Marital Propertytexas Bar Exam Essay: Marital/community Property

Front 1

1. What types of property are SP (5 types)?

Back 1

Property owned before the marriage; acquired during the marriage by gift, will or inheritance; partitioned CP; property bought w/separate funds; & tort recovery for personal injury (not medical or loss of earning potential)

Front 2

2. What types of property are CP?

Back 2

Salary & wages. All property other than SP acquired during marriage, & income from SP unless the spouses agree in writing that the income will be separate; income from gift property is spouse’s SP if gift is from other spouse. If not interspousal gift, income from gift is CP.

Front 3

3. When is the status of property determined?

Back 3

The character of an asset is determined at the time the asset is acquired. This rule, the inception of title rule, applies to all assets but employee retirement benefits & stock options.

Front 4

What is the community presumption?

Back 4

All assets acquired during marriage are presumed to be CP. All assets acquired on credit during marriage are presumed to be acquired on community credit. All assets on hand when the issue is raised is presumed to be community. The burden on proving property is separate is on the proponent by CCE

Front 5

5. How is property divided at death?

Back 5

50/50 (probate code).

Front 6

6. What happens if community funds are spent on SP or separate funds are spent on CP?

Back 6

A claim for reimbursement arises at divorce. No claim for reimbursement on CP spent on CP- only b/t marital estates. Amt is w/in trial court’s discretion. Can not reimburse for child support, alimony, maintenance, living expenses, nominal property contributions, nominal liability payment, student loans owed by spouse.

Front 7

7. What if property brought from other state?

Back 7

In CL state, spouse’s salary is SP, how title is held determines ownership. Conflict of laws separate property- you don’t lose property when you move. Upon divorce- CP in another state is CP or quasi-CP & gets J&R division. Death= characterized by acquisition.

Front 8

8. What is the status of property that was adversely possessed, begun before marriage & finished during marriage?

Back 8

If the spouse was a naked trespasser, the property is community. If the spouse entered under a rightful claim, the property is separate.

Front 9

9. What is the effect of title being taken only in one spouse’s name?

Back 9

In common law states the person that takes title is the owner. In CP states the title does not determine characterization. Rather, under the inception rule it’s the time & circumstances of the acquisition. One exception is when one spouse, using SP, takes title to an asset in other spouse’s name. The presumption in that situation is that a gift was intended.

Front 10

10. How are insurance policies handled?

Back 10

The 1st premium payment on plan characterizes CP or SP of policy. (Inception of title rule applies).

Front 11

11. How are employee retirement benefit plans handled?

Back 11

The benefits accumulated during marriage are CP. Defined benefit plans are ret. benefit then subtract the value on day of marriage from current value. Ret bene= 2% x yrs of service x avg 3 yrs highest salary. Then: total yrs married & employed/total yrs employed x value of ret bene. A deceased spouse has no interest in retirement benefits (federal preemption- also DO have rts to military ret. benefits under USFSPA, but no rights to military disability benefits)

Front 12

12. How are business interests during marriage handled?

Back 12

For business owned before marriage, TX allows a reimbursement claim for value of time, toil and talent expended (what someone in similar position would have received) (TTT)- value of time reasonably necessary to preserve H’s separate estate- compensation received by H (salary, bonus, fringe benefits).

Front 13

13. How is property divided upon divorce?

Back 13

A court will effect a just & right division of CP (but cannot for SP).
The court may consider the age & physical condition of the parties, ability & earning power, business opportunities, education, children, length of marriage, child care needs, needs for future support, size of CP, size of each party's SP, benefit (innocent) spouse would have received from continuing marriage, & fault. Also taxes and debts. Ct can set aside SP for support of minor child.

Front 14

What if the appellate court disagrees?

Back 14

Wide latitude is given to trial judge. A decision will only be reserved if division is so disproportionate as to be manifestly unjust and an abuse of discretion. *Appellate ct can only reverse and remand- may not make own division.

Front 15

15. How is property discovered after a divorce is settled handled?

Back 15

Later discovered CP is subject to a just & right distribution in a separate action. Statute of limitations is 2 years from the point the other party repudiated the claim of community ownership. (Not 2 yrs from divorce).

Front 16

16. How are commingled bank accounts handled?

Back 16

Apply community out first rule. Community funds are presumed to be withdrawn first.

Front 17

17. When can spousal maintenance be ordered?

Back 17

Spouse seeking maint lacks sufficient property (including SP and any CP awarded on divorce) to provide for her minimum needs AND
(1) Spouse who support requested from = convicted/deferred adj for crim offense or FV within 2 years before filing or while suit is pending. OR
(2) The spouse seeking support must be unable to support herself bc of a disability; OR married to spouse 10 years or longer and lack ability to earn suff income; OR be a custodian of a disabled child of the marriage who req's substantial care that prevents spouse from earning enough to meet min rzbl needs; OR lack employment skills adequate to provide for her minimum reasonable needs.

Front 18

18. How much money can be awarded as spousal maintenance?

Back 18

The lesser of $5000 a month or 20% of spouse's average monthly gross income.

Can be modified downward but not upward

Front 19

Limits on duration of spousal maint:

Back 19

Shortest time rzbl that allows the spouse seeking maint to earn suff income to provide for min rzbl needs

Short marriage or FV = 5 years
10-20 years = 5 years
20-30 years = 7 years
30+ = 10 years
Exception: disabled or caring for disabled child = can be ct ordered to continue until impediment removed.

Can be modified downward but not upward

Front 20

Spousal Maint rebuttable presumption:

Back 20

There is a rebuttable presumption that maint for a 10+ marriage is not warranted UNLESS the spouse seeking maint has exercised diligence in either:
(1) Earning suff income to provide for the spouse's min rzbl needs, OR
(2) Developing skills to provide for the spouse's min rzbl needs during a period of separation and during the time the suit for dissolution is pending

Front 21

19. What are the factors of spousal maintenance?

Back 21

(1) Lack of employment history & employment skills, (2) physical & mental condition, (3) contributions as a homemaker to spouse’s earning ability, (4) spouse’s ability to meet his personal needs and child support obligations. Can be modified downward (not up) and ends by death, remarriage, romantic cohabitation.

Front 22

Termination of spousal Maint?

Back 22

at death of either spouse, when supported spouse remarries or romantic co-hab.

Front 23

20. How is property of a bigamous marriage handled?

Back 23

If spouse is unaware of the bigamous marriage, she is called a putative spouse & she gets share of CP. If spouse is aware of preexisting marriage, the relationship is characterized as a meretricious relationship & the spouse gets nothing. If 1st spouse dies, not bigamous- all CP.

Front 24

Income from Gifts?

Back 24

Interspousal gift: presumptively SP
Gift from someone other than spouse: CP

Front 25

21. What are the requirements for a premarital agreement that would alter the character of community assets?

Back 25

It must be in writing & signed by both parties, no consideration is required (an exchange), parties may:
(1) agree that SP remains SP
(2) govern the disposition of property upon separation, divorce, or death including making of a will or trust and the disposition of LI policies
(3) Waive rights to homestead, spousal maintenance
(4) Make salary and wages SP. Can’t agree that premarital property becomes CP after marriage.

Cannot limit obligation to provide child support.

Front 26

22. How can a premarital agreement be set aside?

Back 26

By proving that it was not signed voluntarily, or unconscionable when made & there was no fair disclosure of spouses property or obligations, right to disclosure was not waived in writing and there was no prior knowledge of spouse’s property or financial obligations.

Front 27

23. How can premarital SP be converted to CP?

Back 27

Spouses can agree in writing to convert SP to CP. (conversion agreement) Spouses can also agree to convert CP to SP & can even partition unequally (including future income, increases, after acquired property).

Front 28

24. Are survivorship agreements valid for disposition of CP?

Back 28

Yes, the agreement must be in writing & signed by both spouses; either spouse can revoke w/written notice to other, & a court order will be necessary to adjudicate the agreement valid (clear title)

Front 29

Gifts by spouse of CP to 3P

Back 29

ONe spouse can make rzbl gifts of the CP to 3P as long as the gift is not so disproportionate as to create fraud on the spouse's CP rights (constructive fraud)

Front 30

25. What power does one spouse have to challenge the CP gift of another spouse?

Back 30

One spouse can make reasonable gifts of CP as long as such gifts are not so disproportionate as to be in fraud of the spouse’s community rights (constructive fraud). Factors to look at: relationship b/t donor & donee, amount of gift in relation to comm. estate, is spouse adequately provided for with remaining estate. (also applies to beneficiaries on life insurance).

Front 31

Fraud on the Community

Back 31

Factors: (1) relationship of the donee to do not spouse (unrelated party is GF = presumptive fraud); (2) amount of gift i relation to the community estate; (3) whether spouse is adequately provided for out of remaining community estate. ALSO APPLIES TO LI POLICIES - SAME TEST!

Remedy: ct shall (1) calculate the value of fraud on the community and amount of the reconstituted estate and (2) divide value of the reconstituted estate bw the spouses in a J&R. Ct may grant legal or equitable relief necessary to accomplish J&R division: (1) wronged spouse = appropriate share; (2) money jdmt; (3) combo of both

Front 32

26. What effect does a divorce have on preexisting creditors?

Back 32

A divorce does not affect the rights of preexisting creditors. If only one party is personally liable b/c the other didn’t sign, a secured creditor can go after CP in an in rem suit seeking to have a constructive trust placed on the property.

Front 33

27. What is the liability for torts committed by one spouse? (I.E. wife commits tort during marriage--what property can be reached?)

Back 33

All CP is subject to judgment for torts committed during marriage. (W’s SP, W’s sole/joint management CP, H’s sole/joint management- NOT H’s SP).
PRE MARRIAGE TORT---Only SP and sole management of tortfeasor & joint management CP is available, not spouse’s SMCP or SP.

Front 34

28. What is the liability of one spouse for contracts entered into by the other?

Back 34

Each spouse has a duty to support the other spouse & his or her minor children. Each spouse is personally liable for the other spouse’s contracts for necessaries. Other contracts where other spouse is not personally liable, creditors can only reach liable spouse’s property subject to his control. Homestead can’t be mortgaged or conveyed without joinder. (But protection for B3PPFV in conveyance issue).

Front 35

29. What are the rights in regards to oil and gas?

Back 35

Delay rentals= CP; bonuses= SP; royalties= SP.

Front 36

When can a spouse claim a reimbursement for the CP estate?

Back 36

(1) When CP is used to pay down secured debt or make capital improvements on one spouse's SP, The Community will have a claim for reimbursement that matures at the termination of the marriage. OR (2) When spouses use separate funds to pay down secured debt or to improve (a) the CP or (b) other spouses's SP. Claim for economic contribution is a community asset. If matures at divorce = CP (J&R DIvision) Upon death of spouse = CP and SS or Deceased Spouses Successors take 1/2

Front 37

Model Answer for Community Funds Expended on Spouse's SP

Back 37

"As community funds were spent to reduce secured debt on __'s SP, the community has a claim for economic contribution measured by the amount by which the principal debt was reduced by the expenditure of community finds. There is no claim for economic contribution for community finds used to pay mortgage interest, property taxes, or insurance premiums." (If capital improvements too add:) "As community finds were spent to make capital improvements on __'s SP,the community has a claim for econ contrib measured by the enhancement in value due to the improvements."

Front 38

What is the community credit presumption?

Back 38

That any credit extended during marriage is CP debt. To overcome presumption: must show creditor agreed to look solely at the separate credit of the borrowing spouse. (non-recourse loan)