Short Sweet Community Property For California Bar

Front 1

In a nutshell

Back 1

Most property acquired during the marriage is owned jointly by both spouses and is divided upon end of marriage.

Joint ownership is automatically presumed in the absence of specific evidence otherwise.

Generally speaking, the property that each partner brings into the marriage or receives by gift, bequest or devise during marriage is called separate property

In California, community property is required to be divided "equally" while community debt is required to be divided "equitably".

Property that is owned by one spouse before the marriage is the separate property of that spouse, unless "transmuted" into community property.

Front 2

SP by time of acquisition

Back 2

- Before marriage
- During permanent separation
- Afer divorce
- After death of Spouse

Front 3

CP by time of acquisition

Back 3

- During temporary separation
- During marriage

Front 4

SP by source of acquisition

Back 4

- Bequest, gift, etc.
- SP income
- In exchange for SP

Front 5

CP by source of acquisition

Back 5

CP income
Wages, etc

Front 6

Personal injury recovery against 3P torfeasor

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- If COA during marriage, CP
- If COA during separation, SP
- If SP, injure spouse must reimburse the community or other spouse's SP for any expenses paid bc of injury

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Personal injury // spouse

Back 7

SP

Front 8

Time rule

Back 8

Apportion the separate and community interests of a pension earned both during and after marriage

Front 9

Education and training

Back 9

Not property, but Right to reimbursement.
1. Community funds are used to pay for education, training, or loans and
2. education or training substantially enhances earning capacity.

Outstanding loans go to the educated spouse only.

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Equitable defenses to reimbursement for edu

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1. Community has substantially benefitted (> 10 yrs)
2. other spouse got community funded edu, which reduces need for spousal support

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Non-wages that exes are entitled to

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- Life insurance
- Retirement
- Stock options
- Disability

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To overcome presumption of CP

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1. Statutory facts
2. Took in manner showing agreement
3. Actual Agreement
4. Gift from one to other spouse
5. SP purchase funds (only when untitled, or no agreement shown)

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Agreements before marriage

Back 13

SOF applies unless:
1. Executory promise fully executed OR
2. Promisor estopped to assert SOF (detrimental reliance)

Front 14

When premarital agreements are unenforceable

Back 14

Can't promote divorce, can't be unconscionable, and won't work if burdened party didn't know rich one's wealth.

Front 15

Transmutation

Back 15

Agreements to alter the character of property in marriage

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Transmutations pre-1985

Back 16

Liberal interpretation. Recognized oral agreements, donative acts, inference

MUST INVOLVE PROPERTY.

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Transmutations after 1985

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If made after 1/1/85, must be evidenced by express declaration in a writing signed or accepted by the spouse whose interest is adversely affected. Only applies to interspousal transfers

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Are you bound by a will or trust?

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NO. If you're seeking a divorce, you can change it from what it says in your will.

Front 19

Ways married couples can hold property

Back 19

JT
TIC
CP
TBE

Front 20

When spouse takes title in joint and equal form but contributes disproportionately:

Back 20

Presumption of Gift.

Can get reimbursement for the SP contributions, no interest.

Front 21

Tracing

Back 21

Tracing the $$ back to SP. Have to overcome the presumptions that CP pays for things and that anything else is a gift

Front 22

Exhaustion method of tracing

Back 22

At the time asset purchased, community funds dry.

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Direct tracing

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At time asset purchased, SP funds available and proponent intended to use SP for Sp

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Apportionment of Business Profits

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Van Camp: Use if character of business primary cause for growth

Pereira: Use if spouse's mgmt was cause for growth

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Van Camp Accounting

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Value of H services less family expenses paid from business earnings. That amount is the CP. Remainder is SP for H.

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Pereira Accounting

Back 26

Reasonable rate of return (10%) plus original principal equals H's SP. Remaining is CP.

Front 27

Community Payments that Pay off purchase price of SP

Back 27

Apportioned btw CP and SP

Front 28

Spousal Community funds to improve other spouse's SP

Back 28

Gift

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Community funds used to improve OWN SP

Back 29

NO gift. CP entitled to reimbursement of the cost or by the amount of improved value, whichever's greater.

Front 30

Credit Acquisitions

Back 30

1. Purchases made with borrowed funds treated as cash purposes

2. Determining character of credit or purchase money loan is based on inten of the lender.

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Distro of Divorce Court

Back 31

Can divide all CP and on request all jointly held SP 50/50 (in kind division).

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Deviation from in kind rule

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- When it's necessary to effect equal division.

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Deviation from Equal division requirement

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- Deliberate misappropriation
- Where liabilities exceed assets
- where one spouse has incurred a tort liability
- When separate debt has been incurred
- When one spouse receives community estate personal injury damages

Front 34

Time of Valuation

Back 34

As near to time of trial as practicable, except for spouse managed business or prof. practice - then at time of permanent separation

Front 35

Income tax consequences of division

Back 35

- Transfers btw H and W no longer taxable events.

- Tax consequence of sale of CP to 3P is apportioned

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CP not distributed at divorce

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Subject to future litigation. Any agreement otherwise is undecided by court, estoppel may apply.

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Setting aside property settlement or decree

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1. Extrinsic fraud or mistake
2. Breach of Fiduciary duty
3. Violation of UFTA (Uniform Fraudulent Transfer Act) (disadvantages other)

Front 38

Disposition by Testamentary Transfer

Back 38

Each can transfer 1/2 CP and all his SP by will. Surviving spouse owns other 1/2 CP

Front 39

Other transfers that are treated as testamentary transfers

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- Unauthorized inter vivos gifts of CP
- Designation of 3P insurance benny from CP funded life insurance

Front 40

Item theory of death distro

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Surviving spouse entitled to 1/2 of each item of CP, not 1/2 the aggregate

Front 41

Survivor's duty to elect

Back 41

- T may insert clause in will for spouse to ttake terms under will OR CP ownership rights. If no clause, surviving spouse may assert BOTH, so long as it doesn't upset the T plan. Must choose when will T passes 1/2 interest in CP

Front 42

CP and SP Property Passed By Intestacy

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CP and quasi CP passes to surviving spouse

Front 43

What about decedent's SP?

Back 43

Passes in whole or in part to SS according to 3 formulas.

1. all to SS when no other heirs.
2. 1/2 to SS when only 1 child or issue of deceased child or no issue, but a parent or parents, or their issue, or issue of either of them; or

3. 1/3 to the SS when more than one child or 1 living child and issue of one or more deceased children, or issue of 2 or more deceased children

Front 44

Quasi-CP

Back 44

Acquired by either spouse that would have been CP had the spouse been domiciled in CA at the time acquisition.

Retains SP until divorce/death.

Front 45

Quasi-CP at divorce

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Treated as CP, even if 1 spouse not domiciled in CA

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Quasi-CP at Death

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- Survivor has 1/2 interest in decedent's QCP but decedent has no interest in survivor's QCP.

Front 47

What about illusory transfers?

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- If decedent passed, prior to death, to 3P w/o substantial consideration and w/o consent, can get back 1/2 of the property or its value if one of these rights reserved in property : 1) Income, 2) power to revoke, consume, invade, or dispose of principal for D's own benefit, or 3) right of survivorship.

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What about prop acquired when S in another CP jx?

Back 48

Treated as CA CP, not quasi CP

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What about during the marriage?

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Creditor may go after spouse's quasi-CP to satisfy a debt, but it's iffy. Otherwise, treated as SP during marriage.

Front 50

Out of state realty CP and QCP at divorce

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1. Divide CP and QCP in such a way that you don't have to alter the nature of interests; or

2. Either a) require the parties to execute whatever conveyances are necessary to divide the out of state realty, or b) award to the party who whould have benefited from the conveyance of the money value of her interest.

Front 51

Out of state realty CP and QCP at death

Back 51

It's probated in ancillary jx, and spouse's interest is treated as CP, or QCP as case may be.

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CA treatment of realty owned by out-of-state decedents

Back 52

CA applies the law of decedent's domicile to dispostion of his CA realty.

Front 53

Reqs for a lawful marriage

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Legal capacity and performance of formal legal procedures. No common law marriages purportedly contracted w/in CA. Does recognize if contracted in other jxs that continue to recognize them.

Front 54

Putative Spouse

Back 54

Not lawfully married, but good faith belief based on objectively reasonable grounds that she is lawfully married. Once she finds out she's not, she doesn't accrue the putative spouse prop. rights.

Front 55

Unmarried CoHabs

Back 55

General contract principals apply. If no express contract, may prove implied K based on behavior, and employ quantum meruit and apply equitable remedies, like custructive or resulting trust.

Front 56

Management of SP

Back 56

Each spouse has exclusive mgmt and control of her SP. Quasi CP is SP for purposes of mgmt and contrl

Front 57

Management of CP

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- with certain exceptions, each has equal mgmt and control. can act alone, buy, sell, spend, and encumber all CP. BUT, only 1/2 interest in testamentray procedings.

Front 58

Real Property

Back 58

Both spouses have to join in executing any instrument by which community real prop is sold, conveyed, or leased for more than a year. If there's misrepresentation, other can sue w/in a year to void. Good faith transfers presumed valid.

Front 59

Specific exceptions to the general rule that either spouse may act alone

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- Personal belongings
- Business exception - managing spouse has "primary" role in mgmt, can do some things but w/ written notice.
- Bank accounts

Front 60

General Limits on Managerial Power

Back 60

Gifts of CP require written consent.

Spouses have FD.

Front 61

Duty of managing spouse

Back 61

Prior to 2003, had to give full accounting upon request, and to secure consent before conveying or encumbering the family dwelling or furnishings.

Before 2003, deliberate dissipation or destruction actionable, but incompetence not.

In 2003, even grossly negligent or reckless conduct br/FD, and spouse must provide w/o demand any info required for proper exercise of other spouse's rights.

Front 62

Br/duty of managing spouse

Back 62

if results in substantial impairment, may sue. Can also seek order for accounting and reformation of title to reflect his/her interest.

Front 63

Statute of limitations for br/d axns

Back 63

3 years

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Criminal Liability

Back 64

Can be liable for intentionally damaging CP or the SP of other.

Front 65

Creditor's rights follow managment rights.

Back 65

May reach any prop that debtor has legal right of mgmt and control. QCP treated as CP.

Front 66

Property liable for debts

Back 66

All CP and the SP of debtor if debt incurred before or during marriage.

CP earnings of non-debtor not liable for premarital debt IF kept in separate account.

If one spouse incurs for necessaries during marriage, the other is personally liable for the debt. Absent separation agreement, personal liability for necessaries remains after the parties are separated.

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Special Rule for Encumbrances of Community Property

Back 67

When a married person joins in an encumbrance of CP to secure a debt incurred by a spouse, the person also incurred the debt.

Front 68

Tort Liability

Back 68

Not liable for other person's tort unless they would be liable for them if the marriage did not exist.

If the tort occured during action benefiting community, money first comes from CP and then SP .

If not benefiting community, first SP and then CP.

Front 69

Creditors' Rights at Divorce

Back 69

Each spouse personally liable for all debts she incurred whether or not the court assigned the debt to other spouse.

If you didn't incur it and it wasn't assigned, you don't have to pay it

Right of reimbursement

Front 70

Creditors' rights at death of spouse when probated

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First classify everything as CP or SP, allocate debt accordingly.

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Creditors' rights at death unprobated

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SS is liable for everything, through CP, QCP, and SP.

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Reimbursement

Back 72

1. When CP used for child support or spousal support and he had SP

2. When S1's SP used to pay S2's debt and there was S2SP or CP.

3. when the order of satisfaction of torts debts is not followed.

Front 73

Conditions governing debt reimbursement

Back 73

1. Waivers fxn
2. Must claim w/in 3 years OR
3. In death or divorce proceedings

Front 74

Other reimbursement rights

Back 74

1. Debts paid after separation but prior to trial.
2. unauthorized gifts
3. Using CP to improve SP
4. Edu expenses and loans
5. SP improvements to CP
6. SP1 contributes to SP2

Front 75

SP property w/ federal aspects

Back 75

- Armed forces life insurance proceeds
- Disability benefits
- Railroad retirement benefits like social security
- U.S. Savings bonds
- Social security benefits

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CP property w/ federal aspects

(ALL APPORTIONED)

Back 76

- Civil Service Pension
- Foreign services pension
- Railroad retirement benefits that are supplemental