Term
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Definition
-Property owned by either spouse before marriage
-Acquired during marriage by gift, will or inheritance
-Property acquired during marriage with the expenditure of SP funds
-Rent, issue, and profits derived from SP |
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Term
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Definition
| Property other than separate property, acquired by either spouses during marriage. Most common examples are salary or wages earned by either spouse and the income from community assets. |
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Term
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Definition
| All assets acquired during the marriage are presumptively community propert |
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Term
| When does legal separation occur? |
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Definition
-Permanent physical separation (living apart)
-Intent not to resume marital relations (only need intent by one party) |
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Term
| How will CP be divided at divorce? |
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Definition
Absent a property settlement agreement, all community property must be divided equally.
Each and every community asset (and liability) must be divided 50-50. |
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Term
| Exception for the 50-50 rule |
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Definition
• One spouse misappropriated CP, whether before or during pendency of divorce
• One spouse has incurred educational debts; treated separately as separately incurred debt (take law school loans with you)
• One spouse incurred tort liability not based on activity for benefit of the community
• Personal injury award is CP but on divorce is awarded to injured spouse (unless interests of justice require otherwise)
• Negative community – community liabilities exceed assets; relative ability of spouses to pay debt is considered (concern to protect creditors) |
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Term
| Can a spouse make a gift of CP during marriage? |
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Definition
Neither spouse can make a gift of CP without the other spouse’s written consent.
If one spouse gives a gift without consent, that gift can be set aside in its entirety. If it is after spouse’s death, then spouse can set aside gift as to her half of the CP.
Exception: When US govt savings bonds are involved: federal preemption |
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Term
| Can a spouse will her CP away? |
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Definition
| Yes, but only to her 1/2 but the whole for her SP |
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Term
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Definition
| Widow cannot read will selectively. She had to read ALL of the will. If she elects to take under the will and receive her residuary estate, she is going to get ½ of husband’s CP but she has to allow the rest of the will to operate. Alternatively, she can take against will and claim her ½ of CP but then she has to relinquish all testamentary gifts in her favor. (as if she died before him). |
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Term
| What is considered community credit (debt)? |
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Definition
Funds borrowed during marriage, and goods purchased during marriage are presumptively community credit
Borrowed funds (and credit purchases) are classified according to the primary intent of the lender (where the lender is looking for satisfaction of debt) |
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Term
| What kind of duty do spouses have to one another? |
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Definition
| Spouses are subject to fiduciary duties that arise from their confidential relationship, imposing a duty of highest good faith and fair dealing with each other |
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Term
| What are the requirements in a premarital agreement? |
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Definition
| Must be in writing and signed by both parties. |
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Term
| Are there exceptions to premarital agreements being in writing and signed? |
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Definition
-Where oral agreement is executed (fully performed)
-Estoppel based on detrimental reliance |
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Term
| What can a couple agree to in a premarital agreement? |
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Definition
Just about anything as long as it’s not illegal
Exception: Parties cannot agree to limit either party’s contribution to furnish child support. This is prohibited by statute.
(Cannot promote divorce) |
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Term
| How can a person attack the enforcement of a premarital agreement? |
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Definition
-Not signed voluntarily
-Unconscionability (to be decided by the judge) |
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Term
| How to prove that premarital agreement was signed voluntarily? |
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Definition
The party challenging the agreement was:
1) Represented by independent counsel at the time agreement signed (or waived in separate writing);
(2) Was given at least 7 days to sign; and
(3) If not represented by independent counsel, was fully informed in writing of terms and basic effect of agreement. Party must execute document declaring that they got information and identifying who provided it. |
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Term
| Right to spousal support - can it be waived? When will court find it unconscionable? |
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Definition
Right to spousal support can be waived or modified in a premarital agreement.
A provision in premarital agreement regarding spousal support is unenforceable if the party was not represented by independent legal counsel at the time it was signed OR the provision is unconscionable at time of enforcement. |
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Term
| In a premarital agreement, the court will find unconscionable an agreement for anything else if there was: |
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Definition
-No full and fair disclosure of other party’s property or financial obligations,
-Right to disclosure not waived in writing; and
-Party challenging had no adequate knowledge of other party’s property or financial circumstances. |
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Term
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Definition
Altering character of assets by gift or by agreement
Applies to all transmutations: SP into CP; CP into SP; one spouse’s SP into other spouse’s SP |
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Term
| Requirements for transmutation |
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Definition
Before 1985 – oral transmutations were permitted, whether by express agreement or agreement-in-fact
After 1985 – must be in writing, signed by the spouse whose interest is adversely affected and must explicitly state that a change in ownership in being made. |
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Term
| Prior to 1975, if a married woman acquired property and there's an instrument in writing then: |
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Definition
Presumption is that it's the woman's SP
Rationale: Back in the day, men had sole legal authority to manage or control CP. Thus, if ppty is put in W’s name, then must be an express intent to keep it for her. Assume that H intended a gift.
Rebut presumption: No gift intended AND/ OR H didn’t have control over the transaction |
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Term
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Definition
| Property held in joint tenancy or tenancy in common was CP. Title was held in joint and equal form. Court held that if it was held in joint and equal form, parties must have intended to share. Therefore, any SP contributions were considered gifts, absent any evidence of a mutual understanding or agreement otherwise. |
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Term
| When does marriage of lucas apply? |
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Definition
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Term
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Definition
Property acquired during marriage in joint and equal form is presumed to be CP and is subject to equal division on divorce. CP presumption can be rebutted by:
• Express statement in the deed or other instrument of title that the property is SP; or
• Written agreement by the parties that the property is SP
Reimbursement – spouse who has made contributions of SP to the acquisition or improvement of CP is entitled to reimbursement without interest for contributions to down payment, improvements, or principal payments on mortgage. But NO reimbursement for SP used to pay interest on mortgage, taxes, insurance, or maintenance |
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Term
| If spouse uses CP to improve own SP, is community reimbursed? |
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Definition
| Yes, community has reimbursement claim for the greater of the cost of improvements or the enhanced value |
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Term
| If spouse uses CP to improve the other spouse's SP: |
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Definition
| There is a split of authority on whether there is reimbursement or not |
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Term
| If spouse uses SP to improve CP, then: |
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Definition
| Anti-lucas applies at divorce OR Lucas at death |
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Term
| What if CP is used towards mortgage? |
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Definition
Community estate takes a pro rata portion of the property
a) CP gets dollar for dollar reimbursement of payments of mortgage PLUS
b) CP gets a share of appreciation under pro rata calculation:
CP payments made/Whole mortgage x appreciation = CP share of appreciation
c) Add a + b = total CP share |
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Term
| Whole term life insurance |
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Definition
Proration rules apply
-To the extent that CP funds are put into premiums, the cash surrender value that has accumulated is CP
-Must be apportioned based on who pays premiums |
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Term
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Definition
The last premium determines the character
Term life insurance policy is not a CP property asset after expiration of the term that was acquired with CP funds |
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Term
| If CP funds are used to improve a spouse's SP, what can the community recover? |
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Definition
| Spouse can claim for reimbursement for the community (split jurisdictions). The community gets the greater of the CP expenditure of the increase in value. |
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Term
| If SP funds are commingled with CP funds, what is the character of the asset? |
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Definition
It does not transmute SP into CP. Burden of proof is on spouse to show that each asset was purchased with SP funds.
Presumption is that CP is used before SP in a commingled account |
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Term
| How to show that SP funds were used? |
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Definition
Exhaustion method – exhaustion of CP and thus, purchase was done with SP
Direct tracing (quick in quick out) – requires sufficient separate funds were available and that spouse intended to use SP funds to buy the asset |
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Term
| What is the family expense presumption? |
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Definition
| It is presumed that expenditures for family expenses (food, housing, clothing, recreation, etc) were made with community funds (to the extent they were available) even though separate funds were available. |
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Term
| What if a business owned BEFORE marriage increases in value during the marriage? |
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Definition
Pereira - personal skills and effort are the major factors in growth of business. The SP investment should receive a fair rate of return and the business is deemed CP.
Van Camp - the increase in value is mainly due to the character of the business and outside factors and not on the contribution of the other spouse. The spouse would get the FMV of services. The rest would be SP. |
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Term
| Are employee retirement benefits CP or SP? |
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Definition
Whether or not vested during the time of divorce, they are community property. Use time rule:
Years of service while married/Total years employed to retirement |
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Term
| Disability retirement and workers compensation if treated as wage replacement and thus, are classified according to when received, not when earned, are: |
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Definition
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Term
| Is severance pay CP or SP? |
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Definition
Can argue both ways. Can argue that a spouse’s severance pay is SP because it replaced lost earnings which after a divorce or permanent separation would be that spouse’s SP... or
Can argue that spouse’s severance pay is CP because it arose from a collective bargaining agreement and was thus earned by employment during marriage. |
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Term
| Is stock options CP or SP? |
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Definition
If option is awarded during marriage but doesn’t vest until after separation, proration formula that is used depends on primary intent of the employer in granting the option.
Formula depends on whether to reward for past services or to encourage spouse to remain with the company |
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Term
| If a stock option is to reward for past services, use: |
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Definition
Hug Case
Years from date of employment to date of separation/years from date of employment to date options become exercisable
x the number of shares that can be purchased |
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Term
| If a stock option is to encourage spouse to remain with the company, use: |
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Definition
Nelson
Years from date options are granted to date of separation/Years from date options granted to date options become exercisable
x # of shares that can be purchased |
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Term
| What is goodwill of a professional practice? |
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Definition
Goodwill = those qualities that generate income beyond that derived from the professional’s labor and reasonable return on capital and physical assets
Goodwill of a professional practice to the extent acquired during marriage is CP subject to division at divorce |
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Term
| Is a professional degree CP? Is CP entitled to reimbursement for educational expenses? |
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Definition
| A professional degree is not CP. Community is only entitled to reimbursement for costs of education if the education enhanced his earning capacity (books, tuition, transportation but not living expenses) |
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Term
| Defense to the community receiving reimbursement for educational expenses: |
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Definition
If more than 10 years have elapsed since the degree was awarded, the presumption is that the community has substantially benefitted, meaning that unless presumption is rebutted, no reimbursement.
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If other spouse also received a CP-funded education |
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Term
| If spouse is the tortfeasor of the other spouse, the recovery is: |
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Definition
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Term
| If a 3rd party is a tortfeasor and injures a spouse, the recovery is: |
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Definition
CP. However, on divorce, the award is given entirely to the injured spouse so long as the amount can be traced and was not already spent. This will be the result unless the interests of justice require otherwise.
However, on death, that amount will be CP. |
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Term
| If a spouse commits a tort on a 3rd party, will recovery be taken from CP or SP? |
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Definition
It depends.
-If spouse was performing an act for the benefit of the community (e.g., driving to work or driving kids to school), then liability is first satisfied from CP and then from SP.
-If spouse was not performing an act on behalf of the community, then liability is first satisfied from SP and then from CP.
-Creditor cannot reach the other spouse’s SP |
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Term
| What are the management powers of the spouse? |
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Definition
| Each spouse has equal management and control over all community property, and thus has full power to buy or sell CP and contract debts without the other spouse’s joinder or consent. |
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Term
| Personal belongings exception to the equal management rule: |
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Definition
| One spouse cannot sell or encumber personal property used in family dwelling (furniture, clothing, etc) without written consent of other spouse. Transaction voidable by other spouse at any time. |
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Term
| Business exception to the equal management rule: |
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Definition
| Applies when a spouse operates a business interest that is all or substantially all community personal property and has primary management and control of all the business. While the spouse can act alone in all transactions, if the spouse sells, leases, or otherwise encumbers substantially all of the personal property used in the business, must give written notice to the other spouse. |
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Term
| If a spouse conveys CP real property, what is required? |
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Definition
| Joinder of both spouses is required. There is a SOL of 1 year unless SBP knew that spouse was married. If SBP knew then no SOL applies. The spouse can either claim her half interest in the purchase or void the transfer altogether. |
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Term
| Can a spouse transfer or encumber their 1/2 interest in CP? |
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Definition
No, only the entire interest can be transferred or encumbered.
Exception: a spouse can unilaterally encumber her ½ interest in real CP to pay the family attorney representing her in a divorce action. |
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Term
| For debts incurred before marriage, can creditors reach CP? |
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Definition
| Yes, but the earnings of the nondebtor spouse cannot be reached for premarital debts if held in a separate account in which the other spouse has no right of withdrawal and not commingled with other CP funds. |
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Term
| Can SP of nondebtor spouse be reached by creditor? |
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Definition
| No but SP of nondebtor spouse CAN be reached for debts like medical bills. The Family Code provides that each spouse has the duty to support the other spouse and minor children. This means that each spouse is personally liable for the other spouse’s contracts for necessities. If CP funds are available to pay medical bills, then nondebtor spouse can be reimbursed from the community estate. |
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Term
| If separated but not divorced, can a creditor reach nondebtor spouse's SP in satisfaction of medical bills? |
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Definition
| Yes. Family Code holds as husband and wife until divorce. |
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Term
| Child support obligations from prior relationship are treated as: |
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Definition
Debts incurred before marriage. The debtor's SP are liable for the debt but not the other spouse's SP.
However, the non-debtor spouse is entitled to reimbursement for the child support payments from QMP and CP if at the time, the debtor spouse had SP funds available to pay but did not use it to satisfy the debt. |
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Term
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Definition
| Quasi community property is property acquired by either spouse that would have been community property had the spouse been domiciled in California at the time of acquisition. |
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Term
| Does CA recognize common law marriage? |
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Definition
Where people live together and hold them out as marriage.
Exception: CA will recognize the marriage where common law marriage is validly contracted in another state. |
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Term
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Definition
| A putative spouse is not legally married but believe they are. They must have objectively reasonable and good faith belief that they were lawfully married. |
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Term
| If a putative spouse exists, what are the assets called and how are they divided? |
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Definition
| Assets acquired are called quasi-marital property and upon divorce, assets are split 50-50. |
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Term
| In a putative spouse situation, if there is a bad faith partner, one CA Court of Appeals held that he is: |
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Definition
| Not entitled to 1/2 property earned by woman's labor which would otherwise be CP. |
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