on this point.) In any case D is the best answer.

A is incorrect because the “just and equitable” division of debts applies only when community debts exceed total community assets. FC §2622(b).

B is incorrect because “respective needs and ability to pay” applies only to debts incurred after separation but before judgment for “common necessaries of life of a spouse” or “necessaries of life of the children of the marriage.” FC §2623 (a).

C is a possible answer but not the best answer. According to FC §2625, debts incurred by a spouse during marriage and before

Front 148

Hector and Wilma were married in 1980 in California. In 1985, Hector purchased an antique car for $10,000 using funds that he had had received from an inheritance from his grandmother. The title stated that the car belongs to “Hector and Wilma, as joint tenants.” At the time Hector purchased the car, they orally agreed that the car was Hector’s separate property. Hector recently died. His will stated that “I leave my car to my sister Inez.” Wilma comes to you for advice regarding the car. In a dispute over the car, you determine that a court will

A. Determine that the car is Wilma’s property because Hector’s will is not admissible evidence of a transmutation

B. Determine that the car is Wilma’s property because oral agreements cannot rebut the joint tenancy presumption

C Determine that the car is sister Inez’s property because Hector’s will is an express declaration in writing that the car was transmuted into Hector’s separate property
D. Determine that the car is sister In

Back 148

Answer: B
The most important facts are that the purchase and agreement occurred in 1985
and that the title was in joint tenancy and that this is a death case. The presumption for JT at death is that the car is JT. As of Jan. 1, 1985, according to the transmutation statute and the Blair case, the presumption must be rebutted by an express declaration in writing by the spouse whose interest is adversely affected—that is Wilma. Therefore, the oral agreement is insufficient to transmute the car to Hector’s SP. Thus the survivorship feature of JT makes the car Wilma’s property.

A is incorrect. Even though a will is admissible in a death proceeding to prove a transmutation, it must be an express declaration in writing by the spouse whose rights are adversely affected. The will is Hector’s not Wilma’s.

C is incorrect for the same reason as A.

D is incorrect because that applies at dirvorce to property titled as CP

Front 149

Ron and Nancy were married in 1994. Both were working at the time. By 1999, they had saved a total of $10,000: $7,000 from Nancy's salary and $3,000 from Ron's. Ron then stopped working and began to attend acting school. They spent their entire savings on Ron's tuition. At the end of 2003, after Ron's graduation, he began working in a cowboy movie. It became a success and Ron was soon a star much in demand. In 2006, Ron and Nancy separated. At the dissolution trial, a California court is most likely to accept the following argument on Nancy's behalf:

A. Ron's acting degree is community property under California law

B. Ron cannot rebut the presumption that he has substantially benefited from the education

C. Nancy is entitled to reimbursement of the savings she contributed to Ron's education, plus interest

D. Nancy is entitled to reimbursement of one half of Ron's tuition payments, plus interest

Back 149

Answer: D
D is correct because the community is reimbursed for community contributions to education that substantially enhances earning capacity, plus interest. Nancy is entitled to ½ of those contributions. FC §2641(b)(1).

A is incorrect because an educational degree is NOT community property according to California law.

B is incorrect because the presumption that applies is that the community has NOT substantially benefited from the contributions made less than 10 years before the commencement of the proceedings. Here the contributions were made between 1999 and 2003 and the proceedings would be in 2006. The call of the question asks which argument a court is most likely to accept on Nancy’s behalf. Nancy would avoid any argument that would reduce reimbursement.

C is incorrect because the reimbursement is for community contributions NOT a spouse’s contribution.

Front 150

When Jane and John married in 2000, Jane had a bank account in her own name containing $10,000 in stock dividends and $10,000 from her salary. After their marriage, she continued to deposit only her stock dividends in that account. Although they paid some of their expenses from that account, the balance never dipped below $20,000. In 2003, Jane bought an antique vase for $10,000, using funds from her account. Jane recently died. She had no will. Jane's heirs are claiming that vase belongs to them. A California court is most likely to find the vase is:

A. Jane's separate property because there is no evidence of an express declaration in writing by Jane to transmute her separate property funds into community property

B. Jane's separate property because the community property presumption can be rebutted by tracing

C. Community property because the married women's presumption does not apply to acquisitions after 1975
D. Community property because there were always sufficien

Back 150

Answer: B
B is correct because ALL the funds in Jane’s bank account are SP. This looks
like a commingling problem but it is not. Her salary and stock dividends from before marriage are SP and the rents, issues and profits of SP are SP. Because the vase was acquired during marriage, it is presumed to be CP, but Jane’s estate can rebut the general CP presumption by tracing.

A is incorrect because the transmutation statute is not applicable here. There is no change from SP to any other form of property.

C is a correct statement of the law but is an incomplete answer.

D is incorrect because the funds in the account were all SP.

Front 151

6. Cathy and Irving met while Cathy was going to law school in Los Angeles and Irving was a struggling young actor in Hollywood. They started living together in 2004. In a conversation one evening, Cathy, who was taking a Community Property course, told Irving that they should have an agreement as to their property. Irving said, "We have the ideal relationship. We share everything equally, good and bad. Do we need any more of an agreement than that?" Cathy only answered, "I guess not." After law school, Cathy went to work for a small public interest law firm. In 2005, Irving finally got his big break and starred in a blockbuster movie. He bought a yacht, Porsche, and a house in Malibu from his earnings. The titles were all in Irving's name. Cathy became increasingly uncomfortable with Irving's new friends and lifestyle. She moved out of the Malibu house in 2006. Cathy, who was a friend of yours in law school, comes to you for advice. She tells you the above facts and adds

Back 151

Answer: B
B is correct because cohabitants’ agreements can be oral, written or implied. It would be difficult fro Cathy to prove, but it is not impossible.

A is incorrect because CP only applies to married couples

C is a potentially correct answer because title would control if cohabitants are not married and have no agreements. However agreements between cohabitants control whether property is shared or not. Since there is some possibility that the court could find an agreement, B is the better answer.

D is incorrect because cohabitants are not required to have written agreements.

Front 152

Ralph and Alice married in 1983. In 1984, Ralph bought an antique car. He took the title in his name alone. The car cost $10,000. He used $10,000 from his earnings before marriage to buy the car. Ralph and Alice recently separated. The car is in excellent condition because of the time Ralph devoted to maintaining it. Its value is now $25,000. In a dissolution proceeding, a California court is most likely to find the car is

A. Community property because there was no written agreement to rebut the community property presumption

B. Part separate property/part community property because of Ralph’s efforts in maintaining the car

C. Ralph’s separate property because the title is in Ralph’s name

D. Ralph’s separate property because he used separate property funds to buy the car

E. C and D

Back 152

Answer: D
D is the correct answer because the general community property presumption can be rebutted by tracing to SP funds. The general community property presumption applies to property titled in one spouse’s name. Ralph’s earnings before marriage are SP.

A is incorrect because the general community property presumption does not require a written agreement to rebut.

B is incorrect because Pereira/Van Camp apply to separate property businesses and owning an antique car is not a “business.” Also, the car was purchased during marriage and thus is preemptively CP.

C is incorrect because title is NOT determinative when title is in one spouse’s name.

Front 153

. Harry and Wanda were married in 1997. In 2000, they purchased a car, a Porsche that Harry always wanted. The title to the car states that the owners are “Harry and Wanda, husband and wife, as joint tenants.” Harry paid for the car with savings from his salary. He is constantly showing off “his car” to his friends. When Harry and Wanda recently separated, Wanda said it was because of Harry’s obsession with his car. Harry comes to you for advice concerning a divorce from Wanda. He wants to know if the car will be considered his property. You conclude that a California court would characterize the car as

A. Harry’s separate property because Harry and Wanda both referred to the car as “his car”

B. Harry’s separate property if Harry can prove his earnings were from before marriage

C. Community property even though the title says Harry and Wanda are joint tenants

D. Community property if there is nothing in writing that states the car is Harry’s separate property

E. C and

Back 153

Answer: E
E is the correct answer because JT = CP presumption applies at divorce. FC §2581 (1984 4800.1). The presumption can be rebutted by a written agreement or by a statement in the deed or title. Since the car was purchased in1996, 4800.1 controls. The CP presumption cannot be rebutted by an oral or implied agreement.

A is incorrect because they acquired the car after Jan. 1, 1984. Under 4800.1, oral agreements cannot rebut the JT = CP presumption.

B is incorrect because tracing cannot rebut the JT = CP presumption. A joint title represents an agreement to change the character of the property and can only be rebutted by another agreement.

C is only partially correct since it only addresses the presumption, not the rebuttal.

D is only partially correct because it does not address the presumption.

Front 154

Alice and Bob, who have lived in California their whole lives, have been married for many years. Alice earns approximately $100,000 a year and Bob who is a sculptor who has sold only a few of his works for a very minimal amount. Alice has saved $10,000 a year from her salary and put the funds into a savings account in her own name. At a garage sale in 2003, they bought an old rocking chair for $25.00. She told Bob that she wanted that chair for her antique collection. They used funds that Alice had withdrawn from her savings account. Alice and Bob have recently separated. The rocking chair has been appraised at $10,000. In a divorce proceeding, the California court would characterize the rocking chair as

A. Alice’s separate property because Alice can trace to her earnings

B. Alice’s separate property because of her intentions

C. Community property because Bob can trace to community property funds

D. Community property because Alice cannot rebut the community property presu

Back 154

Answer: D
D is correct because Alice would have the burden of proving that funds came from her SP. The general community property presumption applies to untitled property acquired during marriage. All her earnings are CP.

A is incorrect because earnings during marriage are CP.

B is incorrect because intentions of one spouse do not control the characterization of property. The funds control.

C is incorrect because Bob does not have the burden of proving that the funds come from CP.

Front 155

Carol and David married in 1995. In 2000, they bought stock in XYZ corporation. They used funds from Carol’s earnings during marriage to buy the stock. They directed the stockbroker to put the stock in Carol’s name. They also agree orally at that time that the stock is Carol’s separate property. They have recently separated. Carol comes to you for advice. You explain to her that in a divorce proceeding that the stock will be

A. Community property because the oral agreement was not a transmutation

B. Community property if David can trace to community property funds

C. Carol’s separate property because the stock is in Carol’s name

D. Carol’s separate property because David intended the stock to be Carol’s separate property

E. C and D

Back 155

Answer: A
A is correct because as of Jan. 1, 1985, all transmutations had to be by express declaration in writing. Carol and David’s agreement was oral. Even though the stock was in Carol’s name, title in a wife’s name after Jan. 1. 1975 would still raise the general community property presumption. Carol cannot trace to her SP funds because she used her earnings during marriage which are CP to buy the stock.

B is incorrect because the SP proponent has the burden of rebutting the general community property presumption. Carol would be claiming the stock as her SP.

C is incorrect because title in one spouse’s name is not determinative.

D is incorrect because David’s intentions would be relevant only if the stock was acquired prior to 1975 in Carol’s name.

Front 156

Tom and Linda married in 1995. Tom came from a wealthy family and a large chunk for his income came from a trust fund that his parents had set up for him as a child. Tom also earned a huge salary from his job. In 1998, they bought a home in Malibu for $1 million. They put the title in joint tenancy, but they signed an agreement that stated:

Tom’s interest in the Malibu home is in proportion to his separate property contribution of $750,000 to the purchase price of $1 million.

Tom is considering a divorce from Linda and wants to know what rights he has to the Malibu home. You explain to him that the home is
A. Part Tom’s separate property/part community property because their agreement rebuts the community property presumption

B. Part Tom’s separate property/part community property because their agreement is a transmutation of the property from joint tenancy

C. Community property even though the title is in joint tenancy

D. Community property but Tom will be entitled to

Back 156

Answer: A
A is correct because the written agreement rebuts the JT = CP presumption that applies at divorce. FC §2581 (1984 4800.1). The written agreement here establishes a “separate property interest” in proportion to the funds contributed to the purchase price. Therefore, the conclusion is that the home is part Tom’s SP/part CP.

B in incorrect because 4800.1 applies to JT rather than the transmutation statute. Exception is FC 852(d), “separate property and community property. . .combined.”

C is correct in that the JT = CP presumption applies to property acquired after Jan. 1, 1984, but this answer is incomplete because the presumption is rebutted by the written agreement.

D is correct in that Tom is entitled to reimbursement, but because of the written agreement he is also entitled to a proportional interest in the property.

Front 157

Gerald and Betty were married in California in 1970. In 1982, they purchased a home in Orange County for $100,000. They used $30,000 from an inheritance Betty received in 1981 and paid the rest from Gerald’s earnings during marriage. The deed to the house stated that owners are “Gerald and Betty, husband and wife, as joint tenants.” They have no agreements about the home. Their marriage has deteriorated and they are considering a divorce. The house is valued at $1,000,000. In a dissolution proceeding, the court would consider that the home is
A. Joint tenancy that must be divided equally at divorce

B. Part Betty’s separate property/part community property if Betty can trace to her $30,000 inheritance

C. Community property but Betty will be entitled to reimbursement if she can trace to her $30,000 inheritance and the community will split the appreciation

D. Community property even though the title is in joint tenancy and it will be split between Gerald and Betty

E. C and D

Back 157

Answer: D
D is correct. The most important fact is that the home was acquired in 1982. According to Heikes, the JT = CP presumption of 4800.1 applies to ALL JT property, but for acquisitions prior to 1984, the rebuttal can be by an oral, written or applied agreement. Because there are no agreements, the home is characterized as CP. The right to reimbursement of 4800.2 applies to acquisitions on or after Jan. 1, 1984. According to Lucas, the right to reimbursement can only be established by an agreement. Here there are no agreements. Therefore the home is CP and will be split between Gerald and Betty.

A is potentially correct except that the above presumption analysis applies.

B is incorrect because the JT = CP presumption cannot be rebutted by tracing.

C is incorrect because the right to reimbursement applies only to acquisitions on or after Jan. 1, 1984. That answer would be correct if the home had been acquired in 1984 or thereafter.

Front 158

Henry and Wanda married in California in 2000. Wanda, unfortunately, had a habit of shoplifting. In 2005, she was nabbed by a security officer as she was leaving Saks Fifth Avenue in Beverly Hills. Because this was the third time she had been caught shoplifting since 2001, she had to stand trial and was in danger of incurring a substantial fine. She hired an attorney and ran up attorney’s fees totaling $15,000. When Henry and Wanda recently separated, $10,000 in legal fees was still outstanding. Henry comes to you for advice and wants to know if he will have to pay Wanda’s legal fees. You advise him that
A. Because the legal fees were incurred during marriage, they would be considered a community debt and split evenly at dissolution

B. Because the legal fees were incurred so Wanda did not have to pay a substantial fine and were a benefit to the community, the legal fees would be considered a community debt and split evenly at dissolution

C. Because the legal fees were incurred

Back 158

Answer: C
C is correct according to Stitt. Attorney’s fees incurred for defending a criminal charge are not considered for the benefit of the community. Here the shoplifting did not even occur in an activity for the benefit of the community—employment.

A is incorrect because even debts occurring during marriage and before separation can be considered separate debts if they were “not incurred for the benefit of the community.” FC §2625.

B is potentially correct and has some good reasoning, but there is a case on point that holds to the contrary.

D is incorrect because it does not answer Henry’s question, but it is correct that an action for breach of fiduciary duty can be brought during divorce proceedings.

Front 159

Jon and Edith were married in 2001. In 2002, they purchased their first home in California for $1 million. To purchase the home, they used $500,000 from Edith’s savings from before marriage and $500,000 from Jon’s savings from before marriage. They had no agreements about the home. After consulting with an attorney, they put the title in community property with right of survivorship. Jon recently died without a will and his children from a former marriage are claiming that they have rights to the home. A court will decide
A. Edith will receive the home as her property because of the right of survivorship

B. The home will be part Edith’s separate property/part Jon’s separate property and the children will be entitled to Jon’s separate property

C. The home will be characterized as community property because they had no written agreements about the home

D. The home will be presumed to be community property and Edith will have a right to reimbursement of her $500,000 contributio

Back 159

Answer: A
A is correct because under Civil Code §682.1, spouses can hold property as CP with right of survivorship and it will be treated like JT at death.

B is incorrect because CP with survivorship will be treated like JT at death which is presumed to be CP with survivorship and cannot be rebutted by tracing. Rebuttal would have to be by an express declaration in writing. FC §852(a). See Blair.

C is incorrect because that analysis would apply at divorce.

D is incorrect because that analysis would apply at divorce.

Front 160

Frank and Gloria were married in California in 2000. In 2005, Frank inherited a farm near Fresno from his parents that was valued at $1 million. The farm was quite run-down, but it had a vineyard that was potentially very profitable if they installed an irrigation system. Frank and Gloria talked it over and they decided to invest in the irrigation system. They used $300,000 of Gloria’s separate property funds. Recently Frank has been drinking too much wine and Gloria is considering divorce. She comes to you for advice and you explain
A. Gloria’s funds are a gift to the community unless Frank and Gloria have a reimbursement agreement

B. Gloria’s can be reimbursed if she can trace the $300,000 to her separate property

C. Gloria’s funds represent a separate property interest in the farm and the farm will be split proportionally

D. Gloria has a right to a fair return on her investment of $300,000 even though the farm was Frank’s inheritance

E. C and D

Back 160

Answer: B
B is correct because of the amendment to FC §2640. Section (c) provides for a right to reimbursement of SP funds to improvement of the other spouse’s SP. Here Frank’s farm is SP and Gloria contributed her SP funds to the improvement of the farm. The right to reimbursement is based on tracing.

A would be correct if the law prior to 2005 controlled. It is incorrect because all the facts occurred after the effective date of Jan. 1, 2005. Therefore giving Gloria a right to reimbursement would not be a retroactive application of the law and would not violate due process.

C is incorrect because the facts occurred after the effective date of Jan. 1, 2005 and because prior to that date, contributing SP funds would be considered a gift absent a reimbursement agreement.

D is incorrect because it applies Pereira/Van Camp which applies when there is a separate property business and community property efforts. Even if the vineyard was considered a separate property business,

Front 161

In 2001, Harry wrote a will that stated, "All propert that I posses is the CP of my marriage to W." unfortunatley, H petitoinered for divorce. H is claiming that some of the property in his SP and W is arguing that his will trasmuted his SP to CP. The court will decide
A) The will is an express declaration in writing made by H whose interest in his SP was adversely affected
B) The will is an express declaration in writing b/c it is clear that H knew he was changing his SP to CP
C) The will is inadmissible evidence of a transmutation in a divorce
D) The will is not an express declaration in writing b/c the language in the will does not indicate that H was effecting a change in ownership.

Back 161

C) Will is inadmissible evidence of a trasnmutation in a divorce proceeding b/c will only become oeprative @ death.

Front 162

In 2001, H and W signed a Trust Agreement for estate planning purposes that stated "Property transferred to the Trust is either CP of both of them unless it is identified as the SP of either settlor." No property was identified as SP. Unfortunately, H recently petitioned for dissolution of his marriage to W. H is claiming that some of the property is his SP and W is arguing that the Trust Agreement transmuted his SP to CP. The court would decide that
A) The Trust Agmt is an express decl in writing made by H whose interest in his SP was adversely affect
B) Trust Agmt is an express declaration in writing b/c it is clear that H knew he was changing his Sp to CP
c) The Trust Agreement is inadmissible evidence of a transmutation in a divorce proceeding.
d) The Trust agreement is not an express declaration in writing because "transfer" doe snot indicate that Harry was effective a change in ownership

Back 162

D) Transfer does NOT equal transmutation

Front 163

H and W purchae a cottage and use funds from H's inheritance for the down payment and rest of the purchase price from their earnings. They have no agreements about the cottage and it was bought in 1984. The court would decide that
A) the cottage is Cp but Abe will have a right ot reimbursement if he can tace ot his inerhitance
B) The cottage is CP but Abe will reiceve reimbursement only if Abe and Mary have a reimbursement agreement
C) the cottage is party Ab'e Sp and part CP in proportion to the funds used to purchase the cottage
D) The cottage is Cp b/c there are no agreements about the character of the property.

Back 163

A)
Pre 1984 law!

Front 164

EXAMPLE 13-CLASSIFICATION OF TYPES OF PROPERTY
Will Bill Succeed?
B and M met while they were both enrolled in Cal Tech. Graduated in 2007. Most likely to succeed by his class. Parents paid for half of B's tuition and took student loan for remaining half. Marie who weeks after graduated. Used M's salary to pay back part of B's student loan. Balance on loan was $20K.
It is likley that the court will decide:
The court will decide that
A) Bill will be assigned teh loan becuase it was incurred for his education;
B) Bill will be assigned the loan because it was incurred before his marriage;
C) Bill and Melinda will share the responsibility for the loan because Leminda undertook to pay off part of the balance form her salary
D) Bill and Melinda will share the responsibility for the loan because the community has not yet substantially benefit from Bill's education.

Back 164

B)

Front 165

Ch 6 Example 2: A trip to New Zealand?
A) May have a claim for breach of fiducairy duty becuase John spent her one half of the community eranings
B) May have a cliam for breach of fid dty b/c she did not consent to his use of the savings for the trip C) Does not have a claim for breach of fid dty because John has a rt to use community property as if ti were his SP; D) Does not have a claim for fid dty b/c J's use of savings would not be considered grossly neliggent or reckless conduct

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C/D