California is a community property state.

Property acquired during marriage is presumably

community property (CP). Property acquired before, post-separation, and dissolution of marriage
is presumed to be separate property (SP). Property acquired during marriage by gift, devise,
inheritance is presumed to be SP. Property is traced back to the original funds to property
characterize it. Quasi Community Property (QCP) is property acquired while domiciled in
another state, and is treated the same as CP.

The economic community ends when there is an intent to separate and conduct that matches that
intent.

Here, married from year __ to __, H/W filed for dissolution, moved out, and communicated the
intent to separate to H/W. Thus the property acquired from year ___ to ___ is presumed to be CP
and the rest is SP.

Earnings during marriage is CP.

Transmutation
A transmutation is the re-characterization of property from SP to CP, CP to SP, etc.
Before 1985, a transmutation could be oral, or through conduct. Post 1985, for a valid
transmutation there needs to be 1) a writing, 2) expressly stating the property to be transmuted,
and 3) signed by the adversely affected party.

Gift
Further, a spouse may give a gift to the other spouse of tangible personal property, and the value
cannot be substantial taking into consideration their economic status.

Business
A business during marriage is presumed to be somewhat community property. Courts use two
formulas to decide what portion is community property and what portion is separate property,
Pereira and Van Camp 
Pereira values the community property because the community labor was the reason the
business’s value increased. In a Pereira formula, the court measures the SP gets the separate
property contribution + the legal interest rate multiplied by the years married (what the business
was valued at the beginning of the marriage plus the legal interest rate which is 10% multiplied
by the years married), and the community gets the value of the business at the time of divorce –
the SP interest.

Van Camp values the separate property interest because the value of the business increased due
to the unique nature of the business. In a Van Camp formula, the court measures the CP as the
FMV salary – salary taken – family expenses x years married, and the SP gets the value at
divorce – the CP interest
Antenuptial agreements
For an AA to be valid, it must be in writing, signed by both parties, cannot promote divorce. A
spouse must know the assets at the time they sign. Further it must be voluntary and not
unconscionable. Cannot limit duty to pay spousal agreements.
- Unconscionable - If involuntary and not with independent counsel.
- Involuntary - If rushed (signed in less than 7 days), with independent counsel, and if no
independent counsel, then signed writing saying waiving independent counsel.
Exceptions
May be oral if one party detrimentally relied on it, or when occurrence of the event already
happened.

Fiduciary Duties
Highest duty of good faith and fair dealing with each other, grossly negligent or reckless
investing is a breach of the duty.

Cannot sell house furnishings or clothing of the other spouse.

Both spouses have management and control of businesses, or community property, however,
cannot lease for more than one year, or sell without the signed consent of the other party.

Effect of taking joint title - Marriage of Lucas

At death
The property is presumed community property, and any separate property contributions are
presumed gifts, unless there is a writing stating they get reimbursement for their SP.

At divorce – Anti-Lucas
The property is presumed community property subject to equal division upon divorce, unless
there is a writing, deed, expressly stating it is separate property.
However, the SP gets reimbursement for Down payments, Improvements, and Principal
payments on the loan.

Property
Property acquired during marriage, or before marriage, but community property used to pay off
some of the property, both SP and CP get their pro rata share of ownership interest, unless
otherwise agreed.
First, separate what is SP and CP, each estate gets its contributions plus a proportional share of
ownership.
If property is acquired with loan, figure out if the loan is SP or CP, the loan is treated as
contribution of the purchase price, and depends on the intent of the lender test.

- Example: Wife bought 100k house, put 20k down, and got a loan for 80k. 10k of the loan
was paid before marriage. Wife and Husband paid 20k towards the loan. Now house
worth 500k.
- CP = 20% and SP = 80% 80% of 500k = 400k and 20% of 500k = 100k
- SP gets 400k + half of CP = 50k, 450k and Husband gets half of CP, 50k
Acquisitions on Credit During Marriage
The intent of the lender test, if the lender relied on CP for the loan, then it is CP, if relied on SP
then it is SP.

Community funds used for separate property

The community will get reimbursement for Down payments, Improvements, and Principal
payments on loans.

Separate property used for separate property

Split
Some courts hold that it’s presumed a gift, unless written agreement states otherwise.
Some courts hold that the SP used gets reimbursement.

Commingled bank accounts

The burden is on the proponent that it is SP, by the exhaustion method that all the CP funds were
exhausted, or the tracing method to trace the SP funds used.

Common necessaries do not get reimbursement, such as hospital bills while married.

There is a presumption that all family expenses are made with CP even if SP was available,
unless you show through exhaustion that all CP was exhausted and only SP was left, or tracing
that there was sufficient SP and person intended to use SP.

Education
CP used to pay for one spouses education is subject to reimbursement if the education
substantially enhanced the earning potential of the educated spouse. However, reimbursement
may be reduced or denied if 1) the community paid for education for the other spouse, 2) the
community has benefitted from the education (presumption of benefit if 10 years since the
education), or 3) if the education took away the need for spousal support of the educated spouse.
Education loans assigned to the educated spouse.

Personal injury award

If the other spouse was the tortfeasor, then the PI award is SP.
If the injury occurred during marriage, then the award is CP, however, at divorce the award is
100% SP, unless justice requires otherwise.