Community Property Outline – Fall 2003 Professor Goodman I.

DEVELOPMENT OF CA COMMUNITY PROPERTY SYSTEM
a. Introduction: i. Community property problems arise in: 1. Dissolution of marriage- divorce 2. Probate 3. Creditor actions ii. Fundamental difference b/t C/L and Community property system is a way of viewing property in the family 1. Common Law: all property is owned individually unless specified otherwise W is seen as being consumed into the H a. No equal ownership and is divided following equity distribution. i. Equitable Distribution: refers to the authority of the courts to award property legally owned by one spouse to the other spouse in the context of divorce or dissolution proceedings. 1. Permits a spouse who has made material contributions toward the acquisition of property to claim an equitable interest in such property even though title is in the name of the other spouse (Court has discretion) 2. Equal division is not the norm 3. legislative statements as to what property should be eligible for apportionment. 2. Community Property: a. Marriage is a partnership Each spouse is a co-owner of property acquired during marriage regardless of value of their contribution b. Property is seen as 

i. Community OR
§760:All property acquired during marriage while domiciled in this state is community property, except as otherwise provided

ii. Separate (or some version of that quasi community or quasi martial)
§770 -Separate property includes: a. All property owned b/f marriage b. All property acquired after marriage by gift, bequest, devise, or descent (GBDD) c. The rents, issues, and profits of the property described in this section 2. A married person may without the consent of the other spouse convey their separate property 3. CA Community Property System:

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a. Based on the idea that a portion of the property held by a married person is
dedicated to the economic security of the family which must be distinguished from separate property b. 3 basic principals of the CA Community System  i. Tracing whereby property acquisitions are traced back to their original source ii. Equality of interest  that community property is family property in which both spouses have an equal interest 1. historically H had practical ownership and W had a mere expectancy interest iii. Modification Married persons may modify operation of the community property system by inter-spousal agreements. c. Each spouse owns an = ½ interest in community property by statute  must be divided equally i. Title Theory does not apply  . Title is not determinative of ownership d. In CA all property acquired during the marriage by the efforts of either the H or W or together belong to both of them during the continuance of the martial relationship 4. There are 8 states that are community property states Family Law Act: 1. CA no fault divorce prior to the Act fault had to be shown to get a divorce. a. For a long time the court promoted saving marriage rather than divorce b. Under the OLD law there needed to be fault grounds (willful intoxication, adultery, failure to provide) – this fault ground effected alimony – if it was Extreme cruelty or adultery then the court had no power to award alimony to the guilty spouse (if the spouse was guilty of either they would not get any money in alimony) 2. So, family code was enacted which is separate from civil code 3. Two grounds for divorce  a. Irreconcilable differences b. Incurable insanity If spouse is cheating on another and spends money on the person they are cheating with this = breach of fiduciary duty (ex. dinner buy them a car or pay their rent) 1. Other conduct is not relevant in community property In case of death, ½ community property goes to spouse automatically b/c they own it. A spouse can only will away ½ of the total community property. If no will, all the community property goes to surviving spouse. Separate property goes by statutory disposition. 1. Creditor Rights: A Creditor can execute community property and separate property liability but a Creditor cannot execute on my separate property to satisfy the other spouse’s separate debt. Always first determine what the property is (law practice/copyright/termination from employment packages/ retirement plans/stock options) 1. Retirement plans if acquired during marriage are community property regardless if vested or not. It must then be valued and then divided. a. Figure out all of the community property before dividing it 2

iii.

iv.

v.

vi.

2. Is it community 3. What are the tax consequences
vii. Dissolution action there is no right to a jury trial viii. Prior to 1970’s husband had management and control of property b. Earnings and accumulations during period of separation § 771 (a)The earnings and accumulations of a spouse and the minor children living with, or in the custody of, the spouse, while living separate and apart from the other spouse, are the separate property of the spouse c.

Tracing Principle:

Fruits of separate property are traced to the source and classified accordingly; thus, SP produces SP, CP produces CP. i. This rule encompasses changes in form AND rents, profits, or other forms of income derived from separate property. ii. George v. Ransom: Separate property begets separate property 1. Wife’s property in this case cannot be taken by Creditor to be used to pay husband’s separate debt. a. Fruits of separate property remain separate  the separate property of either spouse may not be taken to satisfy the debt of the other spouse b. Trace to the source  if the underlying property is separate property then the rents, issues, and profits remain separate property. It does not necessarily matter when you acquire separate property i. Change in form does not result in a change in character

II.

Transmutation
d. Change in the character of property during marriage i. Can occur with either separate or community property. Prior to January 1, 1985 oral transmutations were valid. ii. transmutation: a change in the status of property from separate to community or community to separate or separate to separate during the marriage. e. § 850 – Transmutation by agreement or transfer i. Married persons may by agreement or transfer, with or without consideration, do any of the following: 1. Transmute CP to SP of either spouse. 2. Transmute SP of either spouse to CP. 3. Transmute SP of one spouse to SP of the other spouse. (All that is needed is mutual consent) f. §851- Transmutation subject to fraudulent transfer – subject to the laws governing fraudulent transfers g. § 852 – Validity of transmutation i. (a) A transmutation of real/personal prop. is NOT valid unless  1. in writing 2. by an express declaration that is 3. joined in, consented to, OR accepted by 4. The spouse whose interest in the property is adversely affected. 5. EX: It has to be in writing; but if husband orally says it to wife, and wife sends him a thank you note, then it’s sufficient. 3

ii. (b) A transmutation of real property is not effective as to third parties without notice thereof unless recorded. iii. Exception: (c) This does NOT apply to a gift b/t spouses of clothing, wearing apparel, jewelry, or other tangible personal articles used solely by the spouse who got the gift AND not substantial in value taking into account the circumstances of the marriage. 1. EX: giant diamond ring in a marriage that has no money, collection of something iv. (d) Nothing in this section affects the characterization of property in which separate property and community property are commingled v. A married person may, without the consent of the person’s spouse, convey the person’s separate property vi. (e) This section does not apply to or affect a transmutation of property made before January 1, 1985, and the law that would otherwise be applicable to that transmutation shall continue to apply. h. Estate of MacDonald (case used to define “express declaration” for purposes of Section 852) i. S.C. held: Section 852(a) was intended to “create a writing requirement which enables courts to validate transmutations without resort to extrinsic evidence and thus without encouraging perjury and the proliferation of litigation” 1. Extrinsic evidence is not admissible to show proof of transmutations. 2. The words must indicate intent to transfer such interest ii. McDonald Rule (for a valid transmutation): 1. Writing that satisfies the statute of frauds 2. Expression of intent to transfer a property interest iii. Family Code 1100(b): Management and control of CP: 1. A spouse may not make a gift of CP, or dispose of CP for less than fair/reasonable value, w/out written consent of the other spouse 2. This subdivision does not apply to gifts mutually given by both spouses to third parties and to gifts given by one spouse to the other i. Bibbs: Transmutation at issue: i. Real Property (purchased by H prior to marriage) 1. Originally separate property; during the marriage H conveyed a grant deed to himself and W as joint tenants so he would qualify for a loan 2. Joint tenancy: automatic passage of the property to the other party no matter what the will says 3. Section 852: a transmutation is not valid unless made in writing by an express declaration and accepted by the spouse whose interest in the property is adversely affected (need to demonstrate intent to transfer) 4. Appellate Court found an express declaration of intent to change status Based on: the word “grant” (was considered an express declaration) ii. Rolls Royce (purchased as separate property prior to marriage) 1. DMV printout showed car reregistered as H or W names. 2. Not a transmutation b/c this is not an express declaration (nothing on the face of the document evidencing that the change in the form of title was made, joined in, consented to or accepted by H, whose interest in the property was affected) 3. Remains separate property and goes to probate.

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IV.j. Holding: the diamond was substantial in value and therefore needed express writing. §1612 – parties to a premarital agreement may K with respect to anything BUT i. OR if agreement is unconscionable when enforced 3. CHILD SUPPORT may not be adversely affected by agreement ii. agreement was contrary to public and is unenforceable a. admissibility in proceedings commenced before death of testator. In re Noghrey case: Prenup presented immediately b/f wedding was NOT coercion 1. Statement in a will is not admissible as E of a transmutation BEFORE the person dies 2. Fam. 1. just b/c there was counsel does not mean an otherwise unenforceable provision will be enforceable o. Public policy does not render property agreements unenforceable. such agreements simplify the division of marital property. jewelry. ii. or other tangible articles of a personal nature that issued solely or principally by the spouse to whom the gift is made and IS NOT substantial in value taking into account the circumstances of the marriage. n. 5 . Any provision in a premarital agreement regarding SS is NOT enforceable if the enforcement against party: 1. A waiver of a right to a joint and survivor annuity or survivor’s benefits under the federal Retirement Equity Act of 1984 is NOT a transmutation of the CP rights of the person executing the waiver. prior oral or express or implied in fact would have sufficed. K’s that facilitate divorce or separation by providing for a settlement only in the event of such an occurrence are void as against public policy. it is only when the agreement encourages or promotes dissolution that it offends the public policy to foster and protect marriage. upon dissolution H wants the diamond ring back from W and claims that it’s “substantial in value” and therefore falls under 852 and needs an express writing. 2. In Re Steinberger: H & W purchased loose diamond as community property. Did not have an independent lawyer at signing 2. Ante-Nuptial Agreements Contractual Modifications: l. RULE –agreements that encourage or promote divorce or separation are against public policy and are unenforceable. Transmutation at death iii. i. Code §853 – Characterization of property in will. Facts in the prenup are extremely important m. § 1500 – Effect of premarital agreements and other marital property agreements: The P rights of H and W may be altered by a premarital or other martial property agreement i. Requirements for a pre-nup went into effect on 1/1/86. Policy Consideration i. §1611 – Form and Execution of Agreement . H later put stone in a ring and gave it to W as a gift. wearing apparel. k.A premarital agreement shall be in writing AND signed by both parties. Enforceable without consideration. therefore no transmutation had occurred ii. §852 (c): this section does NOT apply to a gift between the spouses of clothing.

Did NOT enter into the K voluntarily OR b. Borelli v. court has discretion to determine whether it’s a violation of public policy. According to Uniform Premarital Agreement Act. Brusseau: 1. Pendleton case: 1. Uniform Premarital Agreement Act – waiver of SS only enforceable when both parties are represented by independent counsel at signing AND the waiver must NOT be found to have been unconscionable at the time of enforcement  the right of a child to support may NOT be adversely affected iv. If agreement did not say “in the event of divorce” then it is presumptively valid 3. therefore the agreement was unenforceable iii.S dollars) on termination of the marriage 1.  can be waived but will be scrutinized a. W had virtually nothing. it facilitates divorce so unenforceable.a. Weiss: a premarital agreement to raise a child in a specific religious faith has been deemed unenforceable b/c free exercise of religion under 1st A vi. apart from rights to community property and the like that arise from the marital relation itself. Ex: in the event of divorce. i. In Re Bonds: 1. prenup promotes divorce on its face  void for public policy. §1615: Premarital agreements are enforceable UNLESS party resisting enforcement of the agreement can show either a. 4. an agreement that would otherwise have been a premarital agreement is enforceable only to the extent necessary to avoid an inequitable result ii. English 2nd language b. A premarital agreement in which one party is not represented by independent counsel should not be subjected to strict scrutiny to determine voluntary agreement 3. v. before entering into the agreement he or she did not or could not have actual or constructive knowledge of the assets and obligations of the other party and did not voluntarily waive knowledge of such assets and obligations 6 . The K was unconscionable when entered into AND i. H was Berry Bonds – baseball player 2. It seems court is saying that b/c agreement wasn’t defining the status of S or CP. Section 1616: if a marriage is determined to be void. the wife gets $500K and house b. but saying that husband will give away his money to wife. Dajani: Jordanian marriage where wife agreed to provide 3000 denars ($990 U. Prenup where parties were to keep their property separate. Court cited Nohgery – wife would only get this money if she got divorced. wife had no family present. A spouse is not entitled to compensation for support. Diosdado: K b/t H & W that provided for liquidated damages in the event one of them was sexually unfaithful to the other was unenforceable b/c it was contrary to public policy underlying CA’s no-fault divorce vii. married the next day a. Overturned the prior notion that that spousal support cannot be waived in prenuptial agreement in CA. no outside counsel. signed the same day it was presented.

Preunup: do not except to actually invoke the agreement c. Burden of proof: i.e. was proficient in the language of the agreement and the instructions 3. Presentation of agreement – surprise (length of time to review document) iv. Temporal proximity b/t signing the agreement and the wedding ii. Premarital Agreement: challenging party bears burden of demonstrating agreement entered into voluntarily 7 . private regulatory agreement (can agree to just about anything) b. Commercial K: parties want the object to be completed. If it can be interpreted in more than one way consult extrinsic evidence (i. party against whom enforcement is being sought was represented by independent counsel or EXPRESSLY waived counsel in a separate writing ii.c. the agreement is VOLUNTARY only if the court finds all of the following on the record or in writing  i. Martial Agreement: advantaged party bears burden of demonstrating no undue influence (this is because parties owe a fiduciary duty to one another – full duty of disclosure) ii. With marriage: do not put the parties back in same position as before the agreement 5. Given a reasonable opportunity to obtain counsel 6. Any other factors the court thinks are relevant 4. Remedies differ as well: i. Look to the language i. fully informed of everything in the agreement and was given a writing of the explanation 2. Factors: i. the party against whom enforcement is being sought was 1. have a document that states they got the explanation and states who gave them the explanation iv. Ordinary use of the language ii. Commercial v. dictionary) b. Embarrassment if wedding was canceled iii. duress or undue influence and there is no lack of capacity v. Were not executed as a result of fraud. if unrepresented. Prenup: a. Voluntarily: a. Burden on the challenger claiming involuntary signature to show undue influence (need substantial evidence) c. had 7 days b/t presentation and signing of the agreement iii. Premarital agreements v. Marital Settlement a.

Fidelity & Casualty Co. i. the presumption that property acquired after marriage is CP is weaker than in the case of a long-continued marriage relation where the presumption would be stronger a. There is no presumption as to when property is acquired – the party claiming it to be CP must show (evidence) that it was acquired after marriage and cannot just state. wherever situated. Family Expense Presumption: it is presumed that family expenses are paid with CP funds a. Family expense presumption: when there is SP and CP in one account (commingled) 1. II. it is presumed to be CP that was withdrawn (the community has to support the family) 2. bequest. If you withdraw for the purpose of making living expenses. in real or personal property. present or future. (look at facts) a. W claims it is CP because it was purchased during the marriage 2. real or personal. b.V. Classification of property as separate or community cannot be made simply by reference to title documents iii. Party who wants it to be CP only has to show it was purchased after marriage then  Burden of rebutting assumption is on the party asserting the separate character of the property. § 1610 – Definitions viii. The most common way to rebut the presumption is by tracing the asset back to a separate property source. ix. Wilson v. v. Facts: H argues that he took SP funds to purchase a house and therefore it is SP.Wilson based on this case 1. acquired after marriage = CP iv. Presumption that property acquired during the marriage is CP and that property acquired B/F marriage is SP ii. Wilson 1. legal or equitable. Estate of Jolly 8 . devise or decent (3) The rents issues and profits of the property in this section (b) A married person may without the consent of the other spouse convey their SP a. General Presumption: Acquisition during marriage is community property. all property. Classification of Property As Community or Separate §760 – CP – except as otherwise provided by statute. vested or contingent. Where the marriage relation has existed for only a short period of time. The party claiming it to be separate can rebut the presumption of community property with clear and convincing evidence. acquired by a married person during the marriage while domiciled in this state is community property §770 – SP of a Married Person – (a) SP of a married person includes– (1) All property owned by the person before marriage (2) All property acquired by the person after marriage by gift. including income and earnings. “Property” interest. Mahoney. “Premarital agreement”  agreement between prospective spouses made in contemplation of marriage and to be effective upon marriage. of NY v.

W claims the settlement money to be CP. but it was acquired by way of the compromise of a statutory right which was acquired PRIOR to his marriage (when his son died). Common Statutory Presumptions Respecting Separate Property i. There was no evidence proving separate property. which were acquired during the marriage (through process of elimination: she had no property before she was married. Property acquired gratuitously. Property acquired by inheritance is SP 9 . energy and skill of husband and wife. H thereafter marries. at the moment of son’s death. W thereafter buys property from the earnings during the marriage 2. H & W had no children. the time. 1. has the same status (CP/SP) as the consideration given up in the exchange if the thing given up is CP then the new is CP.” iii. Facts: H dies and left no will. W survives H by 10 years and dies without leaving a will. was said to be acquired by “onerous title. Property acquired by the spouses during marriage through the direct or indirect exploitation of the primary community property asset.1. Expectancy in property becomes vested interest at the moment of death 2. community property is the rule – separate property is the exception 3. c. such as by a gift or inheritance. Property acquired by compromise is SP if the right compromised is separate.” ii. Property was acquired by H during marriage to W. H thereafter passes away. she never worked after H’s death) b. The fact that CP is sold and other property is bought with the proceeds or that such property is exchanged for other property does not change the original nature of the property – the character to of the property is determined by the nature of the funds that were used to procure it b. H’s right to contest the will becomes vested. H enters into a settlement agreement for ½ of son’s estate. Holding: general presumption of CP was rebutted by the exchange rule (separate property begets separate property) i. unless a better right can be established by the spouse claiming it to be his/her separate property i. during proceeding to contest the will. therefore the presumption of community property prevails (assume it was acquired during coverture) c. that is. Facts: Son died leaving a will which cuts out father. Father (H) would have been sole heir if will was invalid. b. Changing facts: if H married before the son died the property is still SP i. The property in the possession of one of the spouses at the close of a long marital relation must be presumed to be community. Holding: the property is considered community property based on presumption under Civil Code 164 (now Family Code 760) a. was deemed acquired by “lucrative title. Estate of Clark a. Traced property back to the funds. if it is SP then the new is SP 1. Exchange rule: property acquired in an exchange.

Survivor’s election: surviving spouse can elect to “take under the will or against the will”. bonus. W claims that the 1/3 of the ranch is CP and therefore W is entitled to 50% of the 1/3 interest in the ranch i. Separation – Whether parties determined the rift to be final /would society deem the couple to be separated based upon the facts? i. Bramet a. There was no social relationship between H and employer that would explain the conveyance as a gift b.Earnings and Accumulations during Separation – (a) the earnings and accumulations of a spouse and the minor children living with or in the custody of the spouse while living separate and apart from the other spouse are the SP of the spouse 4. Against the will: I don’t care what will says. tip Fam. Parties are separated but continue to have sex and social contact OR couple holds out to the community that they are happily married  NOT separated b/c NO complete and final break in the marital relationship. H acquires 1/3 interest of a ranch from his employer. Issue because 1/3 interest was a gift i. just give me 50% of CP b. Exception: although legally a gift. Facts: marital problems caused H & W to stop living together. If spouse runs away b/c schizophrenic and running away from authorities. Filing of a dissolution petition do not in and of themselves indicate a complete and final break in the marital relationship 2. 2. 3. H claimed date of separation was the move out date b.ii. Facts: After separation. Downer v. the separation does not begin until W refuses to take him back 10 . Only heirs can contest a will. In re Marriage Hardin a. Ultimate test  parties’ subjective intent and all evidence relating to it is to be objectively considered by the court iii. Determined by a preponderance of evidence ii. a remuneratory gift (something given in exchange for good work/disguised compensation) can be considered CP Ex. W claimed date of separation was the legal date of separation. a. but they still had an economic relationship for 14 years after H moved out. General rule: gift is not CP ii. so it would be equivalent to an inheritance. Separation must occur as a result of a marital rift as opposed to social or economic reasons and there must be NO apparent possibility of reconciliation – COURT MADE RULE 1. Holding: property was CP because it was given to H in return for skills and efforts at work during marriage 1. Code §771. Under the will: follow the terms/plain language of the will 3.

unless the instrument indicates a different intention. erred by not allowing H’s declarations into evidence i. then the property is presumed to be CP. § 803: Any real or personal property.4. If it is simply a deed from H to W then extrinsic evidence of intent is admissible. but will loose any possibility of Separate property c. § 803(c): If the property is acquired by H and W by an instrument describing them as H and W. executors of H’s will argued that there was no written agreement about the SP therefore the property was still CP 2. “Intent” becomes the key issue where the character of property changes a.Special Presumptions Based on the Form of Title i. this may favor wealthy b/c what if people do not have the money to live apart  therefore court finds that financial issues will be a factor in the decision 5. puts lawyers in a difficult position because they want to suggest reconciliation. The presumption that property acquired by an instrument in writing becomes separate property is not conclusive b. the securities) as CP. 11 . If there is a possibility of reconciliation then there is no separation.C. Acquisitions by a Married Women 1. d. since there is no language of a conclusive presumption this means there is a rebutable presumption ii. Separated and still living in the same house Norville: separated = different houses (different rooms in same house is not enough) a. e. ii. Maden (case was decided while the woman’s presumption was still in effect) 1. 1975 by a married woman by an instrument in writing is conclusively presumed to be the married woman’s separate property. This presumption is conclusive in favor of any person dealing in good faith and for a valuable KSN with the married woman or her legal representatives or successors in interest  presumed that if the woman sold to a BFP that the property was actually her separate property b/c generally the H had the control of the property and if the wife was doing this obviously she had some control b. The presumption is rebutable between H and W c. NOW – no conclusive presumption -§1102(c)(1) – i. Public policy: to protect a married woman’s title to property in her own name when H had exclusive management and control of the spouses’ CP prior 1975. But. Horseman v. Facts: H endorsed and permitted W to retain the securities in W’s name after separation BUT H willed everything (incl. it if says from H to W as “her separate property” then extrinsic evidence is not admissible. a. or any interest therein or encumbrance thereon. acquired before January 1. T.

iv.all property at issue was SP because it was purchased prior to 1975. is presumed to be CP. Spouses owe each other a fiduciary duty from the day of marriage to the day property is divided. At death of one of the joint tenants: all the property goes to the surviving spouse 1. Joint Tenancy Compared to Community Property 1. or T by entirety. § 750: A husband and wife may hold property as joint tenants or tenants in common. a. On dissolution of marriage: ½ the property goes to each spouse as his or her SP. Facts: H and W separated after 31 years of marriage. At dissolution of marriage: ½ property to each party.that property is community) a. There was no written agreement between the parties thus the husband’s intent in executing the instrument is controlling. regardless of whether those judgment have become final b. therefore the woman’s presumption applies (exception to general presumption. § 2581: For the purposes of division of property on DIVORCE or legal separation. property settlement agreements or proceedings in which judgments were rendered before January 1. Presumption does not apply to a couple who take the property in joint form before marriage and then later marry 12 . Difference between Joint Tenancy and CP a.c. Presumption is rebutable if facts demonstrate an intent to characterize property as CP v. Look to declaration made either before or after the transfer. including property held as T in C. b. regardless of when the property was acquired i. CP (only different when dealing with death) i. or as CP. 1984 only property held in joint tenancy is subject to the presumption of CP ii. 3. Holding – the Property is the SP of the W – H intended a gift by “abandoning” W to practice real estate . d. In proceedings brought before January 1. CP and JT cannot co-exist in the same item of property 2. Property does not go through probate ii. 1987 are not subject to the presumption. Standard of proof toward woman’s presumption: clear and convincing b. H wanted nothing to do with W’s business and signed grant deeds on 2 of the properties 2. are admissible and such declarations need not have been in the presence of the adverse party iii. or as community property with a right of survivorship 4. W bought and sold property with CP funds prior to 1975. 1984. In re marriage of Ashodian 1. JT. Parole evidence is allowed in to show intent ii. Joint Tenancy: i. Presumption applies to all DIVORCE proceedings commenced on or AFTER January 1. At death: one spouse can leave their ½ of CP in a will ii. All the evidence needed was an intention to change status of property i. property acquired during marriage in joint form.

In re marriage of Lucas 1. then it cannot be applied becomes community property retroactively if 2. A clear statement in the deed or other documentary evidence of title by which the property is acquired that the property is SP and not CP ii. Otherwise. Anti-Lucas Legislation 1. §2580 – only applicable to division of property on dissolution of marriage or legal separation of the parties. Titled Property – The affirmative act of specifying a form of ownership in the conveyance of title removes such property from the general presumption of CP (greater burden of proof to rebut presumption) 1. An understanding or agreement is needed to rebut the presumption of what is stated in title such as it is CP c. Untitled Property .c. upon death of one spouse. the contribution will be considered a GIFT to community 2. but rather value on date of purchase AUFMUTH formula – when a spouse make a SP down payment they have a SP interest in the house in the proportion that payment applies to the purchase price vii. 1.Where there is no written indication of ownership interests as between the spouses.. W was beneficiary of trust which was agreed to be the SP of W. Determining titled of property: a. Presumption is no longer limited to single family residences and not JT property (was in the past. There is no evidence of an agreement or understanding that W was to retain a SP interest in the house  so the presumption that when a single family residence is purchased it is CP stands . The presumption may be rebutted by: i. Reimbursement  well settled rule i. going to deprive 13 party of a vested property right . EX: So if record title is taken as joint tenancy.must have a great showing that there was an intention to retain a separate interest in the property b. A party will get separate property payment back. H & W thereafter purchased a home with both CP (16K loan) and SP (W used 6K of SP funds for down payment and 2K of SP for improvements on the house). Ct of App: property purchased during marriage is presumed to be CP 3. the general presumption of community property may be overcome simply by tracing the source of funds used to acquire the property to separate property (lesser burden) ii. Whereas if there’s a divorce. A party who uses his SP for community purposes is entitled to reimbursement from the community or separate property of the other ONLY if there is an AGREEMENT between the parties. Burden of Proof to Rebut Presumption i. Retroactivity – the surviving spouse takes it all. title was taken as JT 2. Proof that the parties have made a written agreement that the property is SP vi. a. but it is not calculated at present value. § 2581 – CP presumption for property held in joint form. Facts: At the time of H & W’s marriage. but this statute changed that) d.

It’s valuation depends on the goodwill of the business as well as accounts receivable and business then in the office but not yet charged 2. equipment. Clear statement in the doc that was used to acquire the property that the property is SP and not CP. Valuation of the business can be done by either the cash or accrual method of accounting: a. Cash method – when you are paid it is income and when you pay out it is liability and everything else is profit. 3. including the goodwill element of the practice. The value of an education is an intangible property right with no monetary value for purposes of division b/t spouses. Lucas is dissolution NOT APPLY to DEATH VI.Property acquired by the parties in joint form during marriage is presumed to be CP . 1. furniture. § 2640 – Separate Property Contributions to Property Acquisition a. Todd – Education and right to practice a profession are not CP. a few years later H became a lawyer and established practice. – so NOT CP iv. Right to practice a particular profession is a valuable property right but is not CP. By contrast. work in progress partially completed but not billed as a receivable. i. b. proof that the parties have made a written agreement that the property if separate property **NOT APPLY TO DEATH 3. iii. ii. Unless there is a written waiver of the right to reimbursement or a signed writing that has the effect of a waiver . Assignment 14 . Facts: H and W married. the professional practice itself. favorable lease. Accrual method – whether you pay out or not you still owe it and it is charged as an expense. W worked while H was in school and after he graduated.may be rebutted by either  i. Todd v. Value of the practice at the time of dissolution of the community is CP. Liabilities for Death or Injuries. Goodwill of the practitioner in his law business as a going concern 4. e. shall be reimbursed W/OUT interest and cannot get more money than current equity in property EX:if you put in 25K and now worth 15K only get 15K **estate of Levine is good law for probate. To determine the value of a law practice. Valuation of a professional education acquired by a spouse during marriage has been held not to be property within the system.a. Liabilities of the practitioner related to his business (mist have a business) § 2627: Educational Loans. the following should be considered: 1. For the purpose of DIVORCE or SEPARATION . is property within the system. f. supplies and law library) 2. Limitations on the Classification Process d. and work completed but not billed. ii. Other assets including properly aged accounts receivable.SP contributions shall be reimbursed to the extent the party traces the contributions to a separate property source b. Fixed assets (cash. costs advanced with due regard for their collectibility. i.

Reimbursement (Section 2641) – non-student spouse can only be reimbursed for the direct costs of education. There is an exception: Educational loan is not considered CP 3. using her income for family expenses 1. books. Interest rate is based on the legal interest 10% iii. Purpose of reimbursement of C expenditures for educational benefits that have benefited primarily one spouse such as tuition. transportation 4. No evidence that she paid for any education related expense or expenses paid directly related to the education. In re marriage of Watt – situation where one spouse works to put the other spouse through school – different outcome for support award and reimbursement award: i. 1994) (a) Community contributions to education or training mean payments or repayments made with community or quasi-community property for education or training (b) Upon dissolution of marriage or separation (1) Comm. should not be reimbursed b/c they have gotten “use” out of the education. has benefited from education. w/o offset. 1. loan etc that was paid for by the community  rebutable presumption that there is a substantial benefit when it has been more than 10 years from the education (more than 10 years the comm. Spousal Support – when there is a situation like this – broad discretion in awarding SS  §4801 – there is a requirement for the TC to consider all the expenses paid by one spouse when determining the award of SS 15 . (2) Education by one party about = to education of the other party (3) Edu of one party enables them to work therefore they do not need as much support (4) Subject to a writing to the contrary NOTE: A division of post dissolution earnings to the extent that they are attributable to higher education ( if education was received during marriage) would be inconsistent with the right to assign post separation assets to the spouse earning them g. Need direct evidence show receipts ii. Court says no reimbursement for living expense b/c expenses would have been paid anyway 2.they will look at: (1) Whether the comm. H received his medical degree five months after separation. shall be reimbursed for contributions to education of one party that increased their earning capacity (W/ INTEREST) (2) Education loan shall not be included in the liabilities of the Community (c) Reimbursement/ assignment shall be modified/reduced as the court sees fit..Educational loans shall be assigned to the spouse whose act or omission provided the basis of liability. Not necessarily have to be books and tuition.whoever took them out pays them § 2641: Community Contributions to Education or Training (operative January 1. a. Exclusive remedy for professional education or training received during marriage 5. or child care. Repayment is based on the amount paid + interest from the date of payment. This does not include reimbursement for living expenses because would have to live whether or not got to school 2. supplies. or travel farther and use more gas to go to school. W worked full time during marriage. H was a full-time student for the entire marriage. it can be if you had to have a second apartment.

A person’s name (e. Good WillValued presently based on factors of the past. SS is discretionary according to ct and appellate ct will not reverse unless it is so unreasonable no reasonable judicial officer could have done that h.g.g. a place where there is lot of walk-in business) d. i. Firm name not attached a product (e. There are 3 potential types of goodwill 1. Goodwill can attach to: a. a. and the nature and duration of his business as a sole practitioner. A trade name (e. 1. health. But some courts do not use this definition because it is not in the context of CP 6.g. Johnny Cochran) 5. Marriage of Green: Valued at the Date of separation instead of date of trial b/c H was a sole practitioner. including contributions for ordinary living expenses. Celebrity goodwill a. Executive goodwill a. Goodwill of a business 2. Zenith or Buick) b. Any method that show substantial justice is acceptable 7. skill. He could control what the value is by manipulating it down.GOODWILL – Business Valuation iv. but there are out of state cases that recognize it 3. Support (Section 4320) – court must consider the totality of the non-student spouse’s efforts toward the attainment of the degree. Professional goodwill a. If you have a partnership agreement. No CA cases dealing with this. knowledge. his comparative professional success. Value: Gross Income – expenses and compare that to average practice in the same area. professional reputation in the community as to judgment. CA Bus and Prof Code  the expectation of future patronage. Location (e. i. Analogous to the silent partner agreement from TOD INSURANCE – when divorced spouse will get the insurance $ after death of the insured 16 . What you will receive if you leave the firm is not determinative of how much you are worth. past demonstrated earning power. but there are out of state cases that recognize it 4. Nordstrom or Nieman Marcus) c. Look at: age. Excess is goodwill i. Definition of Goodwill a. In re marriage of Lopez – the goodwill of a business is CP to the extent it was built up during the marriage.g. No CA cases dealing with this. or as member of partnership or professional corporation to which his professional efforts have made a proprietary contribution (see the continuity of the business) b. 8.

17 . This property is known as quasi-marital property b. can cash in policy 1. if H puts division of property into issue. it may make the property division at a time after the judgment k. automatically renewable without exam. premium is higher because you are closer to death. Term insurance policy = buying insurance for a period of time. Persons within the System – the valid marriage requirement – same sex unions §297: Domestic partners and partnership. option to renew without medical examination. no cash value. in an annulment proceeding. establishment . Ct not said it was QMP. don’t have to prove insurability. Ordinary/whole life insurance = it’s a level premium and goes on forever until you die. If the division of property is in issue. because no saving aspect to it. has cash value. Nothing in this section says that only the putative spouse can get division – so theoretically. If the court expressly reserves jurisdiction. In re marriage of Spengler – RULE: term insurance covering a spouse who remains insurable is CP only for the period beyond the date of separation for which community funds were used to pay the premium i. A whole life policy has an investment component in addition to death benefits. the court shall: 1. it is presumed that the judicially created system will continue to apply. If a determination is made that a marriage is void or voidable and the court finds that either party or both parties believed in good faith that the marriage was valid. ii. divide that property acquired during the union which would have been community property or quasi-community property if the union had not been void or voidable a. (Section 2251 was a codification of this case) i. No cash value – only CP to the extent it was paid by the community ii. If paid for by CP it is CP VII. it’s much cheaper 1. 2.i. then he could get division 3. Coats – Ct developed Equitable Community Doctrine to apply to putative marriage. §2251: Status of Putative Spouse: division of CP or Q-CP i. W entered into the marriage and kept a good faith belief so equitable principals should apply even though the marriage was declared void. Coats v. Meretricious spouse is the opposite – having a guilty knowledge of the fact that the marriage is void or voidable. if W has good faith belief that the marriage is valid but H knows it is not. The Valid Marriage Requirement: Punitive Marriages j. 2. Effect of annulment: Put H and W back In the same position they were before the marriage (as if marriage never existed) and cannot have CP 1. Declare the party or parties to have the status of a putative spouse a.applies to same sex partners VIII. Where the putative relationship is brought to an end by death rather than by annulment or other dissolution proceedings.

the courts were inconsistent after the Vallera decision 1. The Family Law Act does not govern the distribution of property acquired during a non-marital relationship – the only body of law that governs such situations is general contract law. As to the legal wife the property at issue was SP. Marvin ii. i. H and W married in Mexico. a. the parties may enter into express agreements regarding the division of property. So putative wife got ½ as quasi-marital property and the court awarded the other half to the legal and her children + Helen’s child ii. iii. n. i. if you cohabitate with no good faith belief of marriage. Not valid because it was never recorded as required by Mexican Law. Implied agreement  spouse can only recover to the extent that her funds contributed to the acquisition of the property. Marvin (Cohabitation) – To the extent that the agreement does not rest on meretricious sexual services. However. The Marvin court states that contracts between such people with respect to property should be enforced 18 m.a. Even when there was an agreement. P said they held themselves out as H and W. quasi-martial P in statute § 2251 Estate of Leslie – Putative spouse is entitled to the same rights as a valid spouse. what rights do u have. Court stated a family allowance could NOT be awarded in a putative spouse situation  only awarded a family allowance to the legal spouse. Surviving putative spouse is entitled to Q-CP share of decedent’s separate property under the Probate code. Here as in Vallera. iii. Held that public policy favors marriage and courts punish them for not getting married by not honoring the agreements Marvin v. D kicked P out 2. Subjective belief objectively measured based on facts and circumstances b. Vallera (Cohabitation) – If there is no good faith belief that the marriage is valid then the non-legal spouse cannot recover. Although assets are NOT called CP they are treated as such Called l. . o. Facts: Lived together w/o marrying. Putative marriage: union in which at least one partner believes in good faith that a valid marriage exists –conduct themselves as H and W during marriage– that when there is a good faith belief in the marriage there is an entitlement to half of the property acquired during the marriage iii. all property acquired in D’s name and he got it all according to trial ct 1. some courts refused to enforce those agreements as against the public policy. However. even though the statute does not state that it is applicable in the death situation i. –NO allowance that by cohabitation alone there is a sharing of the earnings accumulated during the union i. but as to the putative spouse the property was quasi-marital property 2. ii. W gave up career to be homemaker. 1. Court awarded half of the estate to the legal wife and half to the putative spouse. Estate of Hafner – Court applied the putative spouse statute to a death situation. H believed that he and W were validly married ii. Such a spouse can only recover if there is an express agreement 1. oral agreement to share =ly in earnings and H said he would provide for rest of her life. Vallera v. this principle is modified by Marvin v. However.

4. Grappo v. marital property rights are to be controlled by the law of the domicile of the married persons at the time of the acquisition of wealth ii. Rights: 1. Enforce an agreement of any kind 2. Implied agreements – spouse can recover more than just the contributions iv. – According to the Restatement of the Conflict of Laws the law of the state which has the most significant relationship to the parties and issues in the case is the law that applies to that case. Facts: Action for division of assets ii.1. Must file a civil action and not petition for dissolution It has been held that this rule applies to homosexual relationships as well as heterosexual relationships Other states (NY and Illinois) have rejected Marvin v. it may be that the domiciliary state has no power to tell the other state how to divide its property s. IX. Domicile  residence with no present intent to leave – intent to remain i. Quasi-Community Concept: Property which would have been community property had it been acquired in CA would be categorized as quasi-community property and treated in a fashion similar to community property on termination of the marriage by death or dissolution. vii. A person is never without a domicile and does not lose a domicile until a new one is acquired q. Property rights are not lost b/c property is transported into another state and exchanged there for other property 19 . i. r. ii. for marital interests in movables acquired during coverture. even when such money and property is used to purchase real property in another state. 1. Domicile Requirement: p. i. Coventry Financial Corp. General rule: Marital interests in money and property acquired during a marriage are governed by the law of the domicile at the time of their acquisition. iii. vi. Domicile will be the new place until the intent changes. However. 2. This includes both express contracts as well as implied in fact contracts a. The agreement regarding sexual services must be expressed for the contract to be unenforceable. Domiciled: Physical presence (objective) with intent (subjective) to remain permanently. The agreement does not have to be in writing However. May apply equitable remedies such as constructive or resulting trust based on the facts of the case. such Ks are not enforceable to the extent the contract is for sexual services 1. Rozan – A determination of the domicile is essential. When you visit a place and have an intent to move to that place. made to acquisition of property as stated in Vallera. Rozan v. they are governed by the law of the domicile at the time of their acquisition. Movables are governed by the law of the domiciliary state at the time of the acquisition of the property iv. you are then domiciled there. Quantum Mertuit – reasonable value of services rendered 3.

All personal property wherever situated. Probate Code 1. Family Code vs. ii. and all real property situated in this state acquired in exchange for real or personal property. court said it was QCP 1. Two requirements to be met for Q-CP laws to apply: a. and brought with them property. Addison – H and W moved to CA from a common law state. In exchange for real or personal property.X. (1) BOTH Spouses must move and be domiciled in CA AND i. Certain acts or events that occur in CA that give rise to the action for divorce either spouse initiates the action to alter the marital status in CA ii. but Family code applies to property acquired by either spouse iv. wherever situated. Due Process and Privileges and Immunities Clauses: Constitutional application of Quasi-CP – Q-CP is designed to alleviate the problems that arise when a married couple moves from a common law jurisdiction to CA (CP jur) i. §125: Quasi-CP means all real or personal property. where the innocent party would otherwise be left unprotected the state has a very substantial interest and one sufficient to provide for a fair and equitable distribution of the marital property without running afoul of the due process clause of the 14th A 20 . and all real property situated in this state acquired by a decedent while domiciled elsewhere that would have been the CP of the decedent and the surviving spouse of the decedent had been domiciled in this state at the time of its acquisition 2. wherever situated. that would have been the CP of the decedent and the surviving spouse if the decedent had been domiciled in this state at the time the property so exchanged was acquired. (2) While domiciled in CA must seek divorce or separate maintenance action – subsequently modified by Roesch i. the other ½ belongs to the decedent iii. wherever situated. By either spouse while domiciled elsewhere which would have been CP if the spouse who acquired the property had been domiciled in this state at the time of its acquisition 2. Q-CP under the Probate code – upon the death of a spouse who had acquired property while domiciled elsewhere such property may be deemed Q-CP and accorded the treatment of CP i. consent to jurisdiction will satisfy this prong b. ½ of the decedent’s QCP belongs to the surviving spouse. Addison v. §101 of the Probate Code: Upon the death of a married person domiciled in this state. which would have been CP if the spouse who acquired the property so exchanged had been domiciled in this state at the time of its acquisition u. acquired: 1. Quasi-CP under the Probate Code (§ 66): Quasi-CP means: 1. Upon divorce. Probate code applies only to property acquired by the decedent. All personal property wherever situated. CA is constitutionally prohibited from taking away a party’s SP interests in a divorce case BUT it is allowed to do so through QCP to out of staters a. 2. Quasi Community Property: Constitutional Limitations on the Classification of Property – Q-CP t.

In re Marriage of Bouquet – 1. After their separation. Facts: After filing divorce petition but before judgment § 771 was amended 2. Improper to apply QCP 2. Ct wanted to right the wrong of the previous §771 3.only the earnings and accumulations of the wife were SP while H and W were separated b. Retroactivity of the QCP statute: General rule is that statutes cannot be applied retroactively a. Consent to jurisdiction satisfies the 1st Roesch criterion as an alternative to change of domicile. it modifies the 2nd prong of Roesch case. v. extent and legitimacy of the reliance on the former statute d. Police power: the legislature can provide for the general welfare of its citizens and although a party’s SP is taken away. Fransen. husband transferred this domicile to CA. extent to which retroactive application would disrupt those actions 5. extent of the actions taken in reliance e.b. a. Judgment of divorce determines the effective date of legislation. However. here the statute was not applied retroactively because the divorce was sought after the statute took effect i. wife and the parties’ minor son remained in PA. After the change in domicile either spouse initiates a legal proceeding to alter the martial status in CA 4. When W responded to complaint she consents to jurisdiction and is thus equivalent to her being domiciled in CA v. the state can do this in order to provide for the innocent spouse 3.Retroactivity Problems i. Alters the 1st part test in Addison by stating that a. Both parties must have changed their domicile to CA. Court will uphold a retroactive intent when: 21 . When application of Retroactivity is demanded it will only be applied where there is a sufficiently important state interest ii. In a later case. 1. §771: the earnings and accumulations of both spouses while they live apart is SP a. AND 3. In re Marriage of Roesch – Here. Prior to amendment. H here is saying that 771 should apply retroactively so that his accumulated earnings while separated are SP 4. Whether an impairment of vested interest is permissible? (2 tests) a. the significance of the state interest served b. Fransen v. the importance of the retroactive application of the law to the effectuation of that interest c. CA had a minimal interest in this dissolution b/c h had been there 6 months and they lived in PA for 25 years. the parties lived in PA for virtually their entire married life. stating that a. A statute can be applied retroactive when the legislature intended– consider: a.

While he was on appeal. To cure a rank injustice in the former law iii. 1.e. General Rule: Funds in a commingled account are presumed to be CP 1. No oral or written agreement. It is necessary to serve a sufficiently important state interest b/c there is a taking of property without due process. During marriage. In re Marriage of Heikes . It was not realistic for the wife to get H to sign that property held as JT was CP once they filed for dissolution b. then they will be recognized as SP funds 2. conveyed both parcels to W and himself as JT. justified the impairment of the H’s vested property rights ii. legislation changed. OR 1. Look to a violation of due process and a need to make something fair 5.the law in effect at the time of the transaction (acquisition of property) is the controlling law – NOT when case was filed. The withdrawer must establish that at the time of the disputed acquisition. At the time of marriage. During dissolution. the state’s paramount interest in the equitable distribution of marital property upon dissolution of the marriage. Property acquired in 1980: §2581 will apply retroactively. §2640: when CP is divided upon dissolution of the marriage. 3. 6. kept adequate records). Commingling – the mixing of together of SP funds and CP funds ii. New legislation dealt with right to reimbursement. HOLDING: H’s transfer of his SP to the joint ownership of his wife and himself gave the W a vested property interest (oral agreement that W was to get specific interest in the property) that cannot constitutionally be impaired through the retroactive application of the reimbursement provisions of sec 2640. either spouse shall be reimbursed for his or her contribution of SP to the acquisition of any property being divided as CP unless the contributing spouse has waived the right of reimbursement in writing which was created in 1/1/84. tried. In order to apply it retroactively must have a vested property interest XI. 2. lower Ct classified both parcels as CP. Rebutable by direct tracing – if the person who deposited the funds can trace or identify them back to a SP source (i. Rebutable by indirect tracing – family expense presumption that family expenses are paid from community funds a. but 2640 will not be applied retroactively when there is a vested property interest  a. the CP funds in the account had been exhausted by family expenses so 22 . ISSUE: Whether the Constitution permits the statutorily authorized reimbursement of a H for SP contributions made in 1976 to property divided as CP in 1992. Here. or adjudicated. H had 2 parcels of land as his SP.i. Commingled Funds: i. (NO INTEREST) 4. Problems In Classification: w.

b. During marriage. then the balance at that time is necessarily separate. But there is no requirement that this intent be communicated to the other spouse ii. Any item purchased with remaining funds would then be deem separate property. The withdrawer must keep records i. Dinh’s short version: If a spouse proves that at the time of acquisition of the property. A spouse who commingles but fails to keep adequate records cannot invoke the burden of record keeping as a justification for the recap theory 3. There is an agreement NOT to be reimbursed – consideration is not generally required between H and W ii. such spouse must prove that C expenses exceeded the C income at the time of acquisition of “that particular item. reconciliation) for a spouse to make a gift iii. (decided before Lucas) a. Indirect tracing – the See method 23 funds i. then assume there was only SP funds to purchase the property in question) ii. then that party is not entitled to reimbursement (car payment) iv.balance in the account at the time the property was acquired necessarily was separate. See v. This is the exception that allows such a person to use the recap theory (aggregate all expenses and income over the entire period of the marriage and if the expenses exceed CP funds. The money paid was to fulfill a support obligation of that spouse.” c. Payment is on account of an encumbrance of an asset and the payments made are equivalent to the rental value and the party making the payment has had exclusive use of that asset. Unilateral gift is intended – there could be reasons (e. Direct tracing – requires the withdrawer to intend to withdraw SP b. H commingled C and SP assets and claimed on divorce that the fact that aggregate C expenses exceeded aggregate C income during marriage justified a finding that no CP remained.g. Ct held that in order to be able to implicitly trace any such item to SP. See – the party who uses his SP for C purposes DURING Marriage is entitled to reimbursement from the CP or SP of the other ONLY if there is an agreement between the parties to that effect. Epstein – See rule does not apply to sums paid after the parties are separated – AFTER SEPARATION  the spouse paying with SP is entitled to reimbursement. Exception: when through no fault of the person asserting the SP character it is not possible to ascertain the balance of income and expenditures at the time the property was acquired i. b. This enables the withdrawer to be less than forthright – say that it was SP if the value goes up and CP is the value goes down . that all community income was exhausted by community expenses. unless: i. then not entitled to reimbursement 4. In re Marriage of Mix – 2 methods of tracing: a.

5. then s/he marries and gets divorced 1. if the CP portion is insignificant. Formula.determining the amount of money that is attributable to the SP and to the CP when the business had an increase in value DURING marriage iii. Issues arise when one spouse owns and operates a business before marriage. profits that are the result of that spouse’s efforts are CP 3. Courts have said a certain amount is attributable to the fact that the business was an on going concern when entered the marriage. In re Marriage of Frick – where funds are paid from a commingled account the presumption is that the funds are community funds  in order to overcome this presumption a party must trace the funds expended to a separate property source 6. Formula: Value at time of divorce – [SP + (SP x reasonable rate of return [7%])] = CP  I-SP=CP viii. and the business was incorporated into a corp from a sole proprietorship during the marriage a. Although her tangible evidence alone would not have been sufficient to satisfy the burden of proof. Business Profits . I= increase in the value of the business iv. Pereira – oldest method of apportioning the business’ profits as CP and SP: allows a reasonable rate of return as of date of the marriage 1. CP = community property vi. 24 . Exceptions: a. If there is no other evidence as to what the reasonable rate of return is. her own oral testimony was sufficient. and H would be entitled to reimbursement without interest for the value up to this date. TC said this changed the character b/c it was an acquisition as if this was a new business and no formula was applied to determine which was SP or CP (§2640 SP contribution to Community is entitled to reimbursement) i. Reasonable rate of return is per annum 2. H had a business prior to marriage which is SP and continues business during marriage (use a formula to see how much of an increase goes to SP and CP). issues and profits of SP are SP 2. i. and a certain amount is also attributable to the efforts of the spouse running the business ii. If the commingling is of a trifling sum with a large portion of SP funds. Business profits attributable to the efforts of the spouse are CP 3. the SP value would be as of the date of incorporation. Pereira v. rents. it will be disregarded and the asset will be SP i. Marriage of Keoster: 1. I= SP + CP vii. Where both CP funds and SP funds.c. In this case. W applied the direct tracing method to prove her case. then the asset is deemed SP x. If there is a change in character of the property by incorporation. then the business gets the legal rate of interest (currently 7%) a. SP = separate property v.

the change in form does not in itself change the character of the property. It has been suggested that the court should figure out whether the increase was primarily due to the efforts of the spouse or due to the SP capital a. H changes his SP business from a sole proprietorship to a corporation was done for a reason that had nothing to do with the marriage.this is done first  I – CP = SP x. Tassi/Van Camp –Apportioning Business Profits: determine the reasonable value of the working spouse’s services in the business. no SP contribution.PEREIRA  determine the value of the separate property what was originally put into the business (reasonable value of the services)  I. In re Marriage of Imperato – Reverse Pereira/Van Camp –applies where the business is CP.b. If primarily due to spouse’s efforts the court should choose the method which will yield the greatest community gain 4. presumed to then be CP 2... and allocate that as CP 1. b/c this is not a case of reimbursement i.VanCamp (Huber)  services to the business = community property . Pereira or Van Camp – Which approach should the trial court use 1. mere incorporation is not acquisition ix.assets valued and liabilities should be determines as near to the date of trial as reasonably practicable with the reservation that any portion of the assets including goodwill which are attributable to the earnings and 25 . Co started while married. Formula: Value at time of divorce – (SP investment + reasonable value of services [CP]) = SP  I – CP = SP Pereira and Van Camp – methods of apportioning the portion of the business that each spouse owns o TWO APPROACHES HAVE BEEN MADE WHEN ALLOCATING EARNINGS – o 1) to allow interest on capital investment of the business allocate such interest as separate property and treat the balance as community earnings attributable to the normal earnings of the business . Whatever approach will achieve substantial justice for the parties 2. but one spouse continues to work for the business after separation and an increase in value results after separation – part of the increase is due to that spouse’s efforts during separation which would be that spouse’s SP 1. 2640 reimbursement applies to real property d. Using 2640 Reimbursement was not appropriate in this case. The balance is SP 2. c. Clearer evidence as to rate of return or the value of the spouse’s services. Formula: Increased value – Reasonable value of services (CP) = SP 3.SP = CP o 2) to determine the reasonable value of the H’s services in the business allocate that amount as community property and treat the balance as separate property attributable to the normal earnings of the business . §771. Business lossesdo not use these formulas – only for business profits xi. that might have some bearing as to the court’s choice of approach 3.

Acquisitions in Installment Transactions 1. can only rebut the presumption that credit transactions are CP by showing that the seller SOLELY relied (no longer 26 . pensions and contingency fees. 2. Reverse Van Camp formula – value the spouse’s efforts (energy. 2. if you can show the business profits decreased b/c of a bad economy this will not be held against you 3. Reverse Pereira formula – give a fair return on the CP investment and the remainder is the working spouse’s SP 4. Ex: land sale K. insurance policy. In re Marriage of Grinius – Loan proceeds acquired during marriage are presumptively CP. or a K controls. Today. Installment and Credit Transactions: i. Installment K. Vieux – property acquired by a spouse before marriage is that spouse’s SP – BUT there is a CP interest in the amount of CP that was used to pay for the asset – in proportion to the purchase price a. Borrowed Funds and Credit Acquisitions 1. Rebut through tracing showing SP was used for the transaction. Also applicable to life insurance policy that is paid with SP and CP ii. Upon 30 days notice by the moving party (in the form of notice motion) to the other party. Vieux v. Sending a letter or phone call is not enough y. Personal integrity of the borrower has reference to the individual’s earning ability and reputation for paying back debt may be CP asset b. the court for good cause shown may value all or any portion of the assets and liabilities at a date after separation and before trial to accomplish an equal division of the community estate of the parties in an equitable manner. General presumption may not apply if statutory presumption applies or if the spouses were living separate and apart. (Green case) i. Gudelj – with unsecured credit transactions. and time) and allocate that as SP and the balance is CP from date of separation to date of trial 5. it was a gift. whether they are CP or SP depends PRIMARILY on the intention of the lender (no longer true) ↓ 4. Credit transactions (loan or credit) after marriage are presumed to be CP a. i. BUT.s must be Characterized as either SP or CP a. skill. however. General credit of a buyer is CP even though it may have been built up before the marriage 3. when you have a sole practice have to value as close to separation b/c of the ability of the spouse to devalue it. Gudelj v. c.accumulations of a spouse while living separate and apart are the SP of the spouse earning them a. when an asset is acquired over time it should be apportioned in the amount of S and C that was used to acquire the asset b. §2552: Division of community assets upon dissolution – the court shall value the assets as near as practicable to the time of trial a.

SP = (20. CP percentage interest = (CP payments to the principal) / purchase price i. Very rarely is a loan made solely on SP – only way to prove it is to subpoena the loan officer to testify that he relied solely on SP b.primarily relied) on SP in making the loan AND did so rely. $80. the $78. W/out satisfactory evidence of the lender’s intent. So CP entitled 2 % of the appreciation 6. the loan is CP unless prove it was solely relied on by lender to give loan then SP Intent of the lender. loan and repayment are 3 different things. In re Marriage of Moore – SP acquired before marriage and then used CP funds to pay the mortgage  there is an appreciation it the property during the marriage a. the general presumption prevails.000 ii. a.000 + 80. Appreciation of the property-each spouse gets ½ the percentage of the appreciation that the CP paid for the house f. Payments made during marriage were CP and reduced the principal on the loan to $78.000 is financed. $20.signature alone = CP 5. For purposes of the SP interest in the appreciation. as well as his $20. e.000 contributed by H SP. not the character of the property b. CP interest = 2.000 = 2% iv.000 / 100. Ignore interest payments – interest and taxes NOT included in price of the reimbursement of the SP b/c they dont increase the equity value of the property g. or what induced the lender to believe that the people would be able to repay the loan.000 asset (purchase price).000 is considered a contribution. SP percentage interest is crediting the SP with the down payment and the full amount of the loan less the amount by which the CP payments reduced the principal balance of the loan. Property. Apportionment theory: CP gets that percentage of the appreciation that it contributed to the purchase price c.000 – 2. In re Marriage of Frick – a. So SP entitled to 98% of the appreciation iii.what induced the lender to allow the loan. Determine the character of the loan i. EXAMPLE: $100. Fairness dictates that the S and CP respective interest should be based on the ratio of capital contribution to the purchase price – it is this ratio that best reflects the parties respective interest in the property at the time the appreciation accrues – the community should share in the appreciation 27 .000 in cash 1. the asset has appreciated to $150. what is put up as collateral .000) / 100. When you refinance the character of the loan changes.000 = 98% 2. CP percentage interest is Dividing the amount by which CP payments reduced the principal by the purchase price d.000 i. Underlying property can still be SP if you refinance during marriage. SP percentage interest = (SP down payment + SP loan – CP payments) / Cost of Purchase Price i.

Use SP for down-payment for acquisition of CP. Equity was SP until H transferred title. When both parties contribute SP do apportionment if there is insufficient equity in the property. Property refinanced during marriage. so entitled to reimbursement but they refinance the asset a. Improvements to Separate Property 1. Reimbursement (dollar for dollar) – this will be used when the value of the property has not increased OR 28 . under marriage of Lucus NO right reimbursement of SP unless there is an agreement or understanding (express or implied) 2. NO interest or appreciation. to buy another property. no rights to SP unless there is an agreement or understanding to be reimbursed. CP contributions to other spouse’s SP a. you MUST be able to trace the funds. had they not refinanced the loan would be SP even the though the house was CP. Pre 1/1/1984 in Lucus. d. the loan was used to pay down debt on other property. Remedies – i. c. Apportionment used to divide remaining equity. H is not limited to reimbursement from the equity in the first asset to which his contribution was made  H can trace his original contribution to the new asset and be reimbursed from that new asset i. Absent agreement  presumed gift iii. After refinance the equity was $1K. Some of the money from the refinance was used to pay down the loan of the property. There is a right of reimbursement 2. After refinance the loan = CP. The Classification of Improvements: during the marriage in the same proportion that its capital contribution bears to the total capital contribution required to own the property outright 7. Post 1984 presumed CP unless an agreement otherwise use 2640 g. f. Use of CP gives the community an interest in the separate property – b. Clark – the use of community property funds to improve a separate property asset a.z. To get reimbursement in any situation. Marriage of Walrath : H owns an asset as SP and then deeded it to the community as JT (presumed CP). Bono v. Rebut presumption with written agreement or title stating otherwise b. Most you can ever get reimbursed is the amount you put in which may be money or equity in property at the time title was changed form SP to JT ii. Even though W put in 20K she cannot get it back b/c there is not enough equity e. Cannot get interest in the CP then there is equity. Courts are not willing to presume it as a gift b. Dollar for dollar reimbursement for SP contribution. 1. i.

Remedy is apportionment – Moore iii. CP contributions to acquisition of same spouse’s SP a. §2603(b): In the division of CP. without the consent of the other spouse. Also community estate PI damages if the money has been commingled with other assets of the community estate 29 . separate property is settled AND then b. Remedy is apportionment – Moore 2. §781: Separate Property if the cause of action for the damages arose: i. Tortfeasor spouse must use SP to pay judgment or settlement until that SP is exhausted. If the damages are CP then there is no right to reimbursement dd. 1984 2. Personal Injury Damage Awards – Money or other property received by a married person in satisfaction of a judgment for damages for personal injuries is: aa. CP contributions to acquisition of other spouse’s SP a. Percentage interest in the property – this will be used when there is an increase in the equity value of the property 1. §780: CP if the cause of action for the damages arose during the marriage. Cases involving the use of SP to improve CP are similar in some ways to cases involving the use of separate property to pay a community obligation or expense. majority would say that it is SP – exchange rule cc. While either spouse is living separate from the other spouse iii. § 2640 for cases brought after January 1. XII. §782: If one spouse injured the other spouse during the marriage. After judgment of dissolution or legal separation ii. then the CP or the SP of the other spouse gets reimbursed for the expenses it paid for the injury i. ii. NOTE: If either spouse appropriates community funds for his or her own benefit. then he can use the CP ii. community property is settled 3. the fact that the negligent act of the spouse of the injured person was a concurring cause of the injury is not a defense to an action brought for damages against the 3rd party unless the defense would exist if the marriage did not exist. ff. If the damages are deemed to be SP only. i. the recovery must be assigned to the injured spouse contrary to general statue that says CP is divided equally. Applicable principlea. Acquisition of Separate Property 1. the community should be reimbursed. bb.Injuries to married person by third party w/ partial liability to the spouse If a married person is injured by a third party. in which the owner of the separate property is presumed to have made a gift to the community. money or property received from that injury are the SP of the injured spouse i. If the cause of action was before marriage and recovery was after marriage. the community should be entitled to restitution. SP contributions to improvement or acquisition of CP 1. if one spouse acts in self-interest to the detriment of the community.ii. §783. Cannot join a personal injury claim with a dissolution proceeding ee.

Employee may leave and still get the pension 2. How long are PI damage awards recognized as such before they become just regular CP and subject to equal division i.1. IF investment probably divide in ½ if used for injury. Community estate personal injury damages get assigned to the party who suffered the injuries (exception to equal division) UNLESS: 1. Benefit that represents deferred compensation for services rendered during the marriage benefit will be CP. determines that the interests of justice require another disposition (ct discretion) 2. at least half the damages have to be assigned to the party who suffered the injuries (limitation on the exception) iii. Just b/c funds are in a joint account does not make it commingled 2. Contributory v.not terminable when employment is terminated – will get the money that you earned when the pension is mature 1. 1. Non-Contributory – whether employee makes a contribution or not iv. xvii. Funds are only commingled if they cannot be traced ii. injured probably gets more 3. If the money has become commingled. Defined benefit – plan states a specific percentage of wages the employee will get after a certain # of yrs of service or reaching a certain age v. in the absence of an express agreement. Was the money used to help the injured with medical expenses or was it used as an investment. In re Marriage of Devlin – They only time proceeds from a personal injury award lose their character as CP personal injury damages is. Having traced all of the parties CP to the CPPI damages the TC was required to award this property to the H unless it determined that the interests of justice mandated a different disposition XIII. Employment Related Benefits: XIV. BUT where benefits represent compensation for post separation or post dissolution services it should be SP XVIII. For divorce proceedings – pension right that is NOT subject to a condition of forfeiture Once the pension vests. xvi. Classification as CP or SP depends on the underlying nature of the benefit – xv. Vesting. For other than divorce cases – pension right that the employer cannot unilaterally repudiate without terminating the employment relationship 30 . then it has lost its identification as PI recovery and become regular CP ii. Look at the equity of the injury. Retirement Benefits as deferred compensation to the extent that the retirement benefit represents deferred compensation for services rendered by the employee during marriage they are CP iii. Benefit is designed to replace lost wages that would otherwise have arisen during marriage generally CP. Defined contribution – specific account in the name of the employee that they pay into – will get the money at the time of retirement vi. The court after looking at all the facts of the case. The cause of action has to have arisen during the marriage gg. But. when such proceeds have been “commingled” with other CP and it is impossible to trace the source of the property or funds.

31 . Community interest in an UNVESTED PLAN – a. Disability – not taxed so more people if they have a choice will take this a. the employee loses everything. Disability – 1. Ex-wife wants her ½ interest in the retirement benefit and wants to be paid immediately. Retirement – based on time is taxable. Vested –a pension right may vest after a term of service but not mature until he reaches retirement age and elects to retire viii. xi. Ee spouse decided not to retire even though he was entitled to. In re Marriage of Gillmore: 1. 2. 1.Formula (generally) – number of years in the community  number of years it took to become vested 2. W still has a CP interest in that non-vested pension plan of the time they were married 2. 3. ?????? In re Marriage of Brown – there is a CP interest in a non- vested pension plan 1. VESTED PLAN . EX: Pension vests in 10 years. H works for 5 years. Can cash out or can wait (waiting may = more money) ix. if it’s a contributory plan. once there is separation = SP x. In non-vested pension plan. defeat the community interest of the other spouse. 3. Vested. Before marriage: anything before is SP and remains SP b. Matured v. Whereas in a non-contributory plan. SP = # of yrs not married / # of yrs at the company d. If unvested may have to pay against the employer – will be reimbursed when the plan actually vests i. b/c the years during marriage contribute to the ultimate benefit as much as the years after marriage. Matured – unconditional right to immediate payment or that right to immediate payment is solely within the employee’s control 2. have to see that it may never vest b. Retirement v. Determining the community Interest in a pension – 1. Ee spouse could not use this election not to retire to deprive his wife of her interest in his retirement benefits. Date of employment or marriage (which ever is later) to Date of separation/length of employment = time rule 4. and then gets a divorce. CP = #of yrs married / # of yrs at the company c. Pension benefits are vested and matured. but doesn’t get what the employer had put it. Do not care about vesting.deferred compensation 2. Rule: One spouse cannot by invoking a condition wholly within his control. Brown Time Formula: a. the employee may take out however much he or she had put into it. they are considered a substitute for salary so they are CP to the extent that they are gathered while the parties are living together b. During Marriage: ½ marriage when employed/total time pension i.vii.

he must compensate nonEe spouse for non Ee spouse’s interest. Under Erisa which allows Quadro. and the court reserves jurisdiction to divide the benefits when the Ee spouse becomes eligible for retirement rather than attempting a present valuation and division of the CP portion of the benefits. If the non Ee spouse wants immediate payment. Non employee spouse gets ½ of 1. This method probably unfair because need expert testimony to determine the present value of a future pension plan and the experts are inevitably going to be wrong because it involves too much guess work 2. u pay taxes and a 10% penalty. The date of demand by the spouse c. a. Probably the better method. Ee spouse could compensate non-Ee spouse for non Ee’s right to share in benefits by a. Cash out method – determine the present value of the plan and give an offsetting award of other CP to the other spouse a. 5. The court delineated 4 possibilities for the triggering the benefit entitlement: a. If the nonEe spouse dies. pension benefits of Ee spouse has not yet matured. Quadro allows plan to be divided without tax consequences until there is an actual withdraw and keeping the money (putting the divided ½ of non –employee spouse does not incur penalty) xiii. their rights terminate at death 8. Paying her the present value of her share of the pension plan (if it goes up in value later will not get more to compensate for ↑ in value) c. the plan can be divided  Quadro: if u withdraw money before age 591/2. months. Buy out nonEe’s share of the retirement b. Valuation of the pension plan for division purposes: 1. The Ee spouse retains the right to determine what retirement benefits he will receive. cars 6. 7. 1.a. years. Date of eligibility to retire b. non Ee spouse is entitled to it. 3. so not 50% of retirement. nonEe spouse is the one who has the choice as to when his or her share of the pension shall begin 4. Ex: 5/20 = ¼. However if Ee spouse opts for an alternative to accepting the benefits. In kind method – if and when there are payments then 50% of the CP portion of those would be paid to former spouse and balance to employee a.4 = 1/8. Date of issuance of an order passing on such a motion d. Time-Rule Formula for determining CP share: (# of months of employment between marriage and separation) / (# of months of service) i. it is 50% of the CP portion of the retirement b. Does not matter if calculated in days. because will always be right ii. Reserved Jurisdiction: If at the time of dissolution. Pay non Ee spouse on a monthly basis ***Assets most common in marriage: house. Earnings after divorce are SP. Date of filing of a motion by the non Ee spouse xii. but uses time rule 32 . retirement benefits. Hug this not retirement benefit.

But he remained in the service for a period of time and eventually left the service. Retirement benefits are deferred compensation.SP 3. DOE was starting point b/c these options were granted for present service and not future service 4. then spouse is entitled to ½ b/c it is CP. The nonEe spouse holds them as TE. a. and no question that the benefits were used for loss of future earnings. If disability benefits are paid during marriage. Any method that results in substantial justice is fine. Look at the purpose i. Elfmont 1. Future earnings (SP) 5. then bonus would be CP ii. DISABILITY i.1. 5. Stanquest: Military man injured. Issue: whether stock options granted to H during marriage are CP or SP b/c they were not exercisable until after the parties separated  a. Is it a form of compensation 1. and then the parties separate do a purpose analysis. At new job got stock options as part of compensation. H wanted time rule to start day the stock option was granted instead of date of employment b. Until exercisable they are in the control of the Ee spouse even though non Ee is entitled to a certain amount hh. What was the purpose of the benefits  If purpose was for future loss of earnings the SP 33 . Disability insurance benefits 2. 1. He chose disability b/c higher 4. Reason for disability benefits is to compensate for loss of future earnings . Paid for during marriage. Disability benefits: 1. YEAR END BONUS  only an expectancy interest: i. When he left he had to choose either retirement or disability. H changes jobs and left behind retirement benefits. received disability benefits. Recent cases use the day of grant of an option instead of DOE 7. if same bonus is for time effort after separation then it would be SP ii. Amount H would have gotten for retirement treated as CP. not have to be time rule 6. disability occurs after marriage. Characterization of the option is case by case bias. (DOE – DOS)/(DOE . Now vs deferred (CP) OR 2. The nonEe spouse controls as to whether to exercise them once they are exercisable. Deferred compensation is earned during marriage. If you receive after separation a bonus that is clear in either employment K or formula. Stock options cannot be given to the nonEe. and disability above and beyond SP ii.years to exercise option ) 3. Stock options had conditions attached 2. renew payments were made after marriage = SP  Community gets nothing iii.

and both cars totaled. A spouse who is managing or operating a business or interest in a business that is all or substantially all community personal property has the primary management and control of the business or interest 1. Att payment toward end of marriage and money not for benefit of C 1. accept the will and get only what is in it OR 2. conveyed or encumbered without the written consent of the other spouse iv. and account with 50K to my mistress. kk. Remedy: 1. § 1000: P. Benefits Community. All these assets are CP. or the clothing or wearing apparel of the other spouse or minor children which is community personal property cannot be sold. CP used as the family dwelling. 1. Spouse may not make a gift of the CP or dispose of CP for less than fair and reasonable value without written consent of the other spouse 1. b. restrictions on disposition i. and injury someone. (cooks the books) and takes extra $ and he and W buy a house. furnishings. if debt not for C. H is caught. Since 1/1/75 H & W have = management and control jj. W does not know. If the IRS wanted there take. Challenge the will and get ½ CP. no insurance. a. HYPO: H drafts a will: I give house. H knows about lawsuits against W. Liability is satisfied first from CP. management and control. W does not know H is cooking books. §1100: Community Personal Property. HYPO: H is a salaried Ee and takes $ regularly from his co. NOT applicable to gifts by both spouses to 3rd parties and 2. Hypo: On way to work and hit another car. Stitt: i. W embezzles money and is caught. C pays and then attaches to SP. Spousal Management XX. Money H gets uses to help life style( buy more expensive things for C). i. Does that matter – Prof not sure iii. or fittings of the home. What does the W get since H gave away her ½ interest in these assets. years later. car. pay with Community funds. furniture. gifts given by one spouse to the other spouse iii. and W would say not know about criminal acts and why should I be penalized. Exception spouse cannot dispose of CP in will ii. If H on way to see mistress satisfy with SP first mm. SP first then CP 1.XIX. H would argue money used for benefit of C. W was to get everything else. 518: Debt based on the benefit to C. Both spouse have equal control of CP and can dispose of it at their leisure 1. ii. H does not want to be responsible for W’s att fees. ii. Is this the stitt case i. not clear who has the liability ll. Prior to 1/1/75 H had management and control and W’s only cause of Action was for fraud iv. Management and control: and Creditor’s Rights: xxi. Used for PI recover or accident 2. This means that the managing spouse may act alone in all transactions but shall give prior written notice to the other spouse if there is a sale not in the ordinary 34 .

but there has never been a case to award it 3. §1101. within 60 days of filing for dissolution. legal separation or nullity or may be brought in conjunction with the action or upon the death of a spouse vi. parties must file schedule of assets and liabilities. Careful because there may be a Pereira / Van Camp situation 5. fraud or malice is involved then can get punitive damages 1. 50% unless show oppression. any action may be brought under this section w/out filing an action for dissolution of marriage. Plus attorney’s fees and court costs 3.Claim for breach of a fiduciary duty – i. Spouses owe each other a fiduciary duty. This section appears to be retroactive 4. characterization and valuation of all assets which may be CP – duty to volunteer this information 3. §720: Mutual Obligations: H and W contract toward each other obligations of mutual respect. In order for one spouse to get the primary control of the business there must have been some relinquishment of that control to that spouse from the other spouse v. must be at least a preliminary showing. then get 100%. Can get 100% of the asset as exemplary damages 2. Fiduciary duty between spouses extends until the assets are divided by the parties or by the court 2. If one spouse is an insider. fidelity and support pp. If oppression. § 721: Contracts Between Each Other and Third Parties. selling the whole business or encumber the whole business) 2. remedies for breach – 1. of any asset undisclosed or transferred in breach of the fiduciary duty 2. Fiduciary Relationship 35 .g. then the laws regarding insider trading may prevent the spouse from disclosing to the other spouse nn. Duty includes the obligation to make full disclosure of all material facts regarding existence. special relationship 1. action has to be brought w/in 3 yrs of the breach 1. or an amount equal to 50%. spouse has a claim for breach of a fiduciary duty for any breach that results in impairment of their half of the CP ii. latches defense may be raised – bars relief in equity to those who neglect their right to the detriment of others v. Award to other spouse of 50%. parties may waive final disposition of assets oo. court may order an accounting iii. but no remedy against the buyer 3. Fiduciary duty to spouse until final disposition of assets 1. it does not adversely affect the validity of the transaction – the spouse has a remedy against the other spouse. plus attorney’s fees and costs viii. can be commenced at death or w/ a divorce or separation action or nullity 2. court may order a title change to reflect its CP nature iv. If the notice is not given.course of the business (e. Theoretically can get more than 100%. Interest will never be assessed against the managing spouse vii. fraud or malice.

one or both spouses having conservator of estate or lacking legal capacity. if death or divirce can only get 50% back b/c the other spouse could have willed it away or kept it to themselves ii. Continues to apply through separation until property is divided at divorce qq. A transaction executed AFTER 1975 solely by either spouse w/ a 3rd party shall be presumed valid if the 3rd party had good faith lack of knowledge of the marital relation v. To make a gift of the community property 1.i. Series of Gifts – can keep the gift to her and complain about the other gifts 36 . Providing each spouse access at all times to all books kept regarding a transaction for the purposes of inspection and copying 2. if community still in tack can get 100% back BUT 2. Affirmation of a Transfer – 1. Accounting to the spouse. § 2033: Family Law Attorney’s Real Property Lien i. conveyed or encumbered ii. § 1102: Community Real Property i. One year statute of limitations to file action to void the transaction. beginning from the time of recording vi. nullity or legal separation 1. Either spouse can encumber his or her interest in the property to retain or maintain legal counsel for divorce proceeding ss. Rendering upon request. Need consent of both spouses: i. Both spouses have management and control over community real property 1. Remedies – i. Either party may encumber his or her interest in community real property to pay reasonable attorney’s fees in order to retain or maintain legal counsel in a proceeding for dissolution. Does not apply to transactions between H and W iii. law governing rr. This lien attaches only to the encumbering party’s interest 2. A transaction executed PRIOR to 1975 solely by Husband w/ a 3rd party shall be presumed valid if the 3rd party had good faith lack of knowledge of the marital relation (BFP) iv. and holding as a trustee any benefit or profit derived from any transaction by one spouse without the consent of the spouse with concerns CP ii. Unauthorized Transfers – a. Sue the Spouse ii. Applies only to family law attorneys tt. or is sold. Sue the person who got the transfer (gift) 1. Both spouses must sign any instrument by which the community real property is leased for longer than a year. §1103 Management and Control of CP. But neither spouse is required to keep detailed books and records of CP transactions 3. H and W have fiduciary relationships when entering into transactions with each other – duty of highest good faith and fair dealing and neither spouse shall take any unfair advantage of the other – the duty includes: 1. true and full information of all things affecting any transaction which concerns the CP a.

Debt Liability: spouse v. Tort: at the time the tort occurs c. K: at the time K is made b. With ex above cannot garnish wages of non debtor spouse to pay debtor spouses debt 1. passbook account or the like (no brokerage firm) iii. deposits only his money in a S account in the non debtor spouses name that debtor spouse does not have access to. Deposit account – demand. Ex: While H and W domincled in NJ. Only applies for pre-martial debt If non debtor spouse.2. then Creditor cannot go after what is in that account a. §903: Debt is incurred when: a. W owed BB $500. then the Creditor may go after it b. If commingled. §910: CP is liable for debts incurred by spouse either before or during marriage c. Pre-martial debt a. C can come against CP or SP of debtor spouse. b. they are still not liable so long as they are kept in a deposit account (of the married person) in which the person’s spouse has no right of withdrawal and are un-commingled with other community property. Once non debtor withdraws money and puts it in C account. creditor i. The spouse whose debt it is not is has a right of reimbursement. §913: SP of person incurring debt is liable DURING marriage. except property insignificant in amount ii. QCP is treated the same as CP and a creditor may execute on this property 3. Or when the obligation arises 2. Under 912. time. Concurrent Gift. §911: (Exception): Earnings (CP) of a married person are not liable for the debts incurred by that person’s spouse before marriage i. After the earnings are paid. Post-marital debt: a. money in there account is QCP. Post-marital means during marriage – while married and living together because does not include when living separate b. §910: Community is liable for debts incurred by either spouse before or during marriage (does not include when the spouses are living separate and apart) i. then C can go after any commingled property 2. savings. Is it pre-marital or post-marital debt? 1. but SP of person’s spouse is not liable unless the spouse also incurred the debt 37 . Ex: Before marriage.if the gifts are given in one transaction her acceptance = the acceptance of the gifts to the third parties uu.

Common necessaries of life = deemed to be necessary to sustain life  bare necessities to sustain life b. Does not have to be through contract or tort. SP of the person incurring the debt c. clothes. Three kinds of property involved in debt liability issues a. cold cuts ii. § 916 Division of property. subsequent liability. Treated as a debt incurred before marriage regardless of whether the court order to pay support occurred before or during marriage a. whether based on contract. H gets his mistress pregnant. CP is liable except earnings of other spouse 2.Quasi-CP is treated as CP for all purposes and is liable to same extent as CP v. §912. not to the other spouse 3. then the community is entitled to reimbursement iii. §920 . if the spouse signed the note then they have incurred the debt – willing to sing the mortgage BUT will not sign the note then there is no assumption of liability of her SP for the debt d. food. §914 (Exceptions): i. Thus. Necessaries of life = rent. §902: Debt means an obligation incurred by a married person before or during marriage. SP of the spouse of the person incurring the debt iv.i. Right to reimbursement must be exercised within three years of the application of the funds to the debt 2.Right to Reimbursement: Right to reimbursement is subject to express written waiver 1. medical 2. Common necessaries of life of person’s spouse while living separately (does living separately mean being separated?) a. Necessaries of life of person’s spouse while living together a. If CP is applied to satisfaction of such an obligation at a time when non-exempt separate income is available. §915: Child or Spousal Support Obligation not arising out of marriage (e. Concerned with liability to the creditor. married person is entitled to reimbursement of their SP when their SP is used Voluntary use of SP of person’s spouse does not waive right to reimbursement ii. right of reimbursement. Look at how much is spent – filet v. or H divorces W1 and must pay spousal support even after marrying W2) 1. or sanctions awarded against litigants 2. interest and attorney’s fees 38 . Married person’s SP is liable for certain debts incurred by spouse during marriage: 1. could be through taxes.g. CP of both spouses b. Debt includes any kind of obligation vi. tort or otherwise 1. import or export tariffs or duties.

limitation on exercise of reimbursement 1. Sell all the property. Reverse Pereira / Van Camp – deals with the situation where have SP contributions to CP business zz. Pereira / Van Camp – deals with the situation where have CP contributions to SP business – allocates between return on investments and efforts of the spouse applied to the business 1.reverse Pereira . Permits bifurcation of the dissolution proceeding and the division proceeding if the court reserves jurisdiction to divide the property at a later date 1. § 2550: Manner of division of community estate i. § 2501: Community Estate i. property subject to satisfaction of liability. Division of Community Property At Dissolution vv.. if liability is based upon as act or omission which occurred while the married person was performing an activity for the benefit of the community the liability shall first be satisfied FIRST from the community estate and SECOND from the SP of the married person b. § 2552: Valuation to occur as near as practicable to the time of trial i. Bifurcation – can only have one judgment in a dissolution aaa. Requires equal division of CP except on written agreement or oral stipulation in open court ii. ww.vii. if the liability of he married person is based upon an act or omission which occurred while the married person was performing an activity for the benefit of the community the liability shall first be satisfied from the separate property of the married person and second from the community estate 2. does not apply to the extent the liability if satisfied out of the proceeds of insurance for the liability ****there are no cases on when there is an activity for the benefit of the community or not for the benefit of the community***** XXII. the court for good cause may value the assets and liabilities at a time between separation and trial in order to accomplish equal division in a equitable manner yy. the liability of a married person for death or injury to person or property shall be satisfied as follows: a. “Community estate” includes both the community and quasi-community assets and liabilities of the parties. the court should determine the value of the assets and liabilities as near as practicable to the time of trial ii. satisfaction out of insurance proceeds. Imperator.Court orders the property to be sold and divide the proceeds between the parties 39 . Permits judge to rule on divorce and reserve jurisdiction for a later date to divide the property xx. §1000 – liability for injury or damage caused by spouse.watch out for this i. Three Basic Methods of Distribution on Dissolution of Marriage i. Community estate includes CP and quasi-CP assets and liabilities iii. Upon 30 days notice (notice of motion).

once the spouse is no longer the custodial parent then the house is sold 2. EX: H awarded business worth $75.500 to W in cash b. Type of deferred sale  that is seen as additional child support b. H cannot file for partition until youngest child = 18 1. Parties don’t like this method because it keeps them as partners  disfavored by the court and by the parties 3.whoever has the minor children a. If cannot say pay the excess amount due right away. IMPAIRMENT OF A PRINCIPLE ASSET  if there is a possibility where there could be one spouse buying out the others ownership of the business a. EX: If there are 500 shares of ATT stock. if the spouse remarries. typically the court will award the H and W undivided. legal or going rate of interest or a court appointed interest 4. can have delayed payments but interest must be paid on the unpaid balance i. This method is used most often – most favored 2.000 so the H would have to pay $12.there is a rebutable presumption that further deferral of the sale is no longer equitable ii. Asset Distribution Method – court values the assets and then awards certain assets to the W and the H 1. Seldom will be exactly equal so have to use an equalizer 3. EQUALIZER – Excess that one spouse gets over the other spouse is divided in ½ The spouse that got more has to give the one who got less ½ the excess amount in cash a. Advantage is that the court does not have to value the asset 2.000 – the excess is $25. Children cannot be too young. EX: H and W have 60% interest in the business and partner had 40% interest and W wants half of the Business BUT this would be unfair b/c she could get together with the other partner iii. Problem with business that constitutes the livelihood of one of the parties not likely to be sold ii. equal interest in the house. FAMILY HOME  Exclusive Occupancy. Division in Kind: 50% of the asset is awarded to each spouse as SP 1. This method can only be done when there are minor children involved i. In situations where you don’t know how much you will get until you get out of the investment 4. may award 250 to each party 5. Advantage Court doesn’t have to spend time listening to experts as to the value of the property b/c the market will value the property (not used very must except when value is very difficult to determine or when it is very easy to value but neither want the asset) 2.1. This is typically done with investments and tax shelters a. When there are H and W with minor children.000 and W awarded residence worth $50. because the court will not tie up the property too long 40 . but will give parent with the kids exclusive occupancy until youngest child turns 18 i.

Being in jail is not enough 41 . §3806: Court has to determine who will be responsible for routine maintenance and capital improvements bbb. NET value of community estate less than $5.000 modest CP exception 1. Parties otherwise agree – §2550 manner of division of the property 1. Must be voluntary with no overreaching 3. §3805 – deferred sale may constitute additional child support f. adverse effect on the H ii. Takes into account factors such as the parties’ relative ability to pay iii. The impact of minor children in losing a home must be weighed against the economic detriment of the out-spouse (usually the H) d. Court has jurisdiction to order reimbursement in cases it deems appropriate and for debts paid after separation but before trial v. Permits bifurcation of the dissolution proceeding and the division proceeding if the court reserves jurisdiction to divide the property at a later date i. §2602: Deliberate misappropriation – as an additional award the court can award the amount the court determines to have been deliberately misappropriated by the party 1. Community debts exceed total community assets 1. Debts incurred after entry of dissolution judgment. Permits judge to rule on divorce and reserve jurisdiction for a later date to divide the property ii. if the court determined that the order is necessary to minimize the impact on the children a. if it is feasible then there is a balancing test  1. If you can find him to serve him.c. to see if there will be a deferred sale: Weigh i. Requires equal division of CP except on written agreement or oral stipulation in open court b. adverse effect on the child e. One party cannot be located through reasonable diligence a. to divide the separate property interest of the parties in real and personal property. then this prong not met i. §2550: Manner of division of community estate a. Exceptions to Mandatory Equal Division  i.000 (keep debt in mind) 2. but before termination of marital status shall be confirmed without offset to the spouse who incurred the debt iv. Excess of the debts shall be assigned as the court deems just and equitable 2. Community estate includes CP and quasi-CP assets and liabilities c. Court has jurisdiction. Especially if both are represented by counsel 2. §3801: First the court has to determine the economic feasibility of a deferred sale i. forgot to change the address not deliberate – has to be a DELIBERATE misappropriation vii. held by the parties as joint tenants and tenants in common vi. at the request of either party. §2604: Community estates of less than $5.

limitation and the exceptions on the limitations Undistributed Property that used to CP – overlooked assets 1. general rule. Testator disposes of more than ½ the CP to someone not the spouse in a will  42 . §2556: Court has continuing jurisdiction to award CP assets or liabilities that have not yet been adjudicated a.Community property personal injury damages 1. The property should be distributed equally but doesn’t have to be 3. ½ belongs to surviving spouse. general rule – CP that is not distributed is owned by the parties as tenants in common viii. ½ of decedent’s quasi-CP goes to surviving spouse. ½ belongs to decedent ii. Quasi-CP. xiii. Testator’s SP 2. decedent can only dispose of ½ the quasi-CP acquired by decedent – cannot dispose of quasi-CP acquired by spouse 4. Probate Code §100 1. Court can distribute those assets as it deems appropriate 4. Probate Code § 6101: What can be disposed of by will 1. x. If property is left undistributed after a divorce. Then the court can award the whole estate to the other party on conditions the court deems proper §2641: Education loans assigned to the person who got the education 1. The ½ of the testator’s QCP that belongs to the testator iv. other ½ belongs to decedent 2. xii. Testacy – died with a will i.b. ix. Exchange rule is made applicable iii. that the damages may be divided among the spouses even though the general rule is that the injured party gets it all – BUT the injured party has to have at least 50% of the proceeds a. This is the only place where have distinction between QCP and CP 3. the CP is owned by the parties as tenants in common 2. Does not have to be equal division but will be presumed equal division unless the court finds good cause §2625 – all separate debt including those during marriage and not for the benefit to the community shall be given to the party that incurred them Overlooked assets – oops cases 1. Probate Code §101: Quasi-CP (matters which spouse acquires the property) 1. XXIII. (b)(2) – shall not be included among the liabilities of the community and shall be assigned to the person who incurred the loan §1000: Personal injury liability 1. Distribution of Community Property at Death ccc. this has not been 3. When can they not be located? At any time they need to be available. xi. married person not liable for injury caused by the other spouse EXCEPT where they would be liable but for the marriage §2603 . The ½ of the CP that belongs to testator 3.

If the gifts made to the spouse under the will amount to more than would take from ½ the CP. Separate Property 1. forfeit all gifts made to you under the will and only get 50% of the CP a. the court will look to whether the application of state law will substantially impair federal interests.CP passing to a surviving spouse is not subject to a CA death/Inheritance taxseparate property is subject to an inheritance tax – 1. If die with no will. Code is silent 2. Who gets the gifts made to the spouse when taken against the will – stock goes to decedent’s heirs 6. If take against the will. then the spouse and the child share equally 2. If the surviving spouse has more than one child. then the spouse gets 1/3 and the children share 2/3 iii. Intestacy – dies without a will  i. the surviving spouse will take against the will a. Probate Code § 6401 1. Will is executed as if the surviving spouse died first 4. Will can say that the surviving spouse gets gifts in will no matter what a. Absent a congressional mandate to preempt state law. Quasi-CP has same result ii. Such a provision would allow the surviving spouse to take both under and against the will ddd. NOW the statute is changed to show that the will is NOT admissible to show that all the property is CP (can no longer look to the will to see if there is a clause that transmutes everything to CP) RANDOM STUFF eee. then the surviving souse will elect to take under the will 5. surviving spouse gets all the CP 2. But the will is not invalidated – the property is otherwise dispersed according to the will b. 43 . Supremacy Clause: When there is a conflict with state and federal law. i. If the ½ the CP amounts to more than what was awarded in the will. If surviving spouse has one child. NOTE. Spouse has an option to take under the will or against the will 3. the federal law is supreme.1. OLD LAW: many times in the will the spouse will state everything is community property therefore when there is a divorce they’ll use the will to prove that all the assets are CP (good for the spouse contesting the separate property) 2.

This is the law today 2. McCarty v. then the federal statute says that the “or someone” only takes title upon the death of the purchaser 1. This case doesn’t require CP states to classify the proceeds of NSLI policies as SP. Exceptions: 1. Limitation that no more than 50% of the disposable retirement payment can be subject to the CP laws 3. McCarty – held that federal law would preclude a state court from dividing Military retirement benefits according to state CP laws (old law) a. not named on bond. but only to refrain from administering those incidents of CP law which would frustrate the congressional plan even though the policy was paid for by CP money c. Hisquierdo v. Fraud – a federal law cannot be used to perpetuate a fraud. Preemption does apply v. if it is.S. unless the federal statute was used to perpetuate a fraud vi. the spouse. b. Employment Retirement Benefits 1. Even if the bonds are bought with CP. Federal Uniformed Services Former Spouse’s Protection Act (FUSFSPA) 1. Hisquierdo – CA CP laws cannot be applied to pensions created under the Railroad Retirement Act 3. W still has state right to proceeds of non-governmental insurance policies of H. Social Security – it is the SP of person holding it vii. Once the money is paid the state courts are free to dispose of it by CP laws a. the state courts still could not dispose of the money as CP because it would evade the supremacy clause – but this was overruled by FUSFSPA viii. Wissner v. cannot take title after the purchaser’s death. fff. Government Bonds (U. Savings Bonds) – if the bonds are taken in the name of the purchaser or someone. Savings Bonds iii. Supreme Court said that once the money was paid. Wissner – Federal law granted the insured the right to designate a beneficiary which was not his W. Retirement benefits for people in military service iv. GI insurance ii. the party seeking to use state law will be able to recover.S. state law granted right of spouse to proceeds of insurance policies – federal law is supreme preempting LA law and W cannot collect against H’s governmental insurance plan b/c to hold otherwise would frustrate the deliberate purpose of Congress and nullify the soldier’s choice a. Employee retirement benefits have long been classifiable as CP under CA CP law a.ii. The Act also allows the court to send payment straight to the spouse 44 . The problem arises when the retirement benefits are created by federal law 2. U. National Service Life Insurance Act 1. Federal benefits that area subject to the supremacy clause: i.

or there is less than 10 years of service during marriage.-work the facts into the analysis Breaks down into three section 1. Act allows any McCarty based cases to be vacated. but the argument has been unsuccessful at the circuit level ix. Supreme Court has held that Congress can always determine what its own intent was b. it is not CP. Separation of Powers Problem a. Copyrights are CP because the owner can transfer all (assignment) or a portion (license) of the interest in compliance with the federal statute.-all the possible ways 45 . b. Domicile Requirement a. However. just means that the payment cannot be sent directly to the spouse 4. This doesn’t mean that if the parties are married less than 10 years. ESSAY At death – half of CP goes to the spouse and half to the dead person Quasi Community property – page 647 – §102 – only property acquired by a decedent December 10 – 1:30 -Exam room ???? for typing Answering the Exam – DO NOT DO IRAC do not list the issueuse a tile of what is going go to be spoken about EX: “the house” do not only repeat the facts – be sparing with the facts . SC has never reached the separation of powers issue. and re-heard 5.a. Determining the status of the items The car The house The bank account etc Don’t be very specific about what is first second. if done so within 2 years. Pensioner must be domiciled either within the court’s territorial jurisdiction or else a resident in that jurisdiction other than because of military assignment 6. this power is limited to situations where the parties have been married for at least 10 years and the military spouse has 10 years of service credits during marriage. third etc Use the sequence that was given in the exam Do not separate the items at the end of each section do that at the end of the whole section . Federal Copyrights 1.

-.look to the call of the question don’t add more than what is asked if told that it is in writing then don’t talk about what happens when there is no writing Also discuss claims of spouse v.2 What are the debts 3 how the property is divided – may only have to determine the community property and not the separate property may only have to look at all the property – what is the disposition of the property . spouse – reimbursement don’t need to know the code section #’s – can be if absolutely certain but that is all do not give the names of cases 46 .

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