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, look to see if the property was already transmuted by discussions, etc. before 19851!!! -If the couple divorce, and one spouse dies before the assets are divided, the divorce rules apply!!! INTRODUCTION Common law system (VAST MAJORITY): Husband and wife own all property individually except that which they expressly agree to hold jointly. History: Husband controlled pretty much all property—even that which the wife brought to the marriage. Then the Married Woman’s Property Acts changed some of this. Spousal protection: All states have some protection for dissolution. However, note that it only protects the spouse—and not the devisees of the decedent. Equitable distribution doctrine: Protections were set up for death and divorce so one spouse is not precluded from getting some money. Divorce: Generally spouse gets ½. Death: Forced/Elective share (choosing either what is in the will or their forced share—probably somewhere beween ½ and 1/3 depending on the jurisdiction) Community property system (MINORITY): Husband and wife own significant portion of their property jointly unless they have agreed to hold it separately. Property obtained during marriage is presumed community property. Separate property: A married person may convey his separate property without consent of the spouse; including: all property owned before marriage. all property acquired after marriage by gift, bequest, devise, or descent, rents, issues and profits of separate property, all earnings and accumulations while living separate and apart from the other spouse Community property: Any other assets acquired during marriage, real or personal, while domiciled in California may be deemed community property, owned equally by both spouses. Equitable distribution:There is no real equitable distribution system anymore—it’s already built into the system because each gets their half the moment that one earns the money. Divorce: Each spouse gets his half of community property and keeps his personal property Death: Each is entitled to dispose of her share of community property. If no will, 100% of the community property goes to other spouse, then the separate property goes through intestate succession. Comparisons: During marriage: COMMON LAW: the person who earns the property has management and control over that property. COMMUNITY PROPERTY: Each spouse both spouses have equal management and control over all of the community property At divorce: COMMON LAW: Generally each spouse gets half COMMUNITY PROPERTY: Each spouse gets his half If spouse who earned property dies: COMMON LAW: Generally surviving spouse will end up with half (forced share), and decedent can devise his half COMMUNITY PROPERTY: Each spouse gets his half, and can devise his half. If spouse who did not earn property dies: COMMON LAW: If the spouse that did not earn the money dies, surviving spouse keeps all—decedent cannot devise anything because he had nothing!!! Heirs or devisees get nothing!!! COMMUNITY PROPERTY: If the spouse that did not earn the money dies, he can still devise his half away FUNDAMENTAL PRINCIPLES Community Property (760): All assets acquired during marriage, real or personal, while domiciled in California is presumed community property, owned equally by both spouses. Separate Property: 1. All property owned by the person before marriage 2. All property earned or acquired after marriage by gift, bequest, devise or descent 3. All rents, issues, and profits of separate property 4. All property acquired while living separate and apart Community property with right of survivorship: As of July 1 2001, if a husband and wife expressly declare property as community property with right of survivorship, writing, initialed, shall pass to survivor. The right of survivorship may be severed in the same way that joint tenancy may be severed. (if on exam property is titled this way before July 1, 2001, it is not really titled this way Equality Principle: Each spouse has present, existing and equal ownership interests and management rights in community property immediately on acquisition during continuance of marriage relation.
POPOVICH’S 5 STEP CLASSIFICATION PROCESS:
1. 2. 3. 4. 5.
ARE THE PARTIES WITHIN THE SYSTEM? (legally married, etc.) IS THE PROPERTY CAPABLE OF CLASSIFICATION? (some are not—education, good will?) IS THERE A CLASSIFICATION PRESUMPTION? (presumptions set who has the burden of proof) CAN THE PRESUMPTION BE REBUTTED? (by tracing, transmutation, premarital agreement) IS ANY APPORTIONMENT APPROPRIATE? (if community property was used to improve personal property, etc., apportionment may be appropriate)
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because only then is there a sufficient state interest to protect the spouse. However. W2 has reasonable good faith that she is married to H. FROM W1’s POINT OF VIEW: Because W1 is still legal spouse. under 18. or the death of the person who earned the property. However.40. ARE THE PARTIES WITHIN THE SYSTEM? Union Issues True community property: Legally married (recognized by California): NOTE: CA does not recognize common law marriage. they still have in personam jurisdiction. and it is later found to be void. money earned during the marriage is separate property of the spouse who earned it. the protections are the same. If there is both a putitive and a legal spouse: Determine from each point of view. W1 (and kids) would not have received anything because they would not be entitled to any separate property.. the kids in the aggregate got 2/6. etc. but thought she was divorced.000 is H’s separate property. and H could devise his ½. quasi-community property is only treated as community property at the end of marriage. real community property means both spouses have present. H then tells W2 that he is divorced and marries W2 (also married. First. Registered domestic partners: Same property rights. not valid. EXAMPLE: H and W live in CA. W1 would get 1/3. So. this may be applied retroactively (controversially) to parties that have filed a Declaration of Domestic Partnership before then. So both W1 and W2 got ½. W2 would have gotten her ½. it is true Community Property. Jurisdiction Issues “All property. H dies. and W2 has her half. and hence is not a reasonable good faith belief. Good faith/common law marriage: There is no such thing as a good faith common law marriage! That would undermine the law. EXAMPLE: If W2 had “divorced” H. There are no marital property rights. What could void marriage: Lack of consent. while domiciled (reside with intent to stay) in this state is TRUE community property. H marries W2. Maritritious marriage: When neither spouse has good faith belief that marriage existed. existing. and W2 got 50%. H’s marriage to W2 is not valid. incestuous marriage. and W2 would get 1/3. acquired by a married person. and not community property system. if legally married (by common law. EXAMPLE: EXAM QUESTION!!! Estate of Hafner: H and W1 were married with 3 kids. Implied contract: However. but most commentators think that it does not apply because it seems unfair.000 is quasi-marital property. split it. and H would get his ½ because W1 (and kids) would not be entitled to any separate property. To divide: Because each property is worth same. W1 got 1/6. bigamous and polygamous marriage. EXAMPLE: H is married to W1. rights upon death and divorce. sale share of property to other spouse. real or personal. while CA deals with the probate issues. equal ownership and management rights of the property immediately upon acquisition. Couples migrating into California: Quasi-community property: How the system applies to couples migrating into California: The reason we treat the property like community property is because common law jurisdiction. protections. and so all of the $416. Quasi-marital property: Putitive marriages: Where at least one spouse enters into a marital relationship with reasonable good faith belief that a marriage existed. NO. then H would get 1/3. Hence. putitive domestic partnerships. FROM W2’s POINT OF VIEW: Because W2 is putative spouse. Then they separated and lived separate and apart. Choice of law issue: MAJORITY: Most states will apply the law of the state of the decedent’s domicile. Quasi-community property is treated as community property. If it were not possible however. If not: Court may require parties to execute conveyances with respect to property. buy home 1 in North Dakota worth $100 (in H’s name) and home 2 in Kansas worth $100 (in wife’s name). etc. Retroactivity: Although this was not law until 1/1/2005. If both are entitled to property. wherever situated. it is recognized in CA. it is possible to divide without changing nature of property by giving each one of the properties. which is unconstitutional. benefits. EXAMPLE: If H gets divorced from both W1 and W2. At same time. Can guilty spouse use this statute to his advantage?: It is unclear. Death: Here CA does not have in personam jurisdiction either because he’s dead. If they moved to California. So. This continues for 24 years. we cannot call it community property or treat it as such until spousal protection is necessary because the person who earned the money would automatically be deprived of his separate property rights. In this case. such as common law. both W1 (W1 entitled to 1/3 and kids together are entitled to 2/3) and W2 are entitled to 100%.” Spouses domiciled in California purchase land in another state: Note that California does not have in-rem jurisdiction over the property.1. during the marriage. they must initiate an ancillary probate proceeding in the other state. give money — find other ways to divide. But. upon death or divorce. and for division on death and divorce—all property purposes. we don’t take it away from them until divorce. annulment. and kids would get 2/3. the $416. Page 2 of 7 .472. and by intestate succession W2 get’s H’s ½. W2 would get ½. The estate of H and W2 was worth $416. and hence through intestate succession of separate property she would get 1/3. H and W divorce. MINORITY: Choice of law where property sits. community property). H gets in accident and is awarded $1 million then dies intestate. because both had legal rights. divorce not valid). EXAMPLE: If H would have died with a will. However. there may be an implied contract for services (but not sexual services). Dissolution: If possible to divide property without changing nature of property: Do it. it will be decided under its own rules. the court divided the estate. and H has 3 kids with W1 and 4 kids from W2. CP protections do not apply. Remember. No tricks here on test. The court divided equally because each were entitled to 100% under intestate succession. Rights of putitive marriage: Same as if they were legally married—for distribution of community and separate property. but not same-sex!) in another state. Hence. there would be no spousal protection because the property is separate property. Hence. both with husband’s earnings while married and domiciled in CA (so. and court could award quantum meruit recovery for the services performed. find other ways.
or has substantially benefited from the contributions There is a rebuttable presumption that the community has not substantially benefited from the contributions if it has been less than 10 years since education. He doesn’t have the right of renewable alone—it is up to his employer. W gets half. This will be on exam. 2. the apportionment is proportionate to the amount of the community contribution. last 2 years with community property. No estate protection. There is also a rebuttable presumption that the community has substantially benefited from the contributions if it has been more than 10 years since education. that money is community property. but the policy was provided by his employer. and A gets half. Company assets not worth much. EXAMPLE: H grew his partnership while married to W. Spouse will get reimbursed for half of the unused portion of policy payment. then divorces W1. A gets nothing.000. EXAMPLE: Same as above. such as if other party has also received contributions for education. H dies. Very little. it is quasi-community property OTHER PERSON DIES: It is still separate property of surviving spouse. reputation. O gets $80 + ½ of community contributions. W earned the money. Here you are dividing the cash surrender value. Here W1 would not be entitled to anything. After graduation. Because this property would have been community property had it been obtained while domiciled in California. EXAMPLE: W gets education with community funds. and leaves everything in will to A. there will be both community property and quasi-community property involved. and can be redeemed before death. O gets $50. last 2 years with community property. The benefit (policy) was earned during the last term. training or student loan payments (not living expenses— only tuition. though in such a situation the court may reduce amount—see below) (4) The amount can be reduced (cannot be increased) if necessary. EXAMPLE: H obtains term life policy payable to O without W’s consent (written consent required after 1985—tough transmutation period). IS THE PROPERTY CAPABLE OF BEING CLASIFIED AS COMMUNITY PROPERTY? Education: NO. $100 payout. W gets $10. (2) With interest at legal rate. EXAMPLE: Same as above. H then gets cancer. it is W’s separate property. continued patronage—greater than the value than the some of its parts. Uninsurability: However. except H did not buy his own policy. contributions to education. it is quasi-community property Death: WAGE EARNER DIES: If the property would have been community property (or traced to community property) if acquired while domiciled in California. The last payment was community property. the previous term payments that kept the policy renewable are now worth something. It would be unconstitutional to take separate property away. books. Apportionment on death: Depends on type of life insurance. The last term paid by community property of H & W2. if it (3) Substantially enhances the earning capacity (regardless of whether the party takes advantage of the enhanced earning capacity. LOOK WHO IS DYING!!! EXAMPLE: H and W come from Ohio. but its goodwill was worth a lot. Don’t forget who is dying! EXAMPLE TRICK QUESTION: So. He remarries W2 then dies. sick. W divorces H Reimbursement upon dissolution only: Absent written K to the contrary. Name recognition. talk about both!: Term life insurance: Last payment rule: Apportionment is proportionate to amount of community contribution on last term only. Whole life insurance: Apportionment is proportionate to amount of community contribution. etc.Dissolution: If the property would have been community property (or traced to community property) if acquired while domiciled in California. Whole life insurance: This also accrues value—kind of like a bank account. Upon death. That gives good idea how much goodwill is worth here. Life insurance coverage: YES. H sold his interest for $100. i.e. leaving everything in will to A. NOTE: An outstanding student loan is assigned to the student spouse upon dissolution Goodwill: YES. Companies are worth more than just its tangible assets. 8 years paid with H separate property. W1 would be entitled to some apportionment for the period when the policy was kept renewable with community funds. 8 years paid with H separate property. except H dies. and should be apportioned! EXAMPLE: H & W1 marry. if it was acquired while domiciled in Ohio. Page 3 of 7 . EXAMPLE FRAUDULENT CONVEYANCE: If a spouse gives property away before a divorce to keep the property from becoming quasi-community property. Get appraiser to determine how much. it is like a fraudulent conveyance and is recaptured and distributed as quasi-community-property. W gets $50. NOTE: Even if they purchased the property in CA. so O gets $90. if the person becomes uninsurable. H dies. Apportionment for dissolution: Term life insurance: If dissolution occurs in middle of a term that has already been paid for with community funds. Hence. W dies. all belongs to W. NOTE: If the type if insurance (term or whole life) is not specified on exam.) from CP must be reimbursed: (1) To the community. H obtains term life insurance policy. Education is not capable of being classified as Community Property. EXAMPLE: H obtains whole life policy payable to O without W’s consent (written consent required after 1985—tough transmutation period). $100 payout. and therefore the policy is contingent on employment. during time between the time the couple became domiciled in California and divorce.
NOTE: It was a bit more difficult to transfer community property to separate property than from separate property to community property. but the property acquired during period when there was an intent to end permanently is separate property. 1986 must be in writing Child support: The right to child support may not be adversely affected by a premarital agreement (public policy) Spousal support: The right to spousal support may be adversely affected so long as it is fair (normal contract stuff). that party did not expressly waive in writing any right to disclosure AND c. (LOOK FOR THIS ON EXAM! Analyze under both!) Easy transmutation period (before January/1/1985): Oral transmutations were the rule of the day. One part did not voluntarily consent to the agreement. . some make up their own standard somewhere above preponderance. (NOTE: This does not necessarily 3. Separation (WILL BE ON EXAM): Property earned by spouses during period of separation is separate property. Some use clear and convincing. The party had at least 7 calendar days between receiving agreement and signing the agreement c. “This is ours” is enough. bequest. was fully informed of the terms and effect of the agreement. that party could not have had an adequate knowledge of the property or financial obligations of the other party Transmutation: Statutory property rights of spouses may be altered by agreement. issues. was proficient in the language in which the explanation of the party’s rights was conducted and in which the agreement was written 2. All rents. 1985. and profits of separate property Giving up rights: Property acquired by compromise of a party’s right (such as a chose in action resulting in a settlement) is separate property if the right that the party compromised was solely his Standard of burden: Preponderance of the evidence. Unconscionable AND a. 1. do not apply—absolutely must be in writing!) (NOTE: Titling property in joint tenancy is enough) 1. the party did not have a fair. reasonable and full disclosure of the property or financial obligations of the other party AND b. but both were easy. devise or descent Tracing: The property acquired during marriage was acquired using separate property: 1. Avoiding a premarital agreement: A premarital agreement is voidable either if: 1. More likely a reality check. Page 4 of 7 2.3. No consideration needed. Contractual Modification: Operation of the system may be modified or limited by agreement between the spouses. Gift. 1985): A transmutation of real or personal property is not valid unless: It is in writing (statute of frauds exceptions such as part performance. Acquired by a married person 2.” the less indicative it is of an intent to end permanently. 1985. During the marriage (may be inferred by circumstances when it cannot be shown when the property was acquired) 3. This is still good law for any transmutations made before January 1. CAN THE PRESUMPTION BE REBUTTED? General Community Property Presumption: All property (capable of classification) is presumed community property if: 1. Effect of a void marriage on agreement: If a marriage is determined void. joined in. The party had independent legal counsel or expressly waived representation b. They can agree how property will be classified. While domiciled in this state (where you intend to stay) Rebuttals: Once the 3 elements are met (pretty easy). extrinsic evidence is permitted) Express declaration: Expressly states that the characterization of property is being changed/relinquishing all interest in the property. At least one spouse has no intent to ever resume normal marital relationship (demonstrated by actions and circumstances—no inconsistent actions) Only one spouse wants to end: Only one spouse must intend to end permanently. 2. Critical date: January 1. courts are not consistent. the more that one spouse says “it’s over. etc. bequest. require a signature) 1. the property is presumed community property and the other party has the burden to rebut. we’re usually looking for some expression of an intent to end permanently (and no inconsistent actions) Changing mind: Of course spouses can change their mind. (No That was made. Writing: Premarital agreements executed on or after January 1. It is presumed that it was not voluntary unless: a. However. devise or descent: Property acquired during marriage was a gift. jewelry. All property earned or acquired after marriage by gift. the premarital agreement is only enforceable to extent necessary to avoid an inequitable result. Gift exception: These tough transmutation period requirements do not apply to gifts between spouses that are (must meet these requirements—no such thing as a “true gift”): Tangible personal articles (clothing. The party. consented to or accepted by spouse whose property is adversely affected. if not represented by independent counsel. Premarital agreement (Maybe multiple choice—not big): The property rights of husband and wife prescribed by statute may be altered by a premarital agreement or other marital property agreement. etc. However. All property owned by the person before marriage 2.) Used exclusively or principally by the spouse Is not substantial in value taking into account the circumstances of the marriage. Tough transmutation period (after January 1. In order to qualify as separation for this rule: Physical separation 3. 2. devise or descent 3. bequest. IS THERE A CLASSIFICATION PRESUMPTION? 4. However.
might be just reality check—to shock other spouse. It is still Community Property.Filing for divorce/court adjudicated separation: This is separation. and there is no Special Married Man’s Special Presumption. For Dissolution (this overrides any transmutation rules that may apply): California CFC §§ 2580/81 confirms the Community Property presumption. fraud. or is not single family residence: titling as Joint Tenancy becomes Joint Tenancy Rebuttal: For both of the above presumptions. That way. if one spouse dies after divorce. the property is presumed community property unless a different intention is expressed in the instrument EXAMPLE: Title reads: “W Smith and H Jones. However. NOTE: A dissolution will destroy the joint tenancy. and no intent to end permanently. Married Woman Special Presumption: If these elements are met. Rebuttal: This super presumption is semi-conclusive and can only be rebutted by showing duress. to avoid credit problems. Clear statement in the deed that property is Joint Tenancy and NOT Community Property. NOTE: Titling property in joint tenancy after 1/1/1985 is a valid transmutation (in writing. etc. joined in. or implied (Ignorance + Tracing. it is Community Property if (as per the tough transmutation period): 1. The presumption assumes that the husband intended for the property to be separate property of the wife. because the General Community Property Presumption applies. Is it really Joint Tenancy or is it Community Property? Or something else? Why it matters: Most people put property in joint tenancy—each spouse owns half as separate property with right of survivorship. and H and W own the other half as community property. but before property issues have been resolved. But. it is Community Property if: 1. etc. Super Married Woman Special Presumption: If the above elements are met. Agreement or understanding: Oral. So. the property is presumed wife’s separate property 1. 2. the property becomes the separate property (or greater share) of that spouse if: 1. 2. 3. express declaration. NOTE: Tracing does not rebut this. AND: 4. and the funds can be traced to Community Property. This statute was enacted in 1984. EXAMPLE: Title reads: “W Jones and H Jones. 5. H owns ½ as community property with his wife. For Death (“Common law”): Titling property in joint tenancy rebuts the General Community Property Presumption and the property becomes Joint Tenancy. Title reads “In W’s name as her separate property” Husband knows about it. 1975 (because prior to this year the management and control rights were in the husband) Rebuttal: Lack of intent to transmute (title in wife’s name for convenience. Acquisition of titled property (only the woman’s name is on title) By a married woman In writing Before January 1. 6. 2.) Rebuttal: If an agreement is made after 1/1/1985 purporting to hold the property as Community Property. Everything else (“Common law”): If property is acquired before 1965. written. the property is presumed to be owned as tenants in common unless a different intention is expressed in the instrument If acquired by husband and wife and in title are described as husband and wife. Titling Property in Joint Tenancy: Husband and wife title property in Joint Tenancy. the right of survivorship is destroyed. Probably higher than preponderance. and is applied retroactively so long as there was no vested property right as shown below. 3. mistake. consented to by parties) from Community Property to Joint Tenancy Rebuttal: If an agreement is made before 1/1/1985 purporting to hold property as Community Property.” W owns ½ as separate property because the married woman’s special presumption applies. or does the titling himself.” W owns ½ has her separate property. Rebuttal: If one spouse claims the property is his own separate property (or he has a greater share) due to an agreement made before 1984. Party did not know what Joint Tenancy meant.) Standard of proof required: Courts are all over the place here. there are tax benefits to holding property as community property.” H and W each own ½ as community property. the property becomes Joint Tenancy only if: 1. It is in writing Express declaration: That was made. or before then and one spouse doesn’t claim it is all his (or greater sharae). Other rules: If acquired by the married woman and any other person. consented to or accepted by spouse whose property is adversely affected. Agreement or understanding: Can be oral or written Rebuttal: In all other cases (agreement is made after 1984. Look for facts on this point. directs it. W owns ¾. above statute cannot be applied retroactively: Single Family Residence Presumption: If the property is (1) a single family residence (2) acquired between 1965-1984: It is confirmed Community Property. EXAMPLE: Title reads: “W Jones and H Jones as husband and wife. OR A written agreement stating that it is Joint Tenancy or Separate Property Page 5 of 7 .
-If spouse had taken out $20. After 5 years. Then do the following apportionment: At divorce: Before 1/1/1984: (Lucas) Absent agreement or understanding (oral or written) the contribution of SP to CP is deemed a gift. Add 10% per year $75. etc. etc. but no need to show intent. Salary withdrawal: If one spouse withdraws a salary. Hence. NOTE: So. and it grew a lot—like an espresso business. use Van Camp because it results in a smaller community share. Salary withdrawals: If one spouse withdraws a salary. there is the other rule above.000 is presumed CP because the account was acquired during marriage. EXAMPLE: H purchases business with SP ($10.5. Though he showed closeness in time. First classify the property (if determined JT. when ALL growth is attributable to efforts). assuming a fair salary is $30. Under Van Camp method. Absent a written waiver. Family expenses presumption: For purposes of indirect tracing of a commingled account. and not community property.—must be VERY specific! Once commingled. he did not adequately show that separate property funds were there by specific accurate accounting. Use Pereira and Van Camp in reverse. How to determine the classification of withdrawals used to purchase other property. -If spouse had taken out $20. etc. Business is worth $10. closeness in time or similar amounts between deposit and withdrawal of separate funds. subtract that from the amount owed to the community. marriage ends. EXAMPLE: Person didn’t know much about business. there is a presumption that family expenses (rent. if direct tracing does not work.000). so no change in the analysis. etc. it may not do so because it would take away a vested right. The boat is presumed community property because it is acquired during marriage. you can use this. improvements but NOT taxes. business is worth $40. SP= $350. in which case CFC 2640 applies. Specific schedule showing adequate separate funds (deposits. Page 6 of 7 . interest. business would only have been worth $400. payments to principal.000.000. After 1/1/1984: (Anti-Lucas statute :CFC 2640).000 which is CP. withdrawals.000 per year during that time. IS APPORTIONMENT APPROPRIATE? Comingled funds: Separate property and community property have been combined into one account. However—Note that courts are not bound by either of these methods! Courts may use something else if they want! Also. then it may be CP contributions to SP). the withdrawal must have been separate property. how the growth is classified (NOTE: Some growth is attributable to the market (SP).000. H gets married to W. -Separate funds are presumed to be used for family expenses only when community funds are exhausted. How to determine which one to use: Depends somewhat on the type of business. SP = $75. The minimal contribution will be reimbursed with interest. and at marriage the business is worth $50. De minimus principle: If extremely little commingling has occurred. marriage ends (death or divorce). He likely needed also to show that no other withdrawals occurred between the time he deposited his separate funds and the time he made his withdrawal. by elimination. Reverse situation example: H starts a business after marriage.) were acquired with community funds. such as a law firm. If the business is more dependant on the market such as McDonalds franchise. or less than legal interest if interest rates are low.. in which case no apportionment is necessary.—jury decides) EXAMPLE: H and W deposit $5000 of community property and $5000 of H’s separate property. Assume it would earn 10% simple interest per year. He made those payments 3 days after he received his income checks from the hotel rental (separate property). You still need to come up with an accurate accounting to show that community funds are exhausted.000.000. the business is already worth less. Van Camp method (market): Determine a fair salary for a comparable person in another business doing the same type of work. Separate property contributions to Community Property (see problem set. very rarely can you show that the property was acquired with separate funds ) 2. some courts have rarely used compound interest.000. separate property contributions are automatically reimbursed (without interest. and hence. etc. but can H trace it back to his separate property? Only if he shows that the separate property is still there. the other party must show: 1. 4 years later. because it results in a higher community share. The additional growth is attributable to community efforts and is community property. subtract that from the amount owed to the community. the court presumes the funds had the same classification as the account as a whole.000) is attributable to efforts and hence is community property.e. and the rest ($300. If it is a personal service business. Direct tracing: To rebut the general community property presumption that the property was acquired with separate property. The $10. That amount is owed to the community (and hence is split). so no change in analysis. and that he intended to use separate funds. Indirect tracing/exhausted tracing (see handout): If you can show that you exhausted all community deposits.000. Under Pereira method. no appreciation—just reimbursement) NOTE: Although this statute tries to apply itself retroactively. use Pereira. H and W separate. and the business grows. (Titling property in joint form inconsistent with intent to keep SP separate) NOTE: Be careful! There may be post-1984 SP contributions to loan principal. H took out $3000 to invest in a boat now worth $1 million. each spouse gets half.000) of the growth is separate property.000 per year during that time. Congributions: NOTE: Contributions include down payments.000. answers on TWEN).000 total separate. Intent to use separate funds (by testimony. the business is already worth less. Motion to value at separation: A party may rarely move to value the property at separation instead of divorce (i. writing “from separate property funds” on check. During marriage. In this example. Business profits: When a business was started with separate property. The rest of the growth ($425. five years = $150. the efforts are likely the chief contributing factor.000. food. and some to community efforts (CP)): Pereira method (efforts): Start with known separate property. etc. he uses funds to reduce principal owed on the hotel mortgage. and business is worth $500. Goodwill? Be careful—goodwill can greatly increase by efforts. EXAMPLE: H had a hotel which was his separate property. start with $50.
000.000 left in equity that is CP. There is $300. there is $280. Borrowed funds: 1. house is now worth $400. no appreciation—just reimbursement). for improvements. loan is a community loan (most common). community only gets reimbursed. Must be rebutted. What if all of this happened after 1/1/84.000 separate property down payment on a house before 1984.000 equity. all CP. Subtract the loan amount (from community if it was a SP contribution to CP.000 left on the loan.000 the rest was paid off with community funds. contribution of separate property to community property is deemed a gift. or for death. Pro-Rata apportionment agreement: If there is an agreement requiring pro-rata apportionment. Absent a written waiver. no reimbursement to SP. It is rare that the lender will rely solely on SP to expect repayment. 2. it must be in writing for divorce purposes to apply after 1/1/1984 Community property contributions to Separate Property: Absent agreement or understanding (oral or written) Community gets automatic buy in—is entitled an apportioned share proportionate to contribution. Award each spouse their share of value of home 3. NOTE: However. There is $100. NOTE: Contributing spouse should not be entitled to any pre-marriage appreciation NOTE: Here the loan balance will likely be attributable to the separate property—not to the community Separate property contributions to separate property of other spouse: CFC 2640 was amended in 1/7/2004 to include SP contributions to SP of other spouse. and obtains a loan for $180. split in half. the statute tries to apply itself retroactively. If H is married and gets loan.000 SP contribution was made before 1984 for divorce.At death: (any date): (Lucas) Absent an agreement (oral or written—even if after 1985!) or understanding to the contrary. it is SP. Again. but the parties will argue that it may not do so because it would take away a vested right. or from separate property if it was a contribution to SP) EXAMPLE: H puts down $20. SP contributions are automatically reimbursed (no interest. Page 7 of 7 . First must classify the loan proceeds. and we’re talking about divorce? H will get back his $20. it is presumed CP as per General Community Property Presumption. Intent of the lender test: If he’s looking at community earnings to determine eligibility. Because the $20. This is only for divorce. no interest or appreciation. If H gets loan before marriage.000. spouse gets an apportioned share proportionate to contribution NOTE: Any written agreement after 1/1/1984 acts as a waiver of automatic reimbursement. But.
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