Community Property Summer 2018

Class #1 Notes

Community property is a way of holding title to property.

a. As a non-lawyer, you can say:
i. Amy holds property.
ii. Amy transfers property.

b. As a lawyer, you should say [but no one does]:

i. Amy holds title to property.
ii. Amy transfers title to property.

Basic definition of community property (more complexity added later):

Under FC ' 760, community property is: All property, real or personal, wherever
situated, acquired by a married person during the marriage while domiciled in
California (with certain exceptions)

This class is a writing class in addition to being a Community Property class. What does
"writing class" mean?

a. It means that, most of the time, we'll take a statute like section 760 above and
break it down to elements.

b. Then we'll read a fact pattern.

c. Then we'll apply the law to the facts. What does "apply the law to the facts" mean?
It means that we'll answer whether each and every element of the law is met.

Under FC ' 760, community property is: All property, real or personal, wherever
situated, acquired by a married person during the marriage while domiciled in
California (with certain exceptions not relevant here)

So, what are the elements to this law?

(1) With certain exceptions not relevant here, all property, real or personal,
wherever situated, [what kind of property?—all; located where?—anywhere]

(2) acquired [by gift?—no; by purchase—yes; from working?—yes]

(3) by a married person during the marriage [before or after marriage ends?—no]

(4) while domiciled in California [domiciled in CA but vacationing in NY?—yes]

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5. General rule: Upon divorce, community property is equally divided between
the husband and the wife.

a. What is this class REALLY about? characterizing property as

community property or not

b. Once property is characterized, what happens upon divorce?

i. If the property is community property, upon divorce, ½ of the property

goes to the Husband, and ½ of the property goes to the Wife.

ii.. If the property is one spouse's separate property, the entire separate
property remains with the separate property earner.

6. Fact pattern: In 2009, H and W marry; in 2015, H and W divorce. In 2011, while living
in San Diego, California, H and W each works and receives a $80K salary. Upon
divorce in 2015, H and W have a checking account at the San Diego branch of Bank of
America holding $20K, which comes from two sources:

(1) $10K is attributable to H's $80K salary earned in 2011, and

(2) $10K is attributable to W's $80K salary earned in 2011.

What is the character of the $20K in the checking account?

The issue is what is the character of the $20K in the checking account.

The rule is that community property is all property, real or personal, wherever
situated, acquired by a married person during the marriage while domiciled in
California (with certain exceptions not relevant here).

[Note: even though your rule statement is in the form of a sentence, your IRAC’s
Analysis section must address the following four elements:

The rule is that community property is:

(1) With certain exceptions not relevant here, all property, real or personal,
wherever situated,
(2) acquired
(3) by a married person during the marriage
(4) while domiciled in California]

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 Here, (1) The property is $20K in H and W's checking account situated in the
San Diego branch of Bank of America.

(2) The property was acquired because the H and W received the property as
their salaries.

(3) The property was acquired by a married person during the marriage because H
and W were married in 2009 and divorce in 2015; the $20K property is from H’s
and W’s salaries earned in 2011, and 2011 is after 2009 (when they married) and
before 2015 (when they divorce).

(4) The property was acquired while H and W were domiciled in California
because they received their salaries in 2011 while they were living in San Diego,
California.

The conclusion is that the $20K in the checking account is CP.

7. If property is community property, what are the rights of Husband and Wife as to the
community property? The rule is that, as to community property, each spouse has a 1/2
present, existing interest in the community property.

a. Remember the $20K from the checking account in the previous hypo? $10K was
from H’s $80K salary, and $10K was from W’s $80K salary.

i. What are H’s rights as to the $10K from H’s $80K salary? ½ interst in
$20K CP valued at $10K.

ii. What are W’s rights as to the $10K from H’s $80K salary? Same as H’s.

iii. What are H’s rights as to the $10K from W’s $80K salary?

iv. What are W’s rights as to the $10K from W’s $80K salary?

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8. Compare with non-CP system. Assume, in a pre-1950s, stereotypically “traditional”
family, only H works, earning a $80K salary, and W takes care of the home, earning no
salary at all.

In a non-CP system (aka SP, CL, or title system), who owns $80K salary?
Husband.

In a non-CP system, if H’s salary is placed in a bank account under H’s name,
who owns the bank account? Husband.

[ In a non-CP system, if H divorces W, does W have any property interest in the

bank account in H’s name? No.

i. Is W happy or sad? Sad.

ii. Is H happy or sad? Happy.

iii. Did H contribute to H earning his $80K salary? Yes.

iv. Did W contribute to H earning his $80K salary? Yes.

A. If W contributed to H earning his $80K salary, should she receive

some of that upon divorce? Yes.

B. How much of H’s $80K salary should W receive upon divorce? It

depends.

[d. In a non-CP system, W doesn’t have a property interest in the bank account in
H’s name, but, under the doctrine of “equitable division,” a court usually awards
W a ½ interest in the bank account in H’s name to her upon divorce of H and W.

i. If you are in W’s position, would you rather own a current, present
½ interest in community property, or would you rather wait for the court,
using the doctrine of “equitable division” [or similar doctrines] to award
you a ½ interest? Current present interest

ii. Which system protects someone in W’s position by giving

her property rights now? Community Property

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9. Generally, community property helps to protect the non-wage earning spouse.
How?--by giving the non-wage earning spouse a current, existing property interest in
the community property.

10. Why should the non-wage earning spouse be protected? The non-wage earning spouse
may have made life choices for the marital community:

gave up promising career

gave up possible career advancement had the career been pursued

upon divorce, where is the non-wage earning spouse and his/her career?

can the non-wage earning spouse return to the workforce?

if so, at what level?

can the non-wage earning spouse return to the dating pool?

if so, at what level?

are men and women treated differently because of sex, that is, what about a
45-year old man vs. a 45-year old woman (especially if the woman has custody of
children)? Yes

are men and women treated differently because of earning potential, that is,
what if the man was the wage earning spouse, and what if the woman was the
non-wage earning spouse? Yes men are treated favorably.

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11. The theory underlying community property law is that both spouses contributed
to the production of labor, so:

all property produced by the labor of either spouse during marriage is community
property because both contributed to the acquisition of such property.

12. Think of the salary (property) acquired by one spouse, Husband.

Did Husband only contribute to acquiring that salary? No

What did Wife provide?

Practical support?
clean house
cook dinner
do laundry

Emotional support?
yes, dear, your boss is a jerk
whatever you say, dear

c. Are Husband and Wife going through life alone/separated?

i. Are they married? Yes.

ii. Are they treated as one unit? Yes.

A. What’s mine is yours.

B. What’s yours is mine.

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13. To repeat and to review, compare salary in CP vs. non-CP regimes

Assume W works and H is a stay-at-home dad. W’s marital earnings are

collected in a bank account, which, after years of savings, totals $200K.

Upon divorce, what happens?

In a CP state, the $200K is CP, so upon divorce:

H gets what? ½ CP interest in $200K CP, valued at $100K

W gets what? Same thing as husband.

(3) Is H happy or sad? Happy.

(4) Is W happy or sad? Sad.

In a non-CP state, the $200K from W’s salary is the property of Wife so
that, upon divorce:

H gets what? Nothing – possibly equitable division dependent on

the court.
W gets what? Probably all of the money

(3) Is W happy or sad? Happy

(4) Is H happy or sad? Sad.

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 Five Methods of Holding Property during Marriage (FC '' 750 and 770)

1. Community property

FC ' 760: All property, real or personal, wherever situated, acquired by a married
person during the marriage while domiciled in California (with certain exceptions)

CP held only by a Husband and Wife

no Husband, Wife, and Daughter

no Husband and Daughter
no Wife alone (that=s separate property)

CP is generally not divisible until divorce or death

divorce: Husband and Wife each gets one-half of total CP

death: Trusts and Estates class covers this:

at death of first spouse to die (the decedent), the decedent can

transfer the decedent=s own one-half interest in the total CP to
anybody the decedent wants

CP can be transferrable during life under limited circumstances

H or W can give up the rights to his/her CP interest in the CP to his/her

spouse

later, we'll study rules governing giving up CP rights

2. Community property with right of survivorship

CC ' 682.1: for property the title of which is accepted as Husband and Wife, as
community property with right of survivorship

form of ownership that has a survivorship element (when one spouse dies,
the surviving spouse takes ownership of the entire property)

for today, know that it is a different, distinct way of holding title to property

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3. Separate property (FC '770), which can be held individually by each spouse, including:

a. all property owned by the person before marriage

b. all property acquired by the person after marriage by:

1. gift
2. bequest (personal property given under a will)
3. devise (real property given under a will)
4. descent (any property received in an intestate distribution)

c. the rents, issues, and profits of the property described in this section (FC '770)

SP is owned entirely by the spouse holding title--the other spouse has no rights to the SP

Example: W has a bank account titled as Wilma Wife, as her separate property. The
bank account has $100.

While spouses are living:

H has no rights to the bank account.

W can spend it as she wishes.

Upon divorce,

W retains all rights to the bank account.

H gets nothing.

Upon W’s death, W can transfer her SP to anyone: to H, to her kids, to Red
Cross, etc.

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4. Joint tenancy (a separate property interest)

an interest in land that cannot be sold or transferred, but which can be severed into a
tenancy in common interest, which can be sold or transferred

a joint tenancy interest vanishes upon the death of the joint tenancy holder, and the
remaining joint tenants hold the property

joint tenancy can be between/among married and non-married people

H 1/2 W 1/2

H 1/3 W 1/3 Daughter 1/3

5. Tenancy in common (a separate property interest)

an interest in land that can be sold or transferred during life or at death

H 1/2 W 1/2

H 1/3 W 1/3 Daughter 1/3

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 Three General Distributions upon Divorce

One ACommunity property@ concept that this class emphasizes

1. Property distribution

property distribution = distribution of assets upon divorce (not child support or spousal
support, defined below)
e.g.: $500,000 to the spouse upon divorce

the right to a property distribution can be addressed in a premarital agreement--

see Family Code section 1612(a)(3) and section 1612(a) generally

Two Afamily law concepts not emphasized in this class

1. Child support

child support = payment for the care and maintenance of any child
e.g., $500 per month for a child

2. Spousal support/maintenance/alimony

spouse support = payment for the care and maintenance of the other spouse (can be
permanent or for a limited time)
e.g.: $2,000 per month for the spouse for the rest of the spouse=s life
$2,000 per month for 10 years

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Simplified hypo:

Assume Husband and Wife divorce. At the time of the divorce:

a. Husband and Wife hold $1M CP cash

b. Husband=s annual salary is $100K
c. Wife=s annual salary is $100K
d. the court awards:
sole custody of Child to Wife
child support of $500 per month (until Child reaches 18) to Wife
spousal support of $2,000 per month for 10 years to Wife
property distribution of equal division of the CP

ACommunity property@ concept that this class emphasizes

1. Property distribution

There was an equal division of the CP cash, which is $1M. Accordingly, Husband
received $500K cash, and Wife received $500K cash.

Each of Husband and Wife can take his or her $500K cash and do any or all of the
following:

buy a new house

buy stocks, bonds, real property, etc., as investments

Two Afamily law@ concepts (only briefly discussed in this class)

1. Child custody and child support

Custody of Child is awarded to Wife. Wife has the legal obligation to care for Child.

There was an award of child support of $500 per month (until Child reaches 18) to Wife.

a. Where does Husband pay child support from?

i. maybe from this annual salary of $100K (which likely goes up annually)

ii. maybe from his investments (see above regarding Property Distribution)

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 b. Does the Wife's receipt of child support affect the Wife's property distribution?
No.

c. Does the Wife's receipt of child support affect the Husband's property
distribution? No.

2. Spousal support/maintenance/alimony

There was an award of alimony of $2,000 per month for 10 years to Wife.

a. Where does Husband pay spousal support from?

i. maybe from this annual salary of $100K (which likely goes up annually)

ii. maybe from his investments (see above regarding Property Distribution)

b. Does the Wife's receipt of spousal support affect the Wife's property distribution?
No.

c. Does the Wife's receipt of spousal support affect the Husband's property
distribution?
No.

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