Community Property Cal Community Property Bar Study Review All Quiz! Bookmark & ShareSave to my flashcardsExportPrint In what ways can property be held during a marriage (or purported marriage)? (1) SP (separate property) -one spouses (2) CP (community property) -50/50 (3) QCP (quasi-community property) -50/50 acquired out of state (4) QMP (quasi-marital property) -Putative spouse Community Property Defined Property, other than separate property, acquired by either spouse during marriage. -Absent an agreement or title to the contrary, the burden of proof that a particular asset is NOT CP is on the contending party. When does the economic community end? (1) Permanent physical separation AND (2) Intent not to resume the marital relation by either spouse -Exception: Maintaining the facade of marriage How is community property divided at divorce? Equal Pro Rata Division (50/50 per item) UNLESS: Equity Exceptions: "interest of justice" (1) Family residence (2) Shares of closely held corporation (3) Pension Statutory Exceptions (1) Misappropriation of CP by one spouse (2) Educational Debt (3) Tort liability during a non-community activity (4) Personal injury award (5) Community liabilities exceed assets What can spouse 1 do if spouse 2 makes: (1) a lifetime gift of CP? (2) a testamentary gift of CP? (1) a lifetime gift of CP: (a) Set aside the gift in its entirety; or (b) Take equal offsetting CP (2) a testamentary gift of CP (a) Set aside 1/2 of the gift (her CP interest); (b) Take under the will (widow's election will) -Each spouse has the power of testamentary disposition over all of his/her SP but only over 1/2 of the CP How are funds borrowed during marriage classified? (1) Presumed community loan (2) Classified according to the intent of the lender Fiduciary Duties Owed by Spouses (1) Not gain an advantage from transactions -Presumption of undue influence (2) No grossly negligent or reckless investments of CP -Breach of duty Requirements of a Premarital Agreement (1) Writing (2) Signed by both parties Exceptions to the signed writing requirement for premarital agreements? (1) Fully executed (2) Estoppel based on detrimental reliance Defenses to the enforcement of a premarital agreement? (1) Involuntarily signed Presumed involuntarily signed unless (a) Independent legal counsel (b) 7 day allowed before signing (c) If no counsel: -fully informed -in lay language -document declaring what they were told and who told them (2) Unconscionable (a) when made there was, (b) no fair and full disclosure, (c) right to disclosure not waived, and (d) no knowledge of other party's assets What can't a premarital agreement limit? Child support Community Property Approach (1) Source of asset (2) Actions taken to change character of property (3) Presumptions that affect the character of property (4) Disposition Quasi-CP QCP is property acquired by either spouse that would have been CP had the spouses been domiciled in CA at the time of acquisition. At divorce, QCP is treated as though it were CP. Presumption for Property Held in JT Property held by spouses in JT is presumed CO for purposes of distribution at divorce. Action of changing SP to being held as JT (1) Property held as JT by spouses is presumed CP (2) Spouse who originally held property as SP is entitled to reimbursement for FMV of property at time deeded to JT What is not CP Property acquired before marriage or after dissolution or legal separation, or property acquired during marriage by gift, devise, descent, bequest or bequeath. Is a premarital agreement that promotes divorce enforceable? NO However, a premarital agreement that paid W $100k in the event of a divorce did not violate this prohibition. Is the issue of unconscionability an issue of law or fact? LAW The court is to decide this issue. Important Dates 1975: -Married woman's special presumption -Pre-1975 1984: -Anti-lucas statutes -Pre-1984 lucas controls; no reimbursement; assumed gift 1985: -Oral transmutations -Pre-1985 Elements of a valid transmutation? (1) Pre-1985 -Oral or written -Express or Implied-in-fact agreement (1) 1985-present -Written -Signed by adversely affected spouse -Expressly states change in ownership to be made Exceptions to the 1985-present transmutation requirements? (1) Gifts of tangible personal property -Must not be substantial in nature considering couple's finances NOTE: Typical SOF defenses do NOT apply (e.g., estoppel, part performance) May a statement in a will or revocable trust be used to satisfy the post-1985 transmutation requirements? NO, not if the trustor/testator is still living. -A will is revocable and so is a revocable living trust -These instruments are NOT even admissible Married Woman's Special Presumption (1) Pre-1975 (2) CP used to purchase (3) Written title acquired -NOT a receipt -Deed or pink slip needed (4) Title in wife's name -NOT "H and W, husband and wife" -NOT "H and W, as joint tenants" (5) Presumed wife's SP -Rebuttable as between W and H -NOT rebuttable as between H and BFP who purchased from W If the wife's name is on the title of property acquired pre-1975, what are the only two ways that title could be taken to that would not giver rise to the Married Woman's Special Presumption? (1) Hobie Gates and Winkie Gates, husband and wife. OR (2) Hobie Gates and Winkie Gates, as joint tenants. NOTE: -Hobie Gates and Winkie Gates. -50% W's SP -50% CP -Therefore 75% W; 25% H Reimbursement of SP use to purchase CP in joint form and/or used to improve CP. **Pre-1984** (1) Issues arising on Divorce -Lucas Controls -Presumptively CP -No reimbursement (2) Issues arising on Death -Lucas Controls -Presumptively CP -No reimbursement **1984-Present** (1) Issues arising on Divorce -Anti-lucas statutes control -Still presumptively CP -But reimbursement allowed for: DIP -DIP: Down Payment; Improvements; Principal on Mortgage (2) Issues arising on Death -Lucas Still Controls -Presumptively CP -No reimbursement What can be used to rebut the 1984-present (anti-Lucas) presumption that property held in joint form is CP? (1) Express statement in the deed that it is SP OR (2) Written agreement by the parties that it is SP What is the spouse who contributed SP to a CP asset entitled to upon divorce, and how is it calculated? (anti-Lucas statutes (1984-present)) Reimbursement WITHOUT interest for: DIP (1) Down payments (2) Improvements (3) Principal paid on mortgage What triggers an Anti-Lucas analysis? (1) Property acquired in JOINT FORM (1/1/84 - present) -This triggers the presumption that it is CP (2) Some SP was used to acquire or improve the property -If all CP, the asset is CP (3) DIVORCE (4) Reimbursement w/o interest for DIP -Down payments -Improvements -Principal paid on mortgage What triggers a Lucas analysis? (1) past - 12/31/83 (2) Property acquired in JOINT FORM -This triggers the presumption that it is CP (3) Some SP was used to acquire or improve the property -If all CP, the asset is CP (4) DIVORCE or DEATH (5) NO Reimbursement OR (1) 1/1/84 - present (2) Property acquired in JOINT FORM -This triggers the presumption that it is CP (3) Some SP was used to acquire or improve the property -If all CP, the asset is CP (4) DEATH -ONLY (5) NO Reimbursement Situations and relative analysis: (1) H uses CP to improve his OWN SP (2) H uses CP to improve his W's SP (3) SP used to improve CP (1) H uses CP to improve his OWN SP -CP entitled to reimbursement -Greater of cost to improve OR enhanced value (buy-in) (2) H uses CP to improve his W's SP -Split jdx -Jdx 1 Gift no reimbursement -jdx 2 Greater of cost to improve OR enhanced value (buy-in) (3) SP used to improve CP -Lucas or Anti-Lucas -No reimbursement OR -DIP reimbursement W/O interest Life Insurance (1) TERM Funds used to make last premium payment determines character, i.e., if CP used to pay last premium, insurance proceeds are CP (visa versa) (2) WHOLE LIFE Pro Ration Rule Percentage of CP used towards premiums v. Percentage of SP used towards premiums Commingled Accounts Methods of accounting (1) Recapitulation Method (NOT ALLOWED) -Total CP expenses exceed Total CP income -Therefore, remainder in account is SP Recapitulation Method is NOT allowed because the challenging party must establish that EACH ASSET was purchased with SP. (2) Exhaustion Method -CP funds were insufficient to purchase asset at the time it was purchased BUT SP funds were sufficient (3) Direct Tracing -SP available AND H intended to use SP to purchase SP asset Does Lucas or Anti-Lucas apply to bank accounts that are taken in joint form? NO Bank accounts are governed by the probate code and therefore NOT governed by these rules. Pereira v. Van Camp PEREIRA (pro-CP) *used when community labor was primary reason for appreciation in value of the asset (1) Take starting value of the separate property business ($100k) (2) Using 10% as fair rate of return, calculate rate of return over course of marriage. (e.g., 10% per year for 10 years) (3) Add starting value of business + total fair rate of return = SP investment (4) Subtract SP investment from the value of the business NOW to determine CP portion VAN CAMP (pro-SP) *used when the uniqueness of the asset or circumstances surrounding it was reason for the appreciation (1) Calculate a fair salary for spouse's CP labor put in to the Business. (2) Subtract from CP labor CP living expenses to determine CP labor surplus. (3) Multiply CP surplus by the # of years of marriage = total CP surplus (4) Take CURRENT value of Business subtract total CP surplus = SP Interesting thoughts about Van Camp and Pereira If H owned a business prior to marriage worth $100K and at divorce the business was worth $5 million, H is going to argue that the enormous increase in value was NOT attributable to his skill or labor, but rather to luck. If he can establish that the business' value increased because he was just in the right place at the right time, the Van Camp formula will be used, and he will walk away with MUCH more. Are the Van Camp or Pereira formulas used for business acquired after marriage? NO ONLY for business that were the SP of one of the spouses before the marriage. Pension Benefits Pro Ration Rule Pension * (years of services while married / total years of employment to retirement) If H is not yet eligible for retirement, what are W's options as for his pension? (1) Get a "when and if received" decree -H will have to pay when and if received (2) Cash her out with other assets (3) Court can retain jdx and determine later Can H avoid having to pay W her interest in his pension or retirement proceeds by: (1) continuing to work after he is eligible to retire OR (2) electing disability retirement as opposed to regular retirement NO (1) continuing to work does not defeat W's present right to a vested retirement benefit (2) although disability pay is not CP, if it is taken in lieu of retirement it is CP Are disability retirement and workers' compensation benefits classified as CP or SP? It depends. They are classified when they are received. Therefore, if received after separation or divorce they are SP. Severance Pay JDX Split Some courts consider it replaced lost earnings therefore SP Other courts consider it something that accrued during marriage and therefore CP Stock Options Look to the "primary intent of the ER in granting the option" (1) IF given as an award for PAST services (years employed while married) ÷ (years employed until option becomes exercisable) (2) IF given as an incentive to stay with the company in the FUTURE then SP (years from date option is granted to divorce) ÷ (years from date option granted to exercisable) Professional Goodwill GOODWILL is CP GOODWILL FORMULA: Net annual return from business (business profits) LESS Reasonable value of H's services (salary) LESS Reasonable return on business' physical assets (ROI; 10%) EQUALS Excess earnings attributable to goodwill (Capitalism:) Is a partnership agreement that places a "cap" on the amount of goodwill a dissolving partner is entitled to taken into account when determine the value of goodwill the other spouse is entitled to upon divorce? yes, BUT it is ONLY a factor. Is a professional degree "property" subject to division? NO -But CP may be entitled to reimbursement Educational Reimbursement ANY educational expenses that "enhances the earning capacity" of one spouse must be reimbursed. DEFENSES: (1) Community has substantially benefited from the education. -10 year presumption (2) Both spouses received CP-funded education (3) Education reduces need for spousal support How is Educational DEBT assigned upon divorce? SOLELY to the spouse that incurred the debt. Tort Awards and Settlements (1) H sues W -H's proceeds are his SP (2) H sues 3rd -CP during marriage -CP upon death -SP upon divorce if traceable unless inequitable Tort Liability (1) W injures 3rd while on an errand for the COMMUNITY -Judgement satisfied 1st from CP -2nd from W's SP -NEVER from H's SP (2) W injures 3rd while on a PERSONAL errand -Judgement satisfied 1st from W's CP -2nd from CP -NEVER from H's SP Management and Control Equal management and control over CP May contract debt and encumber w/o consent EXCEPTION (1) Business exception -Family business cannot be sold w/o consent -Remedy against other spouse if CP interest is substantially impaired -NO remedy from 3rd party (2) Real Property -Non-consenting spouse can void sell at w/in 1 YEAR SOL if BFP -Non-consenting spouse can void sell at ANYtime if NOT BFP (3) Personal belongings -Home furnishing cannot be sold w/o consent -Non-consenting spouse can void sell at ANYtime Exception to the general rule that REAL CP cannot be unilaterally encumbered? Family law attorney's real property lien. Can CP be reached to pay medical expenses incurred BEFORE marriage? YES UNLESS CP Earnings of the other spouse are NOT commingled Can SP be reached to pay medical expenses incurred by the OTHER spouse? YES Each spouse is personally liable for ANY debt incurred for NECESSARIES until DIVORCE (past the end of the economic community). -Food -Shelter -Medical Attention HOWEVER If CP funds were available, CP must reimburse SP Quasi-CP at Death The QCP statute does not give the non-acquiring spouse an ownership interest. Therefore, QCP cannot be given by testamentary instrument by the non-acquiring spouse because QCP statutes are ONLY relevant upon divorce. What is a "putative spouse?" An individual who is NOT legally married BUT has an "objectively reasonable and good faith belief" that their was a legal relationship. Putative spouses are entitled to CP law protections. When should Van Camp and Pereira be discussed? ANYtime there is a SP business -Owned prior to marriage -Acquired during marriage w/ SP funds NOTE: Do not discuss if the business was acquired during marriage w/ CP funds What should be discussed anytime time there is a savings bond at issue? Federal preemption. CP laws do NOT apply to savings bonds. Therefore, the name on the bond controls. What property is liable for debt incurred: (1) Before marriage (2) During marriage (3) After marriage (1) Before marriage -CP share of the spouse that incurred the debt -SP of the spouse that incurred the debt (2) During marriage -CP in its entirety -SP of the spouse that incurred the debt (3) After marriage -SP of the spouse that incurred the debt When one partner is a good-faith putative spouse but the other knows of the defect in the attempted marriage, can BOTH claim to be putative spouses? JDX split. Argue both ways Is a judgment to pay child support considered a pre-marriage debt? YES, even if the judgment is entered after marriage. Therefore, the property that is subject to the debt includes: -CP share of the spouse that incurred the debt; AND -SP of the spouse that incurred the debt Are attorney's fees incurred during marriage in defending a paternity suit considered a pre-marriage debt? NO Therefore, the property that is subject to the debt includes: -CP in its entirety; AND -SP of the spouse that incurred the debt Moore If you buy property prior to marriage with a down payment from your own funds, but make payments with community funds during marriage, then your spouse will have community interest in the property. Community funds imply your spouse's money and yours as spent towards loan payment. The community interest is known as Moore Marsden interest, which is calculated using a formula known as Moore Marsden Rule. Does CA recognize CL marriage? NO However, discuss: -Putative spouse -K agreements, so long as not based solely on sex Created: almost 4 years ago by Msacchetto Number of cards: 63 Tags: CAL bar community property Related Card Sets: Cal bar Community Property TX B... Cal Bar Cheat Sheet (Co...

Community Property

Cal Community Property Bar

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In what ways can property be held during a marriage (or purported marriage)?

(1) SP (separate property) -one spouses (2) CP (community property) -50/50 (3) QCP (quasi-community property) -50/50 acquired out of state (4) QMP (quasi-marital property) -Putative spouse

Community Property Defined

Property, other than separate property, acquired by either spouse during marriage. -Absent an agreement or title to the contrary, the burden of proof that a particular asset is NOT CP is on the contending party.

When does the economic community end?

(1) Permanent physical separation AND (2) Intent not to resume the marital relation by either spouse -Exception: Maintaining the facade of marriage

How is community property divided at divorce?

Equal Pro Rata Division (50/50 per item) UNLESS: Equity Exceptions: "interest of justice" (1) Family residence (2) Shares of closely held corporation (3) Pension Statutory Exceptions (1) Misappropriation of CP by one spouse (2) Educational Debt (3) Tort liability during a non-community activity (4) Personal injury award (5) Community liabilities exceed assets

What can spouse 1 do if spouse 2 makes: (1) a lifetime gift of CP? (2) a testamentary gift of CP?

(1) a lifetime gift of CP: (a) Set aside the gift in its entirety; or (b) Take equal offsetting CP (2) a testamentary gift of CP (a) Set aside 1/2 of the gift (her CP interest); (b) Take under the will (widow's election will) -Each spouse has the power of testamentary disposition over all of his/her SP but only over 1/2 of the CP

How are funds borrowed during marriage classified?

(1) Presumed community loan (2) Classified according to the intent of the lender

Fiduciary Duties Owed by Spouses

(1) Not gain an advantage from transactions -Presumption of undue influence (2) No grossly negligent or reckless investments of CP -Breach of duty

Requirements of a Premarital Agreement

(1) Writing (2) Signed by both parties

Exceptions to the signed writing requirement for premarital agreements?

(1) Fully executed (2) Estoppel based on detrimental reliance

Defenses to the enforcement of a premarital agreement?

(1) Involuntarily signed Presumed involuntarily signed unless (a) Independent legal counsel (b) 7 day allowed before signing (c) If no counsel: -fully informed -in lay language -document declaring what they were told and who told them (2) Unconscionable (a) when made there was, (b) no fair and full disclosure, (c) right to disclosure not waived, and (d) no knowledge of other party's assets

What can't a premarital agreement limit?

Child support

Community Property Approach

(1) Source of asset (2) Actions taken to change character of property (3) Presumptions that affect the character of property (4) Disposition

Quasi-CP

QCP is property acquired by either spouse that would have been CP had the spouses been domiciled in CA at the time of acquisition. At divorce, QCP is treated as though it were CP.

Presumption for Property Held in JT

Property held by spouses in JT is presumed CO for purposes of distribution at divorce.

Action of changing SP to being held as JT

(1) Property held as JT by spouses is presumed CP (2) Spouse who originally held property as SP is entitled to reimbursement for FMV of property at time deeded to JT

What is not CP

Property acquired before marriage or after dissolution or legal separation, or property acquired during marriage by gift, devise, descent, bequest or bequeath.

Is a premarital agreement that promotes divorce enforceable?

NO However, a premarital agreement that paid W $100k in the event of a divorce did not violate this prohibition.

Is the issue of unconscionability an issue of law or fact?

LAW The court is to decide this issue.

Important Dates

1975: -Married woman's special presumption -Pre-1975 1984: -Anti-lucas statutes -Pre-1984 lucas controls; no reimbursement; assumed gift 1985: -Oral transmutations -Pre-1985

Elements of a valid transmutation?

(1) Pre-1985 -Oral or written -Express or Implied-in-fact agreement (1) 1985-present -Written -Signed by adversely affected spouse -Expressly states change in ownership to be made

Exceptions to the 1985-present transmutation requirements?

(1) Gifts of tangible personal property -Must not be substantial in nature considering couple's finances NOTE: Typical SOF defenses do NOT apply (e.g., estoppel, part performance)

May a statement in a will or revocable trust be used to satisfy the post-1985 transmutation requirements?

NO, not if the trustor/testator is still living. -A will is revocable and so is a revocable living trust -These instruments are NOT even admissible

Married Woman's Special Presumption

(1) Pre-1975 (2) CP used to purchase (3) Written title acquired -NOT a receipt -Deed or pink slip needed (4) Title in wife's name -NOT "H and W, husband and wife" -NOT "H and W, as joint tenants" (5) Presumed wife's SP -Rebuttable as between W and H -NOT rebuttable as between H and BFP who purchased from W

If the wife's name is on the title of property acquired pre-1975, what are the only two ways that title could be taken to that would not giver rise to the Married Woman's Special Presumption?

(1) Hobie Gates and Winkie Gates, husband and wife. OR (2) Hobie Gates and Winkie Gates, as joint tenants. NOTE: -Hobie Gates and Winkie Gates. -50% W's SP -50% CP -Therefore 75% W; 25% H

Reimbursement of SP use to purchase CP in joint form and/or used to improve CP.

**Pre-1984** (1) Issues arising on Divorce -Lucas Controls -Presumptively CP -No reimbursement (2) Issues arising on Death -Lucas Controls -Presumptively CP -No reimbursement **1984-Present** (1) Issues arising on Divorce -Anti-lucas statutes control -Still presumptively CP -But reimbursement allowed for: DIP -DIP: Down Payment; Improvements; Principal on Mortgage (2) Issues arising on Death -Lucas Still Controls -Presumptively CP -No reimbursement

What can be used to rebut the 1984-present (anti-Lucas) presumption that property held in joint form is CP?

(1) Express statement in the deed that it is SP OR (2) Written agreement by the parties that it is SP

What is the spouse who contributed SP to a CP asset entitled to upon divorce, and how is it calculated? (anti-Lucas statutes (1984-present))

Reimbursement WITHOUT interest for: DIP (1) Down payments (2) Improvements (3) Principal paid on mortgage

What triggers an Anti-Lucas analysis?

(1) Property acquired in JOINT FORM (1/1/84 - present) -This triggers the presumption that it is CP (2) Some SP was used to acquire or improve the property -If all CP, the asset is CP (3) DIVORCE (4) Reimbursement w/o interest for DIP -Down payments -Improvements -Principal paid on mortgage

What triggers a Lucas analysis?

(1) past - 12/31/83 (2) Property acquired in JOINT FORM -This triggers the presumption that it is CP (3) Some SP was used to acquire or improve the property -If all CP, the asset is CP (4) DIVORCE or DEATH (5) NO Reimbursement OR (1) 1/1/84 - present (2) Property acquired in JOINT FORM -This triggers the presumption that it is CP (3) Some SP was used to acquire or improve the property -If all CP, the asset is CP (4) DEATH -ONLY (5) NO Reimbursement

Situations and relative analysis: (1) H uses CP to improve his OWN SP (2) H uses CP to improve his W's SP (3) SP used to improve CP

(1) H uses CP to improve his OWN SP -CP entitled to reimbursement -Greater of cost to improve OR enhanced value (buy-in) (2) H uses CP to improve his W's SP -Split jdx -Jdx 1 Gift no reimbursement -jdx 2 Greater of cost to improve OR enhanced value (buy-in) (3) SP used to improve CP -Lucas or Anti-Lucas -No reimbursement OR -DIP reimbursement W/O interest

Life Insurance

(1) TERM Funds used to make last premium payment determines character, i.e., if CP used to pay last premium, insurance proceeds are CP (visa versa) (2) WHOLE LIFE Pro Ration Rule Percentage of CP used towards premiums v. Percentage of SP used towards premiums

Commingled Accounts Methods of accounting

(1) Recapitulation Method (NOT ALLOWED) -Total CP expenses exceed Total CP income -Therefore, remainder in account is SP Recapitulation Method is NOT allowed because the challenging party must establish that EACH ASSET was purchased with SP. (2) Exhaustion Method -CP funds were insufficient to purchase asset at the time it was purchased BUT SP funds were sufficient (3) Direct Tracing -SP available AND H intended to use SP to purchase SP asset

Does Lucas or Anti-Lucas apply to bank accounts that are taken in joint form?

NO Bank accounts are governed by the probate code and therefore NOT governed by these rules.

Pereira v. Van Camp

PEREIRA (pro-CP) *used when community labor was primary reason for appreciation in value of the asset (1) Take starting value of the separate property business ($100k) (2) Using 10% as fair rate of return, calculate rate of return over course of marriage. (e.g., 10% per year for 10 years) (3) Add starting value of business + total fair rate of return = SP investment (4) Subtract SP investment from the value of the business NOW to determine CP portion VAN CAMP (pro-SP) *used when the uniqueness of the asset or circumstances surrounding it was reason for the appreciation (1) Calculate a fair salary for spouse's CP labor put in to the Business. (2) Subtract from CP labor CP living expenses to determine CP labor surplus. (3) Multiply CP surplus by the # of years of marriage = total CP surplus (4) Take CURRENT value of Business subtract total CP surplus = SP

Interesting thoughts about Van Camp and Pereira

If H owned a business prior to marriage worth $100K and at divorce the business was worth $5 million, H is going to argue that the enormous increase in value was NOT attributable to his skill or labor, but rather to luck. If he can establish that the business' value increased because he was just in the right place at the right time, the Van Camp formula will be used, and he will walk away with MUCH more.

Are the Van Camp or Pereira formulas used for business acquired after marriage?

NO ONLY for business that were the SP of one of the spouses before the marriage.

Pension Benefits

Pro Ration Rule Pension * (years of services while married / total years of employment to retirement)

If H is not yet eligible for retirement, what are W's options as for his pension?

(1) Get a "when and if received" decree -H will have to pay when and if received (2) Cash her out with other assets (3) Court can retain jdx and determine later

Can H avoid having to pay W her interest in his pension or retirement proceeds by: (1) continuing to work after he is eligible to retire OR (2) electing disability retirement as opposed to regular retirement

NO (1) continuing to work does not defeat W's present right to a vested retirement benefit (2) although disability pay is not CP, if it is taken in lieu of retirement it is CP

Are disability retirement and workers' compensation benefits classified as CP or SP?

It depends. They are classified when they are received. Therefore, if received after separation or divorce they are SP.

Severance Pay

JDX Split Some courts consider it replaced lost earnings therefore SP Other courts consider it something that accrued during marriage and therefore CP

Stock Options

Look to the "primary intent of the ER in granting the option" (1) IF given as an award for PAST services (years employed while married) ÷ (years employed until option becomes exercisable) (2) IF given as an incentive to stay with the company in the FUTURE then SP (years from date option is granted to divorce) ÷ (years from date option granted to exercisable)

Professional Goodwill

GOODWILL is CP GOODWILL FORMULA: Net annual return from business (business profits) LESS Reasonable value of H's services (salary) LESS Reasonable return on business' physical assets (ROI; 10%) EQUALS Excess earnings attributable to goodwill (Capitalism:)

Is a partnership agreement that places a "cap" on the amount of goodwill a dissolving partner is entitled to taken into account when determine the value of goodwill the other spouse is entitled to upon divorce?

yes, BUT it is ONLY a factor.

Is a professional degree "property" subject to division?

NO -But CP may be entitled to reimbursement

Educational Reimbursement

ANY educational expenses that "enhances the earning capacity" of one spouse must be reimbursed. DEFENSES: (1) Community has substantially benefited from the education. -10 year presumption (2) Both spouses received CP-funded education (3) Education reduces need for spousal support

How is Educational DEBT assigned upon divorce?

SOLELY to the spouse that incurred the debt.

Tort Awards and Settlements

(1) H sues W -H's proceeds are his SP (2) H sues 3rd -CP during marriage -CP upon death -SP upon divorce if traceable unless inequitable

Tort Liability

(1) W injures 3rd while on an errand for the COMMUNITY -Judgement satisfied 1st from CP -2nd from W's SP -NEVER from H's SP (2) W injures 3rd while on a PERSONAL errand -Judgement satisfied 1st from W's CP -2nd from CP -NEVER from H's SP

Management and Control

Equal management and control over CP May contract debt and encumber w/o consent EXCEPTION (1) Business exception -Family business cannot be sold w/o consent -Remedy against other spouse if CP interest is substantially impaired -NO remedy from 3rd party (2) Real Property -Non-consenting spouse can void sell at w/in 1 YEAR SOL if BFP -Non-consenting spouse can void sell at ANYtime if NOT BFP (3) Personal belongings -Home furnishing cannot be sold w/o consent -Non-consenting spouse can void sell at ANYtime

Exception to the general rule that REAL CP cannot be unilaterally encumbered?

Family law attorney's real property lien.

Can CP be reached to pay medical expenses incurred BEFORE marriage?

YES UNLESS CP Earnings of the other spouse are NOT commingled

Can SP be reached to pay medical expenses incurred by the OTHER spouse?

YES Each spouse is personally liable for ANY debt incurred for NECESSARIES until DIVORCE (past the end of the economic community). -Food -Shelter -Medical Attention HOWEVER If CP funds were available, CP must reimburse SP

Quasi-CP at Death

The QCP statute does not give the non-acquiring spouse an ownership interest. Therefore, QCP cannot be given by testamentary instrument by the non-acquiring spouse because QCP statutes are ONLY relevant upon divorce.

What is a "putative spouse?"

An individual who is NOT legally married BUT has an "objectively reasonable and good faith belief" that their was a legal relationship. Putative spouses are entitled to CP law protections.

When should Van Camp and Pereira be discussed?

ANYtime there is a SP business -Owned prior to marriage -Acquired during marriage w/ SP funds NOTE: Do not discuss if the business was acquired during marriage w/ CP funds

What should be discussed anytime time there is a savings bond at issue?

Federal preemption. CP laws do NOT apply to savings bonds. Therefore, the name on the bond controls.

What property is liable for debt incurred: (1) Before marriage (2) During marriage (3) After marriage

(1) Before marriage -CP share of the spouse that incurred the debt -SP of the spouse that incurred the debt (2) During marriage -CP in its entirety -SP of the spouse that incurred the debt (3) After marriage -SP of the spouse that incurred the debt

When one partner is a good-faith putative spouse but the other knows of the defect in the attempted marriage, can BOTH claim to be putative spouses?

JDX split. Argue both ways

Is a judgment to pay child support considered a pre-marriage debt?

YES, even if the judgment is entered after marriage. Therefore, the property that is subject to the debt includes: -CP share of the spouse that incurred the debt; AND -SP of the spouse that incurred the debt

Are attorney's fees incurred during marriage in defending a paternity suit considered a pre-marriage debt?

NO Therefore, the property that is subject to the debt includes: -CP in its entirety; AND -SP of the spouse that incurred the debt

Moore

If you buy property prior to marriage with a down payment from your own funds, but make payments with community funds during marriage, then your spouse will have community interest in the property. Community funds imply your spouse's money and yours as spent towards loan payment. The community interest is known as Moore Marsden interest, which is calculated using a formula known as Moore Marsden Rule.

Does CA recognize CL marriage?

NO However, discuss: -Putative spouse -K agreements, so long as not based solely on sex

Created:

almost 4 years ago byMsacchetto

Number of cards:

63

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CAL bar community property

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Cards Term Opening paragraphs for a Community Property essay? Definition "California is a community property state. All property acquired during the course of a marriage is presumed to be community property. All property acquired before marriage or after permanent separation is presumed to be separate property. In addition, any property acquired by gift, devise or bequest is presumed to be separate property." [when tracing comes up] "In order to determine the character of any asset, courts will trace back to the source of funds used to acquire the asset. A mere change in form of an asset does not change its characterization. With these basic principles in mind, we can now turn to the specific items of property involved in this instance." Term Summarize presumptions/rules regarding: 1. Personal injury awards 2. Retirement benefits 3. Disability pay and worker's compensation benefits 4. Severance pay 5. Stock options 6. Business and professional goodwill 7. Education and training 8. Child support / spousal support payments Definition 1. Personal injury awards - Presumptively CP. But if divorce then awarded to injured spouse unless justice requires otherwise. (If against other spouse, always SP) 2. Retirement benefits - Presumptively CP if earned during marriage. Use Time Rule. (don't necessarily need to do the math) 3. Disability pay and worker's compensation benefits - depends on wages they're designed to replace. If taken in lieu of retirement benefits, then treated as such. 4. Severance pay - split! SP, b/c replaces future wages, or CP b/c compensation for past wages. 5. Stock options - Use time rule. 6. Business and professional goodwill - Presumptively CP if earned during marriage. [may need to apply Pereira and Van Camp also] 7. Education and training - Not a community asset. But community can get reimbursed if enhanced the earning capacity of the spouse. But community already benefited, if (1) 10 years or more, (2) other spouse has community-funded education, or (3) educated spouse's need for spousal support is reduced b/c of it. 8. If paid with CP, other spouse can get reimbursed to the extent that SP was available to pay for it. Term Rules for following: 1. Both SP and CP funds spent to purchase a property in one spouse's name? 2. CP funds spent to improve one spouse's SP? 3. CP funds spent to purchase jointly titled property? Definition (Moore) 1. We then have pro-rata ownership (tracing). Each gets reimbursed the sum it contributed, PLUS an appropriate proportion of any appreciation. [One typical situation: one spouse acquires property before a marriage, but uses CP funds to help pay off the MORTGAGE.] 2. By contrast, if a spouse uses CP to improve other spouse's SP, we don't have pro-rata ownership - a gift is presumed. If uses CP for OWN SP, presume a gift also - but can get reimbursed for cost of improvement or increase in value, whichever is GREATER. 3. Depends on whether death or divorce: At divorce, anti-Lucas statute after 1987: is community property. However, SP is entitled to reimbursement. At death, Lucas applies: gift is presumed, unless oral/written agreement to the contrary. (character of property!) Term Requirements of a prenuptial agreement? Definition Term Define a transmutation, for community property law. Definition "A transmutation is an agreement between spouses to change the character of an asset (or series of assets). Prior to 1985, it could be oral. After 1985, however, a transmutation must be in writing to be enforceable." Term Community labor is used to enhance the value of a separate property business. How do we split the value of the business? Definition "Here, although H's business is SP the community is entitled to a share of the appreciation of that business b/c H's labor during the course of the marriage was used to increase the value of the business." "Pereira accounting is used when the increase in value is primarily the result of community labor. Using Pereira, you determine the value of the SP at the beginning of the business and give it a fair rate of return over the course of the marriage. Normally this is the legal interest rate (10% simple interest) calculated annually. The SP is given the initial value plus the fair rate of return. The remainder is CP. [apply]" "Van Camp accounting is used when the increase in value of a business is primarily the result of the unique nature of the SP asset. Using Van Camp, you determine what a fair salary would be for the community labor. You multiply that by the years of the marriage. You subtract any salary already received and any amounts paid for community expenses. The result is your CP share. The rest is SP. [apply]" CHOOSE one method as the better one. Term In a marriage, each spouse has the right to manage and dispose of community property. But what are the exceptions? Definition 1. Real property transfers. (right to set aside transaction: if buyer was unaware of marriage, then 1 year statute of limitations, otherwise there's no time bar) 2. Personal belongings (incl. clothing and furniture) 3. A spouse managing a business 4. Bank accounts in the name of one spouse alone. Term Explain how you'd write about a preemption issue in a community property problem. Definition "Under the Supremacy Clause, federal law preempts inconsistent state laws. In some instances, federal law preempts California from applying community property concepts to certain assets." YES preemption: federal homestead claims military life insurance benefits U.S. Savings Bonds Social Security benefits NOT preempted: railroad retirement benefits military retirement benefits copyrights

Cards

Term Opening paragraphs for a Community Property essay?	Definition "California is a community property state. All property acquired during the course of a marriage is presumed to be community property. All property acquired before marriage or after permanent separation is presumed to be separate property. In addition, any property acquired by gift, devise or bequest is presumed to be separate property." [when tracing comes up] "In order to determine the character of any asset, courts will trace back to the source of funds used to acquire the asset. A mere change in form of an asset does not change its characterization. With these basic principles in mind, we can now turn to the specific items of property involved in this instance."
Term Summarize presumptions/rules regarding: 1. Personal injury awards 2. Retirement benefits 3. Disability pay and worker's compensation benefits 4. Severance pay 5. Stock options 6. Business and professional goodwill 7. Education and training 8. Child support / spousal support payments	Definition 1. Personal injury awards - Presumptively CP. But if divorce then awarded to injured spouse unless justice requires otherwise. (If against other spouse, always SP) 2. Retirement benefits - Presumptively CP if earned during marriage. Use Time Rule. (don't necessarily need to do the math) 3. Disability pay and worker's compensation benefits - depends on wages they're designed to replace. If taken in lieu of retirement benefits, then treated as such. 4. Severance pay - split! SP, b/c replaces future wages, or CP b/c compensation for past wages. 5. Stock options - Use time rule. 6. Business and professional goodwill - Presumptively CP if earned during marriage. [may need to apply Pereira and Van Camp also] 7. Education and training - Not a community asset. But community can get reimbursed if enhanced the earning capacity of the spouse. But community already benefited, if (1) 10 years or more, (2) other spouse has community-funded education, or (3) educated spouse's need for spousal support is reduced b/c of it. 8. If paid with CP, other spouse can get reimbursed to the extent that SP was available to pay for it.
Term Rules for following: 1. Both SP and CP funds spent to purchase a property in one spouse's name? 2. CP funds spent to improve one spouse's SP? 3. CP funds spent to purchase jointly titled property?	Definition (Moore) 1. We then have pro-rata ownership (tracing). Each gets reimbursed the sum it contributed, PLUS an appropriate proportion of any appreciation. [One typical situation: one spouse acquires property before a marriage, but uses CP funds to help pay off the MORTGAGE.] 2. By contrast, if a spouse uses CP to improve other spouse's SP, we don't have pro-rata ownership - a gift is presumed. If uses CP for OWN SP, presume a gift also - but can get reimbursed for cost of improvement or increase in value, whichever is GREATER. 3. Depends on whether death or divorce: At divorce, anti-Lucas statute after 1987: is community property. However, SP is entitled to reimbursement. At death, Lucas applies: gift is presumed, unless oral/written agreement to the contrary. (character of property!)
Term Requirements of a prenuptial agreement?	Definition
Term Define a transmutation, for community property law.	Definition "A transmutation is an agreement between spouses to change the character of an asset (or series of assets). Prior to 1985, it could be oral. After 1985, however, a transmutation must be in writing to be enforceable."
Term Community labor is used to enhance the value of a separate property business. How do we split the value of the business?	Definition "Here, although H's business is SP the community is entitled to a share of the appreciation of that business b/c H's labor during the course of the marriage was used to increase the value of the business." "Pereira accounting is used when the increase in value is primarily the result of community labor. Using Pereira, you determine the value of the SP at the beginning of the business and give it a fair rate of return over the course of the marriage. Normally this is the legal interest rate (10% simple interest) calculated annually. The SP is given the initial value plus the fair rate of return. The remainder is CP. [apply]" "Van Camp accounting is used when the increase in value of a business is primarily the result of the unique nature of the SP asset. Using Van Camp, you determine what a fair salary would be for the community labor. You multiply that by the years of the marriage. You subtract any salary already received and any amounts paid for community expenses. The result is your CP share. The rest is SP. [apply]" CHOOSE one method as the better one.
Term In a marriage, each spouse has the right to manage and dispose of community property. But what are the exceptions?	Definition 1. Real property transfers. (right to set aside transaction: if buyer was unaware of marriage, then 1 year statute of limitations, otherwise there's no time bar) 2. Personal belongings (incl. clothing and furniture) 3. A spouse managing a business 4. Bank accounts in the name of one spouse alone.
Term Explain how you'd write about a preemption issue in a community property problem.	Definition "Under the Supremacy Clause, federal law preempts inconsistent state laws. In some instances, federal law preempts California from applying community property concepts to certain assets." YES preemption: federal homestead claims military life insurance benefits U.S. Savings Bonds Social Security benefits NOT preempted: railroad retirement benefits military retirement benefits copyrights