COMMUNITY PROPERTY- outline INTRO/SOURCES: 1) Common Law (42 jurisdictions): H and W own all property individually except that which they expressly agree to hold jointly. a. Dissolution (equitable distribution)- judge divides marital property upon divorce, regardless of title, to make distribution equitable. b. Death (elective share)- if one spouse dies and doesn’t name surviving spouse in will, surviving spouse can take ½ estate or whatever is granted in the will. NOTE: usually comes out with the same result as community property systems 2) CP System (8 jurisdictions): H and W own all property jointly unless they have agreed to hold it separately. Based on the idea that a portion of the property held by a married person is dedicated to the economic security of the family. a. Classification-based system- all assets owned by H and W may be classified as community or separate. Classification depends on the tracing principle. TRACING PRINCIPLE: SP begets SP while CP begets CP. A change in the form of asset does not change the original classification based on the source of the funds. Defining Community Property FC 760- except as otherwise provided by statute, all property (real or personal) wherever situated, acquired by a married person during the marriage while domiciled in CA is CP. The time, energy, and skill of a married person is the primary CP asset. In essence, CP includes any acquisition traceable to this primary asset. NOTE: it doesn’t matter whether contributions to CP are equal because all is owned and divided equally. Defining Separate Property FC 770- separate property includes: (1) all property owned before the marriage; (2) all property acquired after the marriage by gift, bequest, devise, or descent; and (3) the rents, issues, and profits of the property described herein. A married person may, without the consent of the other spouse, convey separate property. FC 771- earnings and accumulations while living separate and apart are SP. FC 772- earnings and accumulations post-judgment are SP. EQUALITY PRINCIPLE: spouses have equal ownership interests in CP. Most acquisitions of CP involve direct contribution of time, energy, and skill of married persons or may be traced to such a contribution. They contribute equally by acting as a family partner. FC 751 (enacted 1927): the respective interests of H and W in CP during continuance of marriage relation are present, existing and equal. Pre-1927- H possessed and managed CP. H was the “practical owner” and W had a “protected expectancy.” H might freely dispose of CP without Ws consent, which was valid unless it was made with the intention to defraud her. 1891- H prohibited from making a gift of CP without W’s consent 1927- Congress decreed that the interests of the spouses in CP are present, existing, and equal (but still under control and management of H). 1975- Management and control are equalized. H and W are equal managers. CONTRACTUAL MODIFICATION:
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FC 721- either H or W may enter into any transaction with the other, or with any other person, respecting property, which either might if unmarried. Subject to general rules governing fiduciary relationships which control the actions of persons occupying confidential relationships. Spouses have the duty of highest good faith and fair dealing and neither shall take any unfair advantage of the other. FC 1500- the property rights of H and W may be altered by a premarital agreement or other marital property agreement. Subject to limitations: (1) public policy; (2) formalities; and (3) rules governing fiduciary relationship which control actions in confidential relationships. 1) Premarital Agreements- an agreement between prospective spouses made in contemplation of marriage and to be effective upon marriage. Property means an interest: present or future, legal or equitable, contingent or vested including income and earnings [FC 1610]. a. Subject Matter (what can prenup include)- FC 1612 i. Numerous things that: 1. Are not in violation of public policy; and a. Cannot include provisions re: religious faith; sexual unfaithfulness; personal appearance; frequency of sex, etc. 2. Do not adversely affect child support. ii. Spousal support agreements are valid UNLESS: 1. Parties do not have independent counsel; or 2. Agreement is unconscionable at the time of enforcement (not entry). b. Unenforceable Agreements (substantively the agreement is valid, but the way in which the agreement was entered into was not)- FC 1615 i. Party did not execute the agreement voluntarily OR ii. Agreement was unconscionable at the time of execution AND 1. Party was not provided fair, reasonable and full disclosure of property/financial obligations of the other party; 2. Party did not waive, in writing, any right to disclosure; and 3. Party did not have, or reasonably could not have had, an adequate knowledge of the property or financial obligations of the other party. iii. Premarital agreement was not executed voluntarily UNLESS it appears in writing or on the record ALL of the following: 1. Party against whom enforcement is sought was represented by independent counsel at time of signing of agreement OR, after being advised to seek counsel, expressly waived it, in a separate writing. 2. Party had 7 calendar days between time party was first presented with agreement/advised to seek counsel and the time agreement was signed. 3. Unrepresented party must have been fully informed of terms and basic effect of agreement plus rights and obligations given up. Must be proficient in language, etc. 4. It was not executed under duress, fraud, or undue influence, and the parties did not lack capacity to enter into the agreement 5. Any other factors the court deems relevant.
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c. Consideration (FC 1611/1614)- prenup shall be in writing and signed by both parties. It is enforceable without consideration. After marriage, it may be amended or revoked only by written agreement signed by both parties. The amended agreement or revocation is enforceable without consideration. NOTE: only consideration required by courts is the mutual consent of spouses d. Formalities: i. Prior to 1/1/86 (FC 1503): agreements regulated by preexisting statutes and case law (basically the same effect- requires writing) ii. Post 1/1/86 (FC 1601/1611): act is effective as to premarital agreements executed on or after 1/1/86- must be in writing and signed by both partiesalso can be amended or revoked only by a writing. 1. If prenup does not satisfy requirements, slighted party may argue for equitable estoppel. Courts do not look favorably upon this, but try. 2) Interspousal Agreements (TRANSMUTATION - contractual modification DURING the marriage) a. Mutual Obligations (FC 720)- H and W implicitly K with each other and share mutual obligations of respect, fidelity, and support. Spouse cannot K to perform a preexisting duty. BUT courts hold consideration isn’t required (cf. FC 850). i. Strict Scrutiny- When interspousal K advantages one spouse, law PRESUMES K was induced by undue influence because of existing fiduciary duty. Question as to whether it rises to the level of a legal presumption- at least more so than in a prenup. Parties to premarital K have no fiduciary duty, thus challenging party bears burden of showing it wasn’t entered into voluntarily. b. Consideration (FC 850)- married persons may affect agreement or transfer, with or without consideration: (1) transmute CP to SP of either spouse; (2) transmute SP of either spouse to CP; and (3) transmute SP of one spouse to SP the other. i. Limitation (FC 851)- H and W cannot adversely affect creditor’s rights by transmutation. W’s attempt to transmute CP earnings to her SP constituted fraudulent transfer and W’s earnings remained liable for H’s debt c. Formalities i. Prior to 1/1/85 (more informal): court will allow written, oral or implied-infact contracts between spouses to alter the character of that property. NOTE: concerned about perjury and fraud (dangerously easy to transmute) ii. Post 1/1/85 (FC 852(a)): transmutations of real or personal property must be in writing in an express declaration that is made, joined in, consented to, or accepted by the spouse whose interest in the property is adversely affected. 1. Courts don’t want to resort to extrinsic evidence to validate agreement, which could encourage perjury and the proliferation of litigation. 2. Express declaration requires: a. A writing that satisfies the statute of frauds and Cf. Islamic law prenup- invalid because agreement whose only substantive term is that the marriage has been made in accordance with “Islamic law” is hopelessly uncertain as to its terms and conditions.
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Had the trial judge allowed expert to testify, expert in effect would have written a contract for the party b. An expression of intent to transfer a property interest- must indicate that characterization/ownership is being changed. Writing must contain on its face a clear and unambiguous (it must be REALLY clear) expression of intent to transfer an interest in the property, independent of extrinsic evidence (i.e. I hereby change/transmute this property from separate to community property). Requirement of an express declaration creates a presumption there was no transmutation, rebuttable by evidence that the transaction was documented with writing containing required language. 3. Standard of proof- clear and convincing evidence 4. Exception to writing requirement (FC 852(c)): writing requirement does not apply to gifts between spouses of clothing, wearing apparel, jewelry, or other tangible articles of a personal nature used solely or principally by spouse to whom gift is made UNLESS it is substantial in value taking into account the circumstances of the marriage. (this came into being on 1/1/85, not effective retroactively) CLASSIFICATION: COMMUNITY OR SEPARATE? Popovich's Five Step Technique: Question 1: Are parties within the system? Question 2: Is property capable of classification? Question 3: Is there a classification presumption? Question 4: Can that presumption be rebutted? You can overcome the presumption by tracing back. You can overcome if you prove transmutation or a premarital agreement Question 5: Is an apportionment or allocation appropriate? Questions the Outline says you should ask: Question #1: is the property within the scope of CP system (is it property)? Question #2: when was the property (or its source) acquired: before or during marriage? FC 760: Community Property Defined Except as otherwise provided by statute, all property, real or personal, wherever situated, acquired by a married person during the marriage while domiciled in this state is community property. The rule is that the burden is on the party asserting the separate character of the property, and that the presumption applies when the one claiming that the property is community offers evidence that property was acquired after marriage.
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Standard of proof: clear and satisfactory. There is no set standard for tracing. However, the best gauge is that mere preponderance is probably your best bet as the Cal Supreme Court has used this. Rebuttal of the General Presumption by Tracing Back to Separate Property (This is the main way to rebut) Freese v. Hibernia Savings and Loan Society: At time of marriage, W owned two parcels of real estate. She sold the parcel and shortly thereafter there was a deposit of roughly the same amount. Later, this money was withdrawn and on the same day there was a deposit with HSL of the same amount. Later the second piece of land was sold and a deposit was made a couple days later. Is the money considered community or separate property? Rule: It is incumbent on the party seeking to overcome the presumption of community property to do no more than to produce such legal evidence as, under all the circumstances of the particular case, would ordinarily produce conviction in an unprejudiced mind, and that in the face of such evidence the naked presumption, unsupported by any testimony, must fall. W established that the money came from the sale of the parcels and is separate property. (You want to start with the property at issue, and then trace back from that and see if you can trace it to separate property, don't start with the separate property and move chronologically). Standard of proof: Mere preponderance of the evidence. Separate Property: § 770 a) Separate property of a married person includes all of the following: 1) all property owned by the person before marriage 2) all property acquired by the person after marriage by gift, bequest, devise, or descent. 3) the rents, issues, and profits of the property described in this section b) a married person may without the consent of the person's spouse, convey the person's separate property. 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 b) notwithstanding subdivision a), the earnings and accumulations of an emancipated minor child related to a contract of the type specified in Section 6750 shall remain the sole legal property of the minor child Earnings or accumulations after entry of judgment of legal separation: § 772 After entry of a judgment of legal separation of the parties, the earnings or accumulations of each party are the separate property of the party acquiring the earnings or accumulations 1. GENERAL [STATUTORY] PRESUMPTION- acquisition of ALL PROPERTY during marriage is CP and CP proponent does not need to show funds used to acquire asset were acquired during marriage. Comes into play when acquisition occurs during marriage. Can be rebutted by a showing of transmutation, tracing, etc.
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Acquisition v. Possession- generally, possession during the marriage (when you can’t determine when it was acquired) will give rise to a presumption that it was acquired during the marriage. However, not all courts apply this and hold that the possession presumption does not apply when the marriage is of short duration. FC 771- Earnings and accumulations during separation: earnings and accumulations while living separate and apart from other spouse are SP of spouse. Definition of “living separate and apart”- condition where the spouses: (1) Have come to a parting of the ways (excludes temporary separation, have to have intent that there will be no return to a normal marital relationship, even if you do return, must be a physical separation); and (2) Have no present intention of resuming the marital relations. (does there have to be mutual intent? NOPE. Only one spouse needs to have the intent, but must act consistently). Usually looking for a specific date where one spouse expresses this intent. Filing for divorce does not necessarily indicate an intent to separate. The spouse may be trying to shock the other spouse into getting back together. However, when a divorce decree is entered then it there is intent. a. There must be problems that have so impaired the marriage relationship that the legitimate objects of matrimony have been destroyed and there is no Rx possibility of eliminating, correcting, or resolving them. (Look in book to verify this) (3) Objective determination: Whether parties’ conduct evinces a complete and final break in marital relationship. All factors bearing on either party’s intentions to return to other spouse are to be considered, and no particular fact is determinative. a. Subjective v. Objective- looking at intent is somewhat subjective, but court must objectively determine intent by conduct. Testimony of intent to sever may not be sufficient if conduct does not support stated intent. Question: Would society see them as living separate and apart? b. Standard of proof- preponderance of the evidence. c. Factors (no one is dispositive)i. Filing a dissolution petition or MSA ii. Leaving the family residence (REQUIRED, but not dispositive) NOTE: if spouse were thrown out of house at gun point, that one factor is dispositive iii. Living in separate states (may be for professional not marital reasons) iv. Ceasing economic, emotional, sexual, and social ties NOTE: having an affair is not enough v. Ceasing attempts for reconciliation Definition of “accumulations”- any property which a person acquires and retains, without regard to means by which it is obtained. Where W while living separate from H, through her own industry, labor, skill or efforts, obtains property, it is an accumulation of property (and is her SP). Examples: acquisition of title by AP; proceeds of sweepstakes ticket purchased with support payments while living separate and apart. Note: change in characterization of asset is not an accumulation
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Rebuttal of the General Presumption by Tracing- direct and indirect
Standard of proof for rebuttal- clear and convincing evidence or by a preponderance FC 802- presumption that property acquired during marriage is CP does NOT apply to any property to which legal or equitable title is held by a person at time of death if marriage during which property was acquired was terminated by dissolution more than 4 years before death.
2. SPECIAL PRESUMPTION BASED ON FORM OF TITLE: ACQUISITIONS BY MARRIED WOMEN: FC 803 (Married Woman’s Special Presumption): whenever property was acquired before 1/1/75 by a married woman by an instrument in writing, following presumptions apply and are conclusive in favor of any person dealing in good faith and for a valuable consideration with the married woman (someone dealing with the woman may presume that it is separate property): - why does this presumption exist? Up until 1975, women did not have equal property management and control rights, so we assumed that if the H put it in his W's name solely that he intended it to be SP. (a) if acquired by a married woman, the presumption is that property is her SP. NOTE: raises a presumption of SP when a title in writing was acquired by a married woman prior to 1/1/75. NOTE: presumption is rebuttable as between spouses and evidence of intent and circumstances surrounding transfer are admissible. Presumption is CONCLUSIVE (NOT rebuttable) as against a 3rd party BFP (b) if acquired by married woman and any other person, presumption is that the married woman takes part as a tenant in common (means part is her SP). NOTE: H is NOT the other person described in section B. If court interpreted H as “other person” and said Ws ½ was SP and Hs ½ was CP, and W would get ¾ while H only got ¼. (c) if acquired by H and W by an instrument in which they are described as H and W, presumption is that property is CP (title issues are implicated here). Purpose: protect married woman and persons dealing with her when H had control and management of CP. When W was given equal rights to control and manage CP, there was no further need for the presumption. (Look up in book) Rule: you can rebut this presumption by proving there was no intent by the donor to transmute or gift his community property. Can't rebut by tracing back to separate or community property. "It is in her name for some other reason." In order for there to be a MWSP: H must know about the transmutation, and Do it himself, Direct it or, Accept it Rebuttal of Married Woman’s Special Statute-
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Standard of proof: must be by clear and convincing evidence or by a preponderance of the evidence? Ashodian says clear and convincing. However, you are probably best going with preponderance of the evidence. Factors considered in determining whether the presumption has been rebutted: direct or circumstantial evidence- (needs clarification) 1) Lack of an agreement between H and W to transmute CP into SP 2) H had no intention to make a gift of SP or CP to W 3) W used CP funds to purchase property in her name with Hs knowledge but he intended no gift 4) W used CP funds to purchase property in her name w/out H’s knowledge Methods of rebuttal: may not be rebutted by tracing alone. Must show H did not intend it to be a gift. OR only by fraud or duress if instrument states “as her SP” upon direction of H. CONCURRENT ESTATES: First step: Classify the underlying property when it is titled as something other than community property. Once we have done this, what do we do when we have some other source coming in, such as one spouse's SP. Is there a presumption that applies? If so, can it be rebutted? How can a married couple hold property? Community Property Tenants in Common o Each has a specified % o No right of survivorship Joint Tenancy (main way, especially real estate) o Undivided ½ interest Each spouse's ½ interest is their own SP Right of survivorship Community property with right of survivorship Hypo: H & W buy a house and title it in JT. But look at the property and see if it is really CP or JT. Different stages of a marriage: JT or CP o Certain management and control differences CP each has management and control JT (look in book) o Difference with creditor's rights o If one spouse wants to sell the property, but the other doesn't. CP: spouse cannot unilaterally do this JT: one party can unilaterally partition the property and sell it o Marriage ending in divorce: not much difference here
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CP: house divided in ½; each spouse has ½ interest in property. The property is divided equally JT: property split up ½ to each spouse How about when there are SP contributions: big difference here. (look in book) o Marriage ending in death: Big issue CP: decedent spouse can will away his ½ or transfer it IV JT: everything goes to surviving spouse Lovetro v. Steers: L sold a property interest to S. The note was in joint tenancy. The creditor was trying to collect on the note. Is it really joint tenancy? Was this asset acquired during the marriage? Yes, presumed to be CP. What is the effect of titling it in JT? Does it override the CP presumption? Normally, no, titling property presumed to be CP as something else generally does not override the presumption, but for JT it does. Now, even if it is titled as JT, can this presumption of JT be rebutted back? Yes, we look at the intent of the parties. If there is an agreement or understanding that it is CP or SP or something other than JT then that will override this JT presumption (can be oral or written). Single Family Residence Presumption (SFRP): Enacted in 1965 FC 750: Methods of holding property- H and W may hold property as joint tenants, tenants in common, as CP, or as CP with the right of survivorship (as of 2001). Typically joint tenancies must be had in titled properties. Importance of Right of Survivorship- at death, property will not go through probate (avoid cost) but passes by operation of law to the survivor. NOTE: right of survivorship (like joint tenancy) can be severed. Severing JT or Right of Survivorship- not effective unless recorded. One JT may grant property to self without using a strawman. Dissolution judgment dissolves marital status ONLY, and does not sever a JT. Estate of Layton (1996)- Final judgment dissolved marriage but did not CP. Couple held title as JTs and W lived in house after divorce. H died 10 years later and gave estate to brother. She died 2 years after H and gave property to kids. Court applied law that property acquired in JT during marriage is CP and does not apply to property held at death when marriage was dissolved more than four years prior to death. Therefore, presumption arising from JT form of title controlled. (Look in book) Dorn v. Solomon (1997)- H and W buy home, take title as JTs. 10 years later, they separate and W moved out. She discovers she is dying of cancer and executes quitclaim deed transferring home to her daughter. She dies the next day (Sept. 20). On Sept. 30, H records declares ownership by right of survivorship. Quitclaim deed to Ws trust not recorded until Oct. 25. H argues that FC 2581- property acquired during marriage in JT is CP- does not apply when JT dies. Court held that FC 2581 does NOT arise unless the property division is at dissolution. When property division occurs at death, property passes by right of survivorship. W could have legally severed title if she had recorded quitclaim deed in time (Cal. Civ. Code allows for 7 day window after death of JT in which to record deed). Daughter waited over a month.
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Once severed- property becomes TinC. TinC at divorce- presumption that property held in joint form is CP. TinC at death- equal ownership and you can will away portion as in CP. Property Division at Dissolution (FC 2580 and 2581 were enacted 1/1/84): legislative presumption FC 2580- "Sections 2580 and 2640 apply to all property held in joint title regardless of date of acquisition or the date of any agreement affecting character of property." NOTE: problem with constitutionality of its retroactive application (affects vested property interests) o Does NOT apply to pre-marital acquisitions. However, if property owned as SP before marriage is transferred into joint ownership during marriage, property is deemed to be “acquired during marriage” w/in meaning of statute. FC 2581- property acquired by the parties during the marriage in any joint form is presumed to be CP for the purpose of division at dissolution. (ALL property held jointly will be considered CP at divorce) This presumption affects the burden of proof, and may only be rebutted 1) by a clear statement in the title document that property is SP or 2) by proof of a written agreement that property is SP. FC 2640- provides reimbursement without interest or appreciation to spouse making SP contributions (thereby ameliorating the harsh effects of Lucas) (a) Contributions to the acquisition of property include down-payments, payments for improvements, and loan payments, but do NOT include payments of interest or payments for maintenance, insurance, or taxation of the property. (b) Unless a party has made a written waiver of right to reimbursement, party is reimbursed for contributions to extent he/she traces contributions to SP source. Amount reimbursed shall be without interest or appreciation and shall not exceed net value of property at the time of division. RETROACTIVITY OF FC 2580, 2581 and 2640: FC 2580 states that the legislation is to apply in all post-1984 proceedings to all property held in joint title regardless of date of acquisition or date of any agreement affecting character. Retroactive application of these statutes to cases involving pre-1984 acquisitions was held unconstitutional by Cal. S. Ct.- unconstitutional if vested interests are impacted Hilke v. Hilke (1992)- W died after entry of dissolution, but before adjudication of property issues. House was held in JT. No individual contributions of SP to house. No agreement that either would hold house as SP. TC applied presumption that property acquired during marriage in JT form is CP (FC 2581). Ct. of App. reversed, reasoning W’s death intervened before statute could be applied, so Hs right of survivorship as JT prevailed. H argues statutes do not apply retroactively (property is JT and he gets all as survivor)- cites Buol. S. Ct. holds FC 2581 applies retroactively even though property was acquired before enactment. H had no vested property interest because survivorship interest is subject to condition precedent that he survive W. JT has no vested interest in being the surviving tenant. H didn’t have vested property interest, so retroactive application is not unconstitutional. THUS, presumed house is CP. Here, the divorce rules apply because they were divorced at the time of W's death.
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If you have a pre-1984 acquisition with an agreement that it was just JT, then the statute is retroactive because there is no vested property right. However, if you have a pre-1984 acquisition with an oral agreement that it is all one spouse's separate property, then under any law you look at, their oral agreement would have been affected, and FC 2580.1 would be taking away a vested property interest. Blair v. Blair (1988)- H and W take house as JTs. W lists house as CP. H testified that he believed it was CP. W wills house to sister. W died before trial. H takes as survivor and sells to BFP. Sister sues for ½ proceeds. TC ordered payment, finding house was transmuted to CP as a result of an agreement or understanding b/w spouses (shown in Ws petition and Hs declaration). However, Hs declaration doesn’t necessarily show agrmntthus no agreement to support transmutation. Remand for more.
TRANSMUTATION: when did it occur- before 1985: sister may rebut form of title presumption by presenting agreement (oral, written, or implied). After 1985: sister may only rebut by an express written declaration by W and H. BUT parties are not required to make writing because it would contravene a vested property interest (cf. Buol). SEVERANCE OF JT: agreement b/w JTs to dispense with right of survivorship terminates JT. Agreement b/w JTs inconsistent with unity will sever it though it may not terminate JT (unilateral severance permitted).
Here, unlikely that during divorce, H and W expected right of survivorship to apply. An untimely death results in windfall to surviving spouse that neither party intended (PP considerations). But court decides only this case and reverses TCs order- property is JT
Cf. Hilke- in Hilke court dissolved marriage and reserved jurisdiction to determine property issues b4 W died. In Blair, W died b4 entry of any judgment re: marital status.
Property Division at Death (and dissolution pre-1965): judicial presumption Title Presumption- the form of title creates presumption as to classification. The fact that H and W put CP funds into property held as JTs is not enough evidence to rebut this presumption. There must be some evidence that H and W intended the property to be CP. Siberell, Tomaier (1932/1944, p. 105)- the use of community funds to purchase the property and taking title thereto in names of spouses as JTs is tantamount to a binding agreement between them that the same shall not thereafter be held as CP, but as JT. Parol evidence at variance with this agreement is inadmissible. Rebutting Title Presumption(1) Show the source of funds (not dispositive) AND (2) Present substantial evidence of intention, understanding, or agreement between the spouses to hold the property in a manner other than as presented in title papers. NOTE: after 1985, an express declaration is required (852(2)). Before 1985, the agreement could be oral or inferred from the conduct of spouses. NOTE: does not have to be recorded, just show knowledge on part of both spouses. Examples of evidence that parties did not intend to hold property as JT: Parties did not know what it meant to hold property as joint tenants Parties thought property was CP Title Presumption cannot be rebutted by(1) Only showing the source of funds or
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(2) Testimony of hidden intention (see Levine). NOTE: will is not enough (if surviving spouse did not know contents- hidden intent) Issue of Family Residence- before the hybrid CP with right of survivorship was enacted, legislature first attempted to address JT problem in 1965. Problems with this, see Lucas. Purpose- let custodial parent stay in house with children. With this legislation, court can award house to custodial parent. Otherwise, house is JT and parties would have to sell it. Pre-1965- rebuttable presumption that ownership is based on how title is taken. Problem: residence purchased with CP but held as JT, was presumed to be SP in which each spouse had a ½ interest. Problems arose upon divorce when parties held title as JTs. Court could not award house to one spouse for use as family residence unless the presumption arising from JT could be rebutted by evidence of an agreement or understanding to the contrary. Thus came 1965 legislation. 1965- 1984- when a single family residence of H and W is acquired by them during marriage as JTs, for the purpose of division at dissolution, presumption is that such single family residence is CP. See Lucas. Rebuttal of CP presumption: 1) Evidence of an agreement or understanding that W was to retain SP 2) Evidence that neither party intended to make a gift *If rebutted, SP spouse gets proportional interest 1984-1987- See Buol- apply 2580, 2581 and 2640 retroactively if it is constitutional. Otherwise apply previous statute or case law. Post-1987- apply sections 2580, 2581 and 2640. In re Marriage of Lucas (1980, p. 112)- W and H take house as JTs. W puts SP into house (down payment and improvements). Loan was paid with CP. W has hidden intention that entire house was her SP, but understanding was that if one spouse died, surviving spouse would take title. Parties divorce. Legislation applies here and since house was bought in 1968, presumption is that it is CP. Court determines W did not intend to make a gift of her SP contributions, and H did not intend to make a gift of his CP earnings that were put towards loan. W and H had no agreement to keep the funds separate (agreement could have been implied, oral, or express). W may not be reimbursed. o Lucas indicates tracing evidence alone will not negate presumed intent. o See FC 2581- created to remedy injustice where spouse who contributed SP to a JT asset is denied credit or compensation. o Single Family Residence Presumption (SFRP): Enacted in 1965. Says that all property which is held in joint tenancy, upon divorce is recognized as community property. It can be rebutted by evidence of an agreement or understanding that the property was to be held in JT. The SFRP went away in 1984. But still applies to any transactions between 1965 and 1984. o The legislature then enacted § 2580-81 of the CFC. See Pg 107: Effective 7/1/2001, the legislature enacted a new form of title, essentially creating a hybrid form of JT and CP. CCC § 682.1(a):
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CP of the H and W, when expressly declared in the transfer document to be community property with right of survivorship, and which may be accepted in writing on the face of the document by a statement signed or initialed by the grantees, shall, upon the death of one of the spouses, pass to the survivor, without administration, pursuant to the terms of the instrument, subject to the same procedures, as property held in JT. Prior to the death of either spouse, the right of survivorship may be terminated pursuant to the same procedures by which a JT may be severed. LIMITATIONS ON CLASSIFICATION: Property within the system- removed certain relationships of economic value from CP system. Where a relationship of value is produced by the expenditure of a community asset, it should be CP even if forfeited or subject to termination, contingent, or if valuation must be postponed. Within the system: Value of professional practice- including goodwill element- at the time of dissolution. Situation is like silent partner withdrawing from a going business. If partner is to receive fair compensation for her share on enforced retirement, it should be so evaluated. Goodwill: difficult to evaluate and depends on variety of factors- may not equal market value (often more than market value). o In dissolution, the practice continues with the same intangible value as it had during the marriage. Under CP principles, W contributed to that value the same as she did Hs earnings and accumulations during marriage. She is entitled to be recompensed for that contribution. o Factors: Expectancy of future earnings- the economic value of any asset depends upon the future net receipts the asset will produce. Since the future is unknown, different individuals and businesses will have different expectations. What you are really taking into account is working spouse’s future work (not appropriate for CP). Almost like a mortgage on the future. But only one factor. Some cases respond to this by holding the value of goodwill must be established without reference to potential or continuing net income of practitioner. Practitioner’s age, health, past demonstrated earning power, professional reputation as to his judgment, skill, knowledge, and his comparative professional success. The nature and duration of his business Value of fixed and other assets of professional business with which the goodwill is to continue its relationship. Fixed- cash, furniture, equipment, supplies and library Other- accounts receivable, costs advanced for collection,
work in progress and work completed but not billed
o Celebrity goodwill- CA has no case-law but New York and New Jersey treat it as a marital asset subject to equitable distribution. Celebrity right of publicity- within the system: SP or CP?
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Tort law regarding right to “privacy”- SP. Money received as compensation for
invasion of such privacy right would be awarded to injured spouse on divorce. Property law regarding right to publicity- CP. To the extend that property is generated as a result of efforts of a spouse during marriage, it should is CP.
Contingent fee agreements Pension plan and retirement benefits Copyrights- if artistic work is CP, then the copyright itself obtains the same status. Qui Tam (private lawsuit allows individuals to enforce public right and retain portion of damages)- H filed qui tam action while married. While action was pending, H and W divorced. The contingency of success results in a divisible community asset. Contingency may be a valuable property right if it is subject only to conditions within the control of the holder of the right. Lottery ticket- ticket is property, plus any winnings the ticket may contingently signify. Fringe benefits- not a gift but earned by employee as part of compensation for services. Includes: employer-paid life insurance. Not within the system: Value of professional education acquired by spouse during marriage [See Todd]. At best, education is an intangible property right, the value of which cannot have a monetary value placed upon it for division between spouses. Rationale- The value of an education lies in potential for increase in the future earning capacity of the acquiring spouse. In valuing and dividing such an asset, reference would have to be made to post-marital acts of the educated spouse- which are not acts for the benefit of the community. Also, more appropriate for consideration as a factor in awarding SS. o Also, in long term marriages, non-student spouse essentially realizes values of student spouse’s education by the award of ½ CP upon divorce. But what if marriage is not long term, and student spouse was in school for entire marriage? o Some states form a compensatory award for working spouse. Some allow unequal distribution of CP. And some, classify degree as CP.
Protection for Non-Student [Working] Spouse- (1) reimbursement, (2) support, (3) loan assignment.
Right to practice a particular profession such as medicine/law [See Lopez]. Brawman v. Brawman (1962)- on dissolution, a professional practice goes automatically to the spouse licensed to practice it. Earnings and accumulations of spouse during separation; Expectation of future professional income is a valuable asset of the marital community, but court cannot divide Hs post-judgment earnings with W. Personal injury damages (although classified as CP, treated much like SP on dissolution). Term life insurance policies [See Spengler]- written for a fixed or specified term. At expiration of term, the policy expires without retaining cash value. Term life insurance policies typically contain two elements- dollar coverage payable in the event of death and a right to renewal for future terms without proof of eligibility. 1) Dollar coverage- provides protection against contingency of death of insured during term. When premium is paid with CP funds, the policy is CP
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for the period covered by that premium. If insured dies during period, the proceeds of policy are fully CP. Otherwise, if insured remains insurable, a term policy does not constitute CP since policy has no value and community has received what it bargained for. Treated as a series of separate Ks. 2) Right of renewal- no CP value because it is a mere expectancy. Right of renewal is contingent upon insured’s continuing to work at that employment AND on the employer’s continuing to provide the group insurance. Renewal right has potential value, but is not CP- even if the policy was renewed. DEATH: o If insured designates a beneficiary other than the spouse, surviving spouse is still entitled to ½ of CP portion of proceeds based on CP premium payments. o Where premium is traceable to both SP and CP, proceeds should be apportioned between the SP and CP in same ratio each contributed. Whole life insurance- (Check the book) o Death- proceeds based on premiums o Dissolution- cash surrender value
FC 2641: community contributions to education and training (a) Definition- payments made w/ CP or quasi-CP for education or for repayment of loan incurred for such, whether payments were made while parties were CA residents or not. (b)(1) Community shall be reimbursed (the student spouse has to pay the community back the full amount, and this gets split between H & W) for CP contributions to education or training that substantially enhances earning capacity of party. Amount reimbursed with interest (the legal rate of interest is about 10 percent - listed in the statutes).
Note: reimbursement for direct educational expenses only (does not include living expenses). Broad interpretation may include contributions to ordinary living expenses. Note: even if the student spouse does not get a higher paying job, must still reimburse because earning potential is there.
(b)(2) A loan incurred during marriage for education of party shall not be included as CP upon dissolution but shall be assigned for payment by that party (includes loans also used for living expenses, books, tuition, etc.). (c) Reimbursement and assignment shall be reduced or modified (cannot be increased though) if unjust, including: (1) when community has substantially benefited from education. Rebuttable presumption that community has NOT substantially benefited from community contributions to education made (graduation date) less than 10 years before filing, and that community HAS benefited if made more than 10 years before. (see book) (2) Offset by community contribution to education received by other spouse. (3) Education or training enables employment, which in turn reduces the need for support otherwise required for that spouse. (d) Reimbursement is exclusive remedy of community but does not limit consideration of effect of education on circumstances for support. (e) Waiver? This section is subject to an express written agreement of parties to the contrary.
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o Purpose- remedy injustice that occurred when a couple separated on the eve of, or shortly after, a spouse’s graduation or other educational accomplishment, long before that education could benefit the community. Otherwise, community has no right of reimbursement. o What expenses are reimbursed? NOT ordinary living expenses. Requires reimbursement for expenses directly related to education experience itself- married couple would incur ordinary living expenses regardless of whether one spouse attended school, stayed at home, or worked NOTE: reimbursement is the exclusive remedy for professional education or training received during marriage. This cuts off argument that education is CP. o Pre-marital loans- 2641 does NOT govern pre-marital loans. What happens when community pays off student loan acquired before the marriage? Todd v. Todd (1969, p. 122)- H enrolled in law school and graduated during marriage. He started practice and brought community from almost nothing to $200k. W worked b4 marriage, while H was in school, and for several years after H started practice. Both Hs and Ws earnings were used as CP. Married for 17 years. DC valued law practice at $9k and awarded W nothing. Education- W argues that Hs education was paid for with CP and has expert value Hs education at $308k. Education is not within CP system. Plus, W realized value of Hs education because she got half of $200k (assets accumulated because of degree). Law practice- The value of the practice at the time of dissolution is CP. Here, DC did not segregate account receivable from other community accounts. Court also finds evidence that H did some considerable covering up of financial condition of practice (W knew of cover-up because she was bookkeeper for business). Contractual withdrawal rights: must give careful weight to partnership agreement in valuing goodwill of practice. If partnership provides for specified withdrawal rights, and the partner spouse subsequently withdraws from partnership, receiving the amount specified in withdrawal rights clause, community value in partnership is not limited to contractual withdrawal rights. W entitled to a separate determination of Hs interest in partnership, including goodwill, as a going concern on the date of dissolution. In re Marriage of Spengler (1992, p. 146)- H begins work 1980 for employer who provided term life insurance as a fringe benefit. In 1982, H was diagnosed with prostate cancer- which would have made him uninsurable. H and W separated in 1986. After dissolution, insurance coverage continued under policy issued in 1989. H remarried and named new W as beneficiary under policy. H died and new W received $100,000. W sued her for proceeds. TC found policy was CP and gave ½ to W. Term life 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. If the insured dies during that period the proceeds of the policy are fully community. Otherwise, the insured remaining insurable, a term policy does not constitute a divisible community asset since the policy is of no value and the community has fully received what it bargained for. If the insured becomes uninsurable during the term paid with community funds, then the right to future insurance coverage which cannot otherwise be purchased is a community asset to be divided upon dissolution. We know that there should be some value accounted for, we just don't know exactly how to apportion it. Important:
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If H had bought the policy himself with community funds, then the right to insurance (after becoming uninsurable) is a community asset. Here, Spengler was provided this term life insurance as a result of his employment with his company. It was not his policy, he did not have the right to renew it, his employer did. Since it was so tied to his employment, he didn't have control of it himself, look to see what the nature of employment was when he died. That would be community property with his second wife. It is community property. However, the first wife doesn't get diddly squat from the right of renewal. Basically, the right of renewal is not a factor in employer provided policies, just use the last payment rule. It matters in self-procured life insurance. It may be community property even if the last payment is made with separate property.
Ensley: If you have a community life policy, half goes to spouse, half goes to beneficiary unless the spouse gives consent (after 1/1/85 must be written consent). If a life insurance policy can be traced back to separate property, then it is not considered a community life policy. The court says that this was basically funded by his employment. Types of Life Insurance: Term Life Insurance -You pay in installments (annual, usually) for a number of years. If you default on payments, then the life insurance lapses once the term is over. Term life premiums go up as you get older. Whole (Traditional) Life Insurance - It is more expensive at the beginning. You pay a higher amount in the beginning. It is almost a cash account. Some of it goes to life insurance coverage, but a lot of it is just for savings. Your premiums stay the same as you get older because they begin to draw from your savings as you get older. Investment component. Apportionment Example: Dude pays premiums for 8 years, then gets married, then pays 2 more years and then dies. How to handle this problem? If Whole Life Insurance, the insurance is considered a community asset to the extent it was paid for by community funds. Thus, twenty percent of the proceeds are attributable to the community. Wife gets 10 percent, beneficiary gets 90. If Term Life Insurance, once the term ends, the life insurance you paid for at the beginning of the term no longer retains any value. You look at the last payment to cover the insurance that is covering you at the moment of your death. In this situation, the last payment is made with community funds so you gotta split the money 50/50 with W and B. Life insurance upon Divorce: Whole Life Insurance: they give ½ of community share of cash surrender value Term Life Insurance: most likely, the term will end by the time the insured dies and the other spouse gets nothing. However, the insured may have to reimburse the other spouse a portion of the premium for that which they were not together. (If the insured dies after the divorce, they get all the proceeds, subject to any reimbursement for the portion of the premium which the community paid for when H & W were not together). People within the System Valid Marriage Requirement- Same Sex Union
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For true CP system to apply, there must be a valid marriage. (either legally married or registered domestic partners, CA does not recognize common law marriages, however, if you are legally married in another state, and then move to CA, CA will recognize your marriage Exception: same sex marriages, CA most likely will not recognize, but the couple can register as domestic partners) Marriage- a personal relation arising out of a contract between a man and a woman, to which the consent of the parties capable of making that contract is necessary. Consent must be followed by issuance of license and solemnization. [FC 300]. o FC 308- recognizes marriages contracted in another state (unless same-sex) Defense of Marriage Act (1996)- relieves states of the obligation to recognize same-sex marriages under the Full Faith and Credit Clause. o FC 308.5- only marriage between man and woman is recognized as valid in CA o Attempted marriage may be deemed invalid [annulled] on grounds of: incest, bigamy, fraud, incapacity or insanity. See FC 2210 Formal domestic partner- treated like marital couples with regard to all financial and economic regulations, but they are not “married.” o In CA, domestic partner registrations facilitates adoption, health insurance coverage, and tax benefits. Also extends inheritance rights, allows them to make medical decisions, and permits surviving partner to file wrongful death suit. FC 297- applies to same-sex couples of any age and male-female couples where at least one is over age 62. Must share common residence and agree to be jointly responsible for each other’s basic living expenses. Civil union- allows parties to have the same benefits, protections, and responsibilities as married couples. Vermont allows civil union between same-sex couple. Quasi Marital Property Valid Marriage Requirement- Putative Marriages: In CA, a valid marriage is prerequisite to existence of a marital community, hence there can be no CP without a legally binding marriage. Putative Spouse- community can exist when a man and woman in good faith enter into a marital relationship even though the marriage is legally void. Marriage is found to be void or voidable and either or both parties believed in good faith that it was valid. The division of property acquired during union which would have been CP or quasi-CP is divisible as such and called quasi-marital property. [FC 2251]. Good faith belief- measure by objective standard. A proper assertion of putative spouse status must rest on facts that would cause a reasonable person to harbor a good faith belief in the existence of a valid marriage. Meritritous spouses - neither cohabitant has a good faith belief that they are married PUTATIVE SPOUSE- DISSOLUTION Quasi-marital property [equitable CP system]- designed to protect a person who entered into marital relationship with a good faith belief that a marriage existed. Did NOT apply to meretricious (sex only) relationship. o Equity- quasi-marital property is matter of equity and thus should not be applied where an injustice would result, particularly where it would deprive 3rd persons of vested property rights. o Equity- normally only 1 spouse needs to have a good faith belief that marriage existed. What if the poorer spouse is the one that does not have a good faith 18
belief? We don't know, it is unclear, but probably will not get the quasi-marital property. Spousal Support- court may order party to pay for support of other as if marriage had not been void or voidable if the party for whose benefit the order is made is found to be a putative spouse. [FC 2254]. PUTATIVE SPOUSE- DEATH (putative spouse treated as surviving spouse) Right of survivorship- CA courts have accorded surviving putative spouses the same rights as surviving legal spouses. [See Estate of Leslie]. The result is inherently fair. o Rationale: While it is true that the joint efforts of putative spouses do not contribute to the acquisition of SP, it is equally true that the efforts of a legally married person do not contribute to the acquisition of SP. Expectations- equitable considerations arise from Rx expectation of continued benefits attending status of marriage entered into in good faith o Putative v. Legal Spouse- courts will usually divide estate equally between them. Estate of Vargas- H lived double life as H and father to 2 different families. He died and both asserted rights to Hs estate. Both have valid and plausible claims, so court just split estate between putative and legal. o Equitable estoppel- legal spouse may be equitably estopped from asserting inheritance rights. Spouse should not be allowed to blow hot and cold by renouncing marriage in order to remarry, and then years of separation, seek judicial declaration that he is decedent’s surviving spouse for purposes of inheriting an interest in assets acquired during deceased’s 2nd marriage. Probate code- if decedent leaves surviving spouse and 1 child, estate goes ½ to surviving spouse and ½ to child. If decedent leaves surviving spouse and +1 child, estate goes 1/3 to surviving spouse and remainder in equal shares to kids. Vargas v. Vargas: This dude had two families for 24 years. He dies. It comes to light that he's had two families. Here, the court gave 50% to each spouse. What would happen if they all got divorced? Probably divide it into 1/3s because from each person's perspective they are entitled to ½, and there are three people. Non-marital Partnership- COHABITATION REQUIRED (but not sufficient) to get property rights to what was acquired or accumulated during period of cohabitation. Cohabitants don’t get the benefits of being married, but may obtain property rights by contract (express or implied). Standard of proof- where title to property is held solely in name of one unmarried cohabitant. Any contractual claim of the other cohabitant must be proved by “clear and convincing” evidence- not just by a preponderance. What do you do with property acquired during non-marital relationship? If man and woman living together agree to pool their earnings and share equally in accumulations, equity will protect K. Even in the absence of such an express agreement to that effect, the woman would be entitled to share in the property jointly accumulated, in the proportion to her funds contributed toward its acquisition. Marvin v. Marvin (1976, p. 189)- Here, P and D lived together for 7 years w/out marrying. All property acquired during period was in Ds name. P claims she is entitled
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to ½ property and support payments because they had an agreement that while the lived together, they would combine their efforts and earnings and would share equally all property accumulated as a result of their efforts. The court here concluded: (1) FC does not govern distribution of property acquired during non-marital relationship (2) Express K- Court should enforce express Ks between non-marital partners except to extent that the K is explicitly founded on meretricious services (must accept $ for sex). o Rule- Non-marital parties may lawfully K re: ownership of property acquired during relationship. K is unenforceable only to the extent that it expressly rests upon the immoral and illicit consideration of meretricious services. o Application- Ps complaint states c/a for breach of express K, terms of which do not rest on any unlawful consideration. Therefore, she furnished a suitable basis upon which court could have rendered her declaratory relief. Court remands case. (3) Implied K- in absence of express K, courts should inquire into conduct of parties to determine whether that conduct demonstrates an implied K. o Prior, courts applied CL by enforcing express Ks between non-marital parties unless it rested upon unlawful consideration (sex), but disregarded CL principle that holds that implied Ks can arise from conduct of parties. Before, division of property acquired during period of cohabitation was based on monetary contribution (Vallera), but now it is based on contract. o The mere fact that a couple has not participated in valid marriage ceremony cannot serve as a basis for a court’s inference that the couple intended to keep their earnings and property separate (there are valid reasons for not marrying). o Recovery- in absence of express agreement, courts use variety of remedies to protect parties’ lawful expectations. Courts may employ the doctrine of quantum meruit, constructive trust, or other equitable remedies. Non-marital partner may recover in quantum meruit for Rx value of household services rendered less Rx value of support received if he can show that he rendered services with the expectation of monetary reward. Domestic Partnership Arrangements: New California Law: Registered Domestic Partners get exactly the same rights as married people. §297 & §297.5 (look online, the book is outdated) Definition of Domestic Partnership: o Must be adults (18 n up) o Must have capacity o Must have a residence o Can't be married to someone else or registered domestic partners with someone else o Can't be related o If it is a heterosexual couple, one of the two must be older than the age of 62. These statutes were enacted to be effective starting 1/1/2005. o Before 1/1/2005, a partner could unilaterally end the relationship o Now, must go through a court adjudication. o Retroactive? Don't know yet. All we know is that after 1/1/2005, RDP's are basically treated as spouses.
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297.5: RDPs have the same rights and privileges as spouses with regards to community property. o The same rules regarding community property apply to former registered domestic partners or a surviving RDP. o Same spousal protection schemes. The Domicile Requirement: CP system applies to property of persons who contracted marriage in the state and to property acquired within the state by persons who were married elsewhere but moved to CA. Courts have consistently held marital property rights to be controlled by the law of the domicile of married persons at time of acquisition of wealth. Issue 1: What do we do with spouses domiciled in CA and buy out of state property? o Not a big problem when it involves personal property (non-real property) California has jurisdiction over personal property California does not have jurisdiction over real property In a divorce case, California has in personam jurisdiction over the person and can tell them how to divvy up In a death case, California cannot tell the person how to divvy up cuz the person is dead. o All property wherever situated acquired during marriage while domiciled in the state is CP o What is domiciled? Where you call home and intend to be residing o If a CA couple buys out of state real estate, what does it become? Upon divorce? CA has in personam jurisdiction over the parties, so CA can classify the land as CP. Not quasi-community property, it is true CP. §2660: controls the practical aspect of distribution when there is no in rem jurisdiction over the land. The court can distribute different properties from different states to each partner to avoid problems with trying to coerce other states to divvy up the properties The court can also force partners to transfer deeds to make it all even (they can withhold the divorce, you can't get divorced until you deed half your property to your husband). Upon death? CA has no in personam jurisdiction over the dead person. So now you have to open an ancillary probate proceeding in the state where the real property is located. Now this state has a choice of law problem? Use Nita or CA? Generally, the state will apply the law of the decedent's domicile. o You can get around this by appointing a trustee to take care of this shit when you die. In this case, all your out of state real property is CP. CP for death purposes is all personal property acquired during the marriage wherever situated and all real property acquired during the marriage located in CA. It still may be CP if the other jurisdiction has choice of law rule which will make them use CA law.
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General rule- marital interests in movables acquired during marriage are governed by law of domicile at the time of acquisition. The interests of spouses in movables do not change even though they are taken into another state or are used to purchase land in another state. o Property acquired in CA by non-CAs: trace CA land back to a movable, and classify the property according to law of domiciliary jurisdiction. CP laws generally apply only to acquisitions by CA domiciliaries. Ex. Illinois domiciliary sent money to CA for acquisition of CA real property. On his death, the court held property was not CP. o Applicable law- generally, questions relating to interests in real property are determined by the law of the situs. However, this rule does NOT apply where funds used for purchase were acquired while domiciled in another state. Court looks to domicile at time property was acquired to characterize it. CP issues are determined by marital domicile rather than physical location of the real property. [Dissolution: FC 125] Quasi-CP: all real or personal property, wherever situated, acquired before or after the operative date of this code in one of the following ways: o By either spouse while domiciled elsewhere which would have been CP if acquiring spouse had been domiciled in state at time of acquisition. o In exchange for real or personal property, wherever situated, which would have been CP if acquiring spouse had been domiciled in state at time of acquisition. o Purpose- property acquired in common law jurisdiction is classified as one party’s SP. When couple moved to CA, property remained SP. Therefore, this law protects married couples who married and acquired property in common law. [Death: Probate Code 66] Quasi-CP: includes o All personal property wherever situated, and all real property situated in this state, acquired by decedent while domiciled elsewhere that would have been CP if decedent had been domiciled in this state at the time of its acquisition. o All personal property wherever situated, and all real property situated in this state, acquired in exchange for property, wherever situated, that would have been CP if decedent had been domiciled in this state at time the property was so exchanged. [Probate Code 101] Quasi-CP: upon death of a married person domiciled in this state, ½ of decedent’s quasi-CP goes to surviving spouse and ½ belongs to decedent. o NOTE: PC 66 and 101 apply only to death of acquiring spouse. An attempt to extend the quasi-CP concept in a case involving death of non-acquiring spouse was deemed unconstitutional. FC 2660 (at dissolution, NOT DEATH): sets forth guidelines for division of out-of-state real property acquired by CA domiciliary as CP or quasi-CP. o If possible, court should effect a division of couple’s CP and quasi-CP without changing the record title to out-of-state realty. If this is not possible, court may require parties to execute conveyances of out-of-state realty or award equivalent money value of property to party who would have benefited by such conveyances. o Dissolution: Based on having parties in court– court has jurisdiction over parties. o Death- court does not have jurisdiction over decedent, so FC 2660 does not apply [Probate Code 28] CP: CP is defined as property acquired during marriage while domiciled in CA. Personal property wherever situated and real property in CA acquired during marriage while domiciled elsewhere is considered CP. Out-of-state realty goes through probate in the state in which it is located.
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Constitutional Limitations Due Process and Privileges and Immunities Clause Spreckles- statute which increased Ws rights could not be applied retroactively so as to affect vested rights of H in property previously acquired. Involvement in Quasi-CP: no difficulty in applying concept to new acquisitions made by married persons after moving to and establishing a domicile in CA. Difficulties arose when legislature attempted to create marital property interests in wealth which had been acquired prior to moving to CA. Addison v. Addison (1965)- In 1949, H and W moved to CA bringing with them personal property valued at $143,000 (CP). 1961 parties divorce and W attempts to apply quasiCP legislation and contends that property held in Hs name was acquired by use of property brought from Illinois and that property would have been CP had it been originally acquired while parties were domiciled in CA. Thornton- H and W move to CA and bring with them property acquired during former domicile in Montana. Upon Hs death, widow seeks CP rights in his estateca. code classified all personal property wherever situated and all real property in CA as CP if that property would not have been SP had it been acquired while parties were domiciled in CA. Insofar as the amendment attempted to affect personal property brought to CA which was SP of one spouse while domiciled outside this state, the court held the section was unconstitutional- based on theory that upon acquisition of property, H obtained vested rights which could not be altered without violation of his privileges and immunities as a citizen, and violation of DP rights. Here, Cal. Code is different than it was in Thornton. New code does not attempt to alter property rights merely upon crossing the boundary into CA. Instead, quasi-CP is applicable only if a divorce is filed here after parties have become domiciled in CA- these acts are not necessarily connected with change in domicile. Question is not whether property right has been impaired but whether it is sufficiently necessary to public welfare to justify the impairment. Interest of state of current domicile is substantial. The, court held that statute could expand definition of CP w/out violating constitution if: 1) Both parties changed their domicile to CA or consent to jurisdiction 2) Subsequent to change of domicile, the spouses sought legal alteration of marital status in CA. -Satisfied when EITHER spouse initiates a legal proceeding. To require otherwise would enable one spouse to defeat a quasi-CP claim of the other by refusing to seek dissolution. Unless both conditions exist, interest if CA in status of property is insufficient to justify reclassification without violated DP and privileges and immunities clauses. Retroactivity Problems In re Marriage of Bouquet (1976)- H and W divorce and get judgment in May 1972. After filing petition but before judgment, FC 771 took effect. Amendment provides that earnings and accumulations of BOTH spouses while living separate and apart are SP. Prior statute said earnings and accumulations of W while living separate and apart are her SP, but those of H are CP. H wants his post-separation earnings to be SP. Court holds
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that amendment requires retroactive application and that such application does not constitute an unconstitutional deprivation of Ws property. Court assumes legislature intended to apply statute retroactively because it was aware of sexually discriminating old law and wished to replace it ASAP. Here, Ws vested rights in ½ CP is violated, but such deprivation was not unconstitutional because it serves a sufficiently important state interest. State has interest in equitable dissolution of marital property, so it can impair Ws property right and does so here. Hs post-separation earnings are his SP. In re Marriage of Heikes (1995, p. 229)- FC 2640 became effective 1/1/84. Before that spouse was entitled to reimbursement only if parties had so agreed; otherwise any contribution was a gift. See Lucas. Fabian- dissolution proceedings commenced before 1/1/84 cannot apply FC 2640 constitutionally because it would deprive spouse of vested property right. FC 2640 applies to dissolution proceedings commenced after 1/1/84 regardless of when property was acquired. Court does not allow reimbursement of H for SP contribution he made in 1976 to property divided as CP in 1992. NOTE: state law must yield to any conflicting federal law. PROBLEMS IN CLASSIFICATION: Commingled Funds- a number of married persons do not keep their SP and CP segregated. “Commingling” refers to the combination of CP and SP into a common pool. Most frequent example involves deposit of both CP and SP in a single bank account during marriage. EXAM STRATEGY- Start with presumption of CP and rebut by tracing, or intent. Direct Tracing (Accurate Itemized Schedule of withdrawals and deposits + Drawer’s Intent)if withdrawal is made with intent that it will be used for community purposes, the pro-CP presumption that initially attaches to all money in the account will be overcome. o You have to show that at the time of the purchase there was enough SP funds to make the purchase. o You also have to show that you had the intent to purchase the property with SP funds. Lets say that H and W have CP of 5,000 and H has SP of 5,000. No additional contributions or withdrawals are made. In this situation, the H can just trace back to the initial contribution and claim that 5,000 are his SP. o How about where there are more CP and SP contributions but no withdrawals. This is harder, but as long as you can identify which contributions were CP and SP then you can still uncommingle. o What if the H buys something with funds from the account, and it appreciates greatly in value? How can you prove the nature of the property? Family Expense Doctrine (indirect tracing)- presumption that community expenses are paid from community funds. Separate funds are deemed to pay community expenses only when community expenses are used up. If at the time of the acquisition of the property in dispute, it can be shown that all community income in the commingled account has been exhausted by family expenses, then all funds remaining in account when property was purchased were SP. This still requires an accurate accounting of deposits and withdrawals. See v. See (1966, p. 261)- Here, H did not meet his burden of proving an excess of community expenses over income. Basically he calculated that over the course of the marriage CP expenses outweighed CP income. This does not work because he has to prove that with each acquisition, the CP funds were exhausted at the time he acquired.
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o Recapitulation: at the end of the marriage, court balances out funds deposited and community expenses. If nothing is left, anything acquired would be SP. Courts don’t apply this anymore and hold that record must be made at time of acquisition. o Reimbursement: SP contributions to CP presumed to be gift- no reimbursement unless agreement was made (852(d)- express written declaration not required) o Cf. FC 2580/81- doesn’t apply because account is not taken in joint form o NOTE: requirement of keeping adequate records applies in case where marriage was terminated by death. Commingling spouse had opportunity during life to keep adequate records and protect SP. Minimal contribution- courts will decline to apply general presumption and tracing principles where commingling was minimal. o Cudworth/Kershman(pg 271, note)- if commingling is of trifling sum with a large amount of SP, it may be inequitable to hold H’s property thereby lost its separate character. Decision is further buttressed by the family expense presumption- family expenses were paid out of mixed property, and presumptively CP was first used to pay expenses. o Shelton- H contends post-separation gambling proceeds constituted his SP because he acquired them after separation. He argued that the income arose from his separate skill, efforts, and industry, thus commingling CP and SP and that he should receive a fair share of profits as his SP. Court rejected argument saying his SP contribution was minimal. Gambling depends on luck, not skill. Entire winnings are CP.
Business Profit Apportionment: where SP used as capital for business operated by one spouse during marriage. SP remains SP and CP remains CP- so where the two types of property combine in production of something new (like a business), CA courts have determined that the new production should be apportioned according to the relative SP and CP contributions. Apportionment Methods: (clarify in book) Clear Evidence- use both normal rate of return AND value of services. If there is clear evidence of both the normal rate of return on the SP capital and the value of community services, no special apportionment formula is necessary. Profits are simply apportioned ratably according to the relative established contributions. Todd v. Commissioner of IR (1946)- tax-payer disputes. Proportional allocation based on capital investment return and salary allocation. Capital Income $12,158.46 (SP) Salary for Services $10,000 (CP) TOTAL $22,158.46 Proportional Allocation: SP: $12,15846/$22,158.46 = 54.87% CP: $10,000/$22,158.46 = 45.13% 1936 Earnings: $26,990.92 SP: $26,990.92 x 54.87% = $14,809.92 CP: $26,990.92 x 45.13% = $12,181 Gudelj v. Gudelj (1953)- H withdrew $3,600/year from business for Rx value of his services and $2,000/year as Rx return on investment of $11,500. Investment comprised of $1,500 of his SP and $10,000 as borrowed and CP. Thus complete evidence of the production of profits showed $3,600/year came from management (a community asset) and $2,000/year came from invested capital which was 3/23 SP and 20/23 CP.
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When evidence of the value of the spouse’s service or of the normal rate of return on the particular type of capital is incomplete or inconclusive, use either Pereira or Van Camp formula. Determination as to which approach to be used in a given case should depend on type of evidence available. Perhaps court should also consider whether the character of the separate capital or the community labor was the chief contributing factor in the realization of profits. There are two methods by which we evaluate the value of businesses. Pereira- allocation of a fair return on the spouse’s SP investment, and then the allocation of any excess to the community. Used when increase due primarily to spouse’s effort (CP) We want to compute what the SP is. Figure out what the value of the business is at marriage. Then give the SP a fair rate of return. The fair rate nowadays is 10%. Don't compound the interest, use simple interest (10% of the original amount x the number of years married). Once you have the total, this is all SP. The rest is CP. NOTE: no deduction for community expenses (see Frick) Marriage of Koester (1999, p. 275)- FC 2640 provides dollar-for-dollar reimbursement, but without interest, to a spouse who contributes SP to acquisition of CP to the extent he or she traces contributions to SP source. A community does not “acquire” a SP business merely because it is incorporated during the marriage. Here, there was nothing to trigger the “title presumption” which Legislature endeavored to correct by passing FC 2640. Statute was never designed to apply to SP business and is inherently not applicable to businesses, at least when there is no compliance with the rigorous requirements for transmutation set from in FC 852 (express written declaration required). Characterization of business was not changed by incorporation, and change in business form did not transmute it from SP to CP. Thus, TC erred in applying FC 2640 and not Pereira. Van Camp- determines Rx value of the spouse’s services, allocates that amount to CP, and treats balances as SP. Typically used when increase due primarily to capital investment. In Van Camp we are trying to figure out the value of the CP. What is the value of the work of the working spouse? Want to figure out a fair salary for someone doing that job. Then multiply the salary by the number of years in the marriage. That becomes the community amount which gets split between H&W. The balance is SP. When to use either Van Camp or Pereira method? The court is not bound to these two methods, but these are the most common. It really depends on the type of business. If the chief contributing factor to the growth is the effort of the spouse or if it is the assets of the company. If CCF is the efforts of the spouse then the court will generally use Pereira, which results in a larger amount of CP. If the CCF is the underlying assets, then use Van Camp, which results in a larger amount of SP. How do we deal with withdrawals? o Van Camp: Let's say the W makes withdrawals. How do we figure out what is CP and what is SP? Each withdrawal is presumably CP. The withdrawals from the "fair salary," the remainder is CP. If withdraw more than the fair salary, then it is all SP. o Pereira: the withdrawals will already be incorporated into CP. Just need to calculate SP and the remainder is CP. Hypo: H starts business after the marriage, initial investment 1K, at separation 10K, 4 years pass, now worth 40K. W says all CP. H says only up to separation. Imperato says to just do Pereira and Van Camp in reverse.
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o Pereira: 10K x 10% = 1K times 4 years. This is CP. The original 10K is also CP. So … 10+4 = 14 is CP the rest is SP. (just change the labels of CP and SP) o Van Camp: Use the Van Camp method, but now solve for SP instead of CP and the rest is CP. NOTE: deduct community expenses withdrawn from business Reverse Apportionment- community business continues to be operated by spouse after sep In re Marriage of Imperato (1975, p. 285)- on date of separation, business worth $1,665.85. H continued to operate after separation and nearest date of trial, business is worth $17,614.26. It was agreed that H would retain business and pay W ½ value. H argues business should be valued as date of separation. FC 771 provides that the earnings and accumulations of a spouse while living separate and apart from the other spouse are SP of the spouse. But when parties separated, FC stated only Ws earnings were SP while Hs earnings were CP. If the earnings of a spouse in some manner increase the value of a community asset, the court must then determine what portion of the asset is CP and what portion is CP. Here, the earnings of corporation are not (generally speaking) the earnings of individual stockholders, but are PROFITS of the business. CP acquired during marriage and court seeks to allocate increases of CP occurring after separation into SP. Court on remand should determine which formula (Pereira or Van Camp) to usewhichever is most appropriate and equitable in the situation, achieve substantial justice. Duncan: § 2552 says - when we are valuing assets for distribution, take the value of the property at the date of divorce, where it is appropriate, take the value of the property at the time of separation instead. The courts will rarely use the separation date if there is a big gap between separation and divorce. If the growth is really really attributable to the efforts of the spouse (labor-intensive), then the court may use the separation date instead of the date of divorce. (What? Look to book for explanation)
Lucas - Acquisitions: House acquired for all case in 1970 by H's SP of 20K. Community property put in house is 80K. Titled in JT. Over time, the house appreciates to 400K. If there's a divorce, how do you divvy it up? Absent to some agreement (can be oral or written) to the contrary, the court does not want H to get his initial investment back plus the corresponding appreciation. If you make an SP contribution to a jointly titled or community asset, absent some agreement to the contrary, it becomes CP. § 2640: 1/1/84(use date when SP contribution was made) - The Anti-Lucas Statute: The California Legislature overruled Lucas. Now, absent any written waiver SP contributions to a CP asset is automatically reimbursed without appreciation. This does not apply to CP contributions to a purchase of SP asset. This applies only for purposes of divorce. § 2580-81: enacted also 1/1/84: This applies retroactively, doesn't matter when the SP contribution was made. In Hykus, they said that this statute is invalid because it affects a vested property interest. So … basically, this means that §2640 is not retroactively applied. What happens upon death? Lucas applies and all SP contributions to a CP asset become CP.
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What if H purchases something on a payment plan before marriage (SP) but makes subsequent payments with CP to the SP asset? See Vieux. The community gets an automatic buy-in. They get an apportioned share. You divvy up based on what percentage they put in. If contribute 35% and it appreciates, then you get 35% of the appreciation too. Applies to both divorce or death. Installment and Credit Acquisitions: married persons frequently use both SP and CP in acquisition of major assets, particularly those acquired over time or on credit. Acquisitions in Installment Transactions- in some transactions, ownership interests in an asset are realistically acquired on a piecemeal basis over time. Examples- pensions, insurance, and real property acquired under an installment sales K. Inception of the right- when the first interest in the subject matter was acquired. If wealth of a different classification was subsequently used to complete the acquisition transaction, reimbursement was a possibility, but there was no apportionment of the subject matter itself. Apportionment theory (Vieux)- when an asset is acquired over time by installment payments, the asset should be apportioned on the basis of community and separate contributions to the total purchase price and classified accordingly. Vieux v. Vieux (1926, p. 291)- P and D agreed to buy land and considered it CP. P made original down-payment of $280. After marriage, $553.68 of CP was used to make payments on purchase price, pay interest and taxes. Conveyance was in name of P. TC held land was Ps SP. Court sees agreement as partnership- H as one partner and community (H and W) as the other. Justice demands that the rights of the parties should be measured by the direct contributions made by the respective parties to the purchase price of the property. Accordingly, the judgment of TC should have indicated that the community interest was entitled to share in title to property in the same proportion as the amount contributed to purchase price by community ($553.68) bore to the sum of $883.860 the total amount paid by parties. Thus 66% CP and 34% SP. NOTE: to the extent that the court included payment of interest and taxes by community in formulating apportionment, the decision has been disapproved. Borrowed Funds and Credit Acquisitions- property acquired during marriage through a credit or loan transaction comes within general presumption of CP, and can be rebutted. You are concerned with what the lender is looking at in deciding whether or not to lend you the money. Most time they will be looking at CP. When an item of SP is used as primary security for loan, the money so produced are classified as SP. Lenders consider personal integrity of borrower (references personal earning ability and reputation and may be considered CP during marriage). Also, energy and skill may be involved in procuring loan and executing necessary documents. Note: The fact that a loan is secured with SP does not really have a bearing if they are looking at your earnings (CP) to see if you can pay them back. The bank is not in the business of foreclosing on things. Gudelj v. Gudelj (1953, p. 295)- H owned business, married, and sold business. 3 years later he goes into business, dissolved it and purchased ¼ interest in French Cleaners. TC found ¼ interest was SP of H. ¼ interest cost $11,500 and H obtained $1,500 cash and executed a note for $10,000. $1,500 cash was his SP (from sale of business traceable to SP). However, balance of purchase price was not SP- note. Rebuttable presumption that property acquired on credit during marriage is CP. The character of property acquired by sale upon credit is determined according to the intent of seller to rely upon purchaser’s
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SP or upon a community asset. In the absence of evidence tending to prove that the seller primarily relied upon the purchaser’s SP in extending credit, TC must find in accordance with presumption. Here, no testimony was offered concerning intent of seller, thus CP. Between date of purchase of partnership interest and commencement of present action, H withdrew $3,600/year PLUS $4,000 in profits. $4,000 must be apportioned b/w parties. H has 3/23 interest in profits of business has his SP ($1,500/$11,500). Thus he gets 3/23 of $4,000 ($521.74) and community gets the rest ($3,478.26). Grinius- when credit used to acquire asset, credit presumed to be CP unless intent of lender was to rely solely on SP for loan. Criticized as making it practically impossible for spouse to rebut CP presumption. Bank of CA v. Connolly (1973, p. 297)- K and L acquire land borrowed with funds obtained on unsecured note, and parcel with note secured by mortgage of SP. K and L agree to sell and split profits from land with K, C, and S. Mrs. L claims this agreement was transfer of CP land without her consent. Properties acquired during Ls marriage, thus his interest is deemed CP, and burden of overcoming the burden is by clear and convincing evidence (C and S must meet burden). Unsecured note is CP- Bank’s loan officer testified loan was made solely on reliance upon personal credit of K and L. Proceeds of loan on personal credit of either spouse are CP. Other loan, though large portion was SP, was made PRIMARILY on general credit of K and L. Thus land is CP. (look up in book) Borrowed Funds and the Family Home Apportionment- where community funds are used to make payments of property purchased by one of the spouses before marriage, CA gives the community a pro tanto CP interest in such property in the ratio that the payments on the purchase price with community funds bear to the payments made with separate funds. Aufmuth Method: (look in book) o Down payment + (Full amount of loan – Community payments on loan) SP contribution/ Purchase price = SP PERCENTAGE o Community payments on loan / Purchase price = CP PERCENTAGE o APPRECIATION during marriage = FMV at time of divorce – FMV at marriage o CP % x Appreciation during marriage = X PLUS down-payment and any SP payments (i.e., payments before marriage ) o SP % x Appreciation during marriage = X PLUS community payments o SP INTEREST + CP INTEREST = EQUITY IN HOUSE In Re Marriage of Moore (1980, p. 306)- W purchase home 8 months before marriage for $56,640.57, and made down-payment of $16,640.57 and secured loan for the balance. She took title in her name alone and reduced principal by $245.18. Parties lived in home until separation and made payment during this time with community funds and reduced loan principal by $5,986.20. W remained in home after separation and reduced principal by an additional $581.07. TC concluded that house was Ws SP but that community had in interest in it by virtue of payments made during marriage. General Rule: excludes payments for interest and taxes. Interest and taxes are not included because they do not
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increase the equity value of property. Here, the loan was based on separate assets and was thus a separate property contribution. Thus proceeds of loan must be treated as SP. $16,640.57 Down-payment +$34,013.80 Full amount of loan less CP payments $50,654.37 / $56,640.57 Purchase price for SP INTEREST 89.43%. House appreciated $103,359.43, so W gets 89.43% of that PLUS money she put into it ($16,640.57 + $245.18 + $581.97)= $109,901.16 CP INTEREST divide amount by which community property payments reduced principal by purchase price. $5,986.20/$56,640.57= 10.57% $103,359.42 x 10.57% = $10,925.09 + $5986.20 = $16,911.29 In Re Marriage of Frick (1986, p. 310)- H owned real property before marriage and used CP to reduce principal. Purchase price of property was $708,220. H made downpayment of $118,958 and loan payments of $162,762 before the marriage. Property appreciated by $441,780. Community made loan payments of $308,341. SP INTEREST = 56.46% and CP INTEREST = 43.45%. Property increased in value by $700,000 during marriage so community gets 43.45% of that (plus payments) and H gets 56.46% of that (plus payments). Perspective interests are based on the ratio of capital contribution to purchase price. Use how much property increased during marriage, not how much it appreciated before marriage. FC 2640: in division of community estate, unless a party has made a written waiver of right to reimbursement, party shall be reimbursed for contributions to acquisitions to extent party traces contributions to SP source. Amount shall be without interest or adjustment for change in monetary value and shall not exceed net value of property at time of division. o Reimbursement award comes off the top of the CP item in question before the CP interest in that property is divided. o If there is insufficient equity at time of dissolution to fully reimburse the contribution, the entire asset is awarded to contributing spouse. o NOTE: no appreciation, just reimbursement. Any appreciation goes to community. Marriage of Walrath (1998, p. 314)- H and W married for 3 years. Prior to marriage H owned Lucerne house, but after marriage he deeded the property to himself and W as JTs (CP). House had equity of $146,000 and $82,000 mortgage. W contributed $20,000 of her SP to reduce mortgage. Couple refinanced and borrowed $180,000 against equity. $60,000 went to pay off first mortgage. $62,000 paid off mortgage on Nevada property, and $40,500 went to acquire and improve property in Utah. Remainder placed in joint savings account. Lucerne house, Nevada and Utah properties and joint bank account are all CP. H says he is entitled to reimbursement from Nevada and Utah properties because funds from Lucerne were used to acquire it. “The property” in FC 2640 includes not only the specific CP to which the SP is originally contributed but also any other CP that is subsequently acquired from proceeds of initial property, and to which SP contribution can be traced. Thus H gets proportional interest (as his SP) in Lucerne property, AND in Nevada and Utah properties because his SP contributed to acquisition of these CPs. Tracing method (majority)- Court estimates that market value of Lucerne property when refinanced was $180,000. At trial, Lucerne property had equity of $1,000, Utah had
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equity of $74,500, and Nevada had equity of $125,000. H made SP contribution of $146k and W made SP contribution of $20k, thus $14k was CP. $146k is 81% of $180k, so H may trace 81% of amount of loan proceeds spent on Lucerne, Utah, Nevada, and joint bank account. For example, H is entitled to 81% of the $40,500 spent from loan proceeds on Utah property. Ws SP contribution was 11% ($20k/$180k). Community is entitled to any appreciation in these assets above amount necessary to reimburse parties for SP contributions to these properties. Tracing method (Kennard dissent)Tracing method (Baxter dissent)What if W buys something before marriage, so her SP. However, H contributes his SP to help pay for her SP. See § 2640(c) (see it on the internet). A party shall be reimbursed for his SP contribution to the other spouses SP assets absent written transmutation. Only entitled to what you put in, not entitled to interest or appreciation. This was enacted on 1/7/2004, but it is supposed to act retroactively. There is some issue as the constitutionality of the retroactivity. Classification of Improvements- concerned with classification of increased value of an item of property due to improvement of subject matter. Tracing principle can be used to show that either CP or SP produced the increase in values. However, improvement doctrine as it developed in CA denies the estate supplying the improvement funds any ownership interest in the improved property. At best, reimbursement may be in order, and even reimbursement may be denied absent a K calling for it. Doctrine of accession- improvement becomes part of underlying property ownership. Improvements to SPo Pre-1975: H had M&C over CP. If H used CP to improve W’s SP, it was a gift. If H used CP to improve his SP, community was entitled to reimbursement. Needed to avoid constructive fraud against W. Marriage of Wolfe (2001, p. 330)- H and W maintain SP and CP bank accounts during marriage. Hard to trace SP contributions over 11 year marriage. At time of separation, H and W had house and vineyard as CP. H owned SP adjacent to vineyard. During marriage, H and W establish $60k line of credit to build pool at house. After separation W paid off credit line with her SP. She took line of credit and put it in her SP account so it couldn’t be used. She took $45k as her SP for paying off loan and gave H the $15k to be used exclusively to harvest raisin crop at vineyard. Absent agreement, the use of community funds to improve SP of one spouse does no alter the character of the SP. Court discards rule that presumes a gift when CP contributed to one spouse’s SP. What was intent of spouse when CP used for SP? H who lends his money with no strings attached cannot later claim an interest in the property. BUT gift is not presumed when CP applied to improve separate property. Here W does not claim appreciation in value of property, just wants reimbursement of initial expenditure. o Should community be reimbursed in the amount of funds expended, or should reimbursement be measured by the value added to the SP by the expenditure of CP? Spouse uses CP to improve his/her SP- community is entitled to reimbursement in either the amount expended or the value added, whichever is greater, so that there will be no benefit from breach of trust
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Spouse uses CP to improve other spouse’s SP- any right to reimbursement arises solely on the basis of an agreement to reimburse original amount. Improvements to CP- owner of SP is presumed to have made a gift to community, but presumption is rebuttable. If presumption of gift is rebutted, then SP estate would not be entitled to any ownership interest in improved property, but would have a right to reimbursement. Changed by FC 2640. (Check the book) Applies to both death and divorce. It is at least reimbursed, unless there is an agreement in any form, in which case you follow the agreement. Pre-1984: gift presumed o In re Marriage of Smith (1978, p. 339)- during last 10 years of marriage, parties owned and operated a custom sign-making business. H handled technical work and W was book-keeper. During marriage W inherited SP and put down-payment on Costa Mesa house and paid for pool at family residence. H bought equipment for family business with her SP. W intended a gift (considered it CP) and was not entitled to reimbursement. No agreement for reimbursement. Post-1984: no gift presumed o FC 2640 (1984) : contributions to acquisition of property include down payments, payments for improvements, and payments that reduce the principal of a loan used to finance the purchase or improvement of property but do not include payments of interest or payments made for maintenance, insurance or taxation. Unless a party has made written waiver, party shall be reimbursed for party’s contribution to acquisition of property to extent the party traces it to SP source. Amount w/out interest. NOTE: retroactivity of FC 2640 is subject to question. NOTE: FC 852 says transmutation requires a writing after 1985- otherwise SP interest is retained. NOTE: does not apply when SP is commingled with CP Improvements to SP with other spouse's SP. See § 2640(c) above.
Class Ends Here Bitch!!!!
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