COMMUNITY PROPERTY
-------------------------------------------------------------------------------BASIC PRESUMPTIONS GOVERNING CP LAW BEGIN CP ESSAY WITH THIS PARAGRAPH
“California is a CP state. All property acquired during course of marriage is presumed to be CP. All property acquired before marriage or after permanent separation or is by gift, bequest, devise o descent, is presumed to be separate property. QCP is property acquired by either spouse while domiciled in a non-CP state that would have been CP if couple had lived in CA at the time of acquisition.”
---------------------------------------------------------------------------BASIC CONCEPTS
with an intent not to resume the marital relationship
MARITAL ECONOMIC COMMUNITY (MEC): Begins at marriage, and ends upon divorce, death of a spouse, or a permanent physical separation
SEPARATE PROPERTY (SP): (1) Property acquired before marriage by either spouse or during marriage by gift, bequest, devise, or descent; (2) Property acquired AFTER death, divorce, or permanent separation; (3) Applies to wages received during marriage but earned before marriage COMMUNITY PROPERTY (CP): Property acquired during marriage or temporary separation is presumptively CP; The CP presumption can be
overcome with (1) statutory evidence; (2) written title evidencing a gift or an intent to make property SP; (3) an agreement that property is SP; OR (4) purchase funds traced to an SP source
-------------------------------------------------------------------------------INITIAL ISSUES WHICH AFFECT ALL OR MOST OF ASSETS DISTRIBUTION OF PROPERTY AT DIVORCE
EQUAL DIVISION REQUIREMENT: Upon divorce, all CP assets are divided equally between the spouses based upon an ITEM THEORY of distribution; Under the item theory, each spouse is entitled to ½ of each item of CP, NOT ½ of the aggregate CP
QUASI-COMMUNITY PROPERTY (QCP): Property acquired by either spouse while domiciled in a non-CP state that would have been CP if the couple had been domiciled in CA at time of acquisition; NOTE: Property will be treated like SP during marriage once in CA, but treated like CP upon divorce or for purpose of creditor’s rights
---------------------------------------------------------------------------DISTRIBUTION OF PROPERTY AT DEATH
DISTRIBUTION OF PROPERTY AT DEATH
PROPERTY DISTRIBUTED BY TESTAMENTARY TRANSFER: A spouse can transfer all SP and ½ of the CP by will. If an intervivos gift was
made without the other spouse’s consent, the nonconsenting spouse can void the gift in its entirety during donor’s lifetime, or recover her ½ CP interest upon donor’s death
in the will, then the surviving spouse must make an election between her CP rights or her rights under the will. If no clause, and testator only attempts to pass his ½ CP interest, widow can assert both her CP rights and her rights under the will
WIDOW’S ELECTION CLAUSE IN A WILL: If the testator tries to devise all of the CP by will, or has included an explicit widow’s election clause
PROPERTY DISTRIBUTED BY INTESTACY: If a spouse dies without a will, his ½ interest in the CP passes to the surviving spouse, and the surviving
---------------------------------------------------------------------------CREDITOR’S RIGHTS TO PROPERTY
PROPERTY THAT IS LIABLE FOR DEBTS: Creditor can reach debtor spouse’s SP and all CP to satisfy debts incurred before/during marriage. After divorce, creditor can’t reach CP awarded to spouse unless that spouse incurred debt or was assigned debt by the court. Creditor can reach non-
spouse’s share of decedent’s SP depends upon the number of decedent’s heirs
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on or any other property awarded to her is not subject to the debt
used to pay child/spousal support from a previous relationship, but only if debtor spouse had SP funds available at the time to pay the debt, and (2) SP funds used to pay for debtor spouse’s necessaries, but only if debtor had SP/CP funds available at the time
RIGHT TO REIMBURSEMENT FOR PAYMENT OF CERTAIN DEBTS: Non-debtor spouse can seek reimbursement for (1) CP funds
TORT LIABILITY: CP is subject to tort liability of either spouse. If the tortfeasor was acting for the benefit of the community (ex. Taking
child to school), liability is first satisfied from CP and then from the tortfeasor’s SP. If the tortfeasor was not acting for the benefit of the community (i.e. driving to mistress’s house), then liability is first satisfied from the tortfeasor’s SP and then from CP.
----------------------------------------------------------------------UNMARRIED COUPLE’S PROPERTY RIGHTS
REQUIREMENTS FOR A LAWFUL MARRIAGE: Legal capacity and the performance of formal legal procedures
UNMARRIED CO-HABITANTS: Property disputes between unmarried cohabitants are governed by general contract principles, and if
there is no express contract, a cohabitant may prove the contract was implied by conduct and use the doctrine of QUANTUM MERUIT to obtain remedies like a constructive or resulting trust. Full time cohabitation is not necessary. If cohabitants later marry, contract law still applies to property acquired before marriage she is lawfully married, but once that person discovers that the marriage is not valid, her QUASI MARITAL PROPERTY (QMP) rights no longer accrue. All property that would be CP had the couple been legally married at the time of acquisition is QMP. A bad faith putative spouse may still have a claim to QMP rights, but putative spouse status fails if the claimant knew marriage was invalid
PUTATIVE SPOUSE: To qualify as a putative spouse, a person must have good faith belief based upon objectively reasonable grounds that
--------------------------------------------------------------------------WHEN & WHERE WAS THE ASSET ACQUIRED? OUT-OF-STATE CP & QCP
TREATMENT OF QCP: If acquiring spouse dies, surviving spouse has ½ interest in decedent’s QCP, but if non-acquiring spouse dies, that spouse has no interest in surviving spouse’s QCP (this is to prevent ½ of the property from going into non-acquiring spouse’s estate); If couple lives in CA and acquire property in another CP jurisdiction, treat property like CA CP.
--------------------------------------------------------------------------WHAT WAS THE SOURCE OF THE FUNDS USED TO ACQUIRE THE ASSET? PROPERTY CHARACTERIZED BY SOURCE OF FUNDS
LUCAS & ANTI-LUCAS STATUTE: LUCAS: Property purchased with SP and CP funds BEFORE 1/1/87 is presumptively CP if the spouses took title in JOINT and EQUAL form. (If same transaction occurred on or after 1/1/87 and was in the case of divorce or legal separation, ANTI LUCAS makes CP presumption rebuttable and the SP contributor can be reimbursed for down-payments, improvements, and principal payments upon divorce (but no reimbursement for interest payments, appreciation, etc.)
presumptively CP. Family expenses presumed to be paid with CP funds, and SP funds only deemed to be used when CP funds are exhausted. SP funds used for family expenses are presumed to be a gift to the community, so no right of reimbursement unless there is an agreement. Two methods to prove that SP funds were used to purchase property: (1) Exhaustion method (At time asset was purchased, CP funds in account must already be exhausted through the payment of family expenses); OR (2) Direct Tracing method (at time asset purchased, there were sufficient SP funds available, and the SP proponent intended to use SP funds to purchase the asset)
PROPERTY PURCHASED FROM COMMINGLED BANK ACCOUNT: Property purchased from commingled bank account is not
CP FUNDS OR CP LABOR ENHANCE VALUE OF SP BUSINESS: 2 TESTS to calculate CP portion of business: VAN CAMP (Value Character of Business): This formula is used when character of business was primary reason for its growth or
productivity (FAVORS SP estate; usually use this test when spouse/owner was paid a great salary and drew big bonuses)
FORMULA:
Market salary for managing spouse’s services – family expenses paid from business earnings= CP portion of business (remainder is SP)
PERIERA (Personal skills and effort): This formula is used when the personal skills and effort of the managing spouse increased the
value of the business (FAVORS CP estate; usually use this test when spouse/owner worked long hours or drew a modest salary)
FORMULA:
Value of managing spouse’s SP business (at time of marriage) + fair rate of return (10% per year)= SP portion (remainder is CP)
CP FUNDS USED TO PAY PRINCIPAL ON OR IMPROVE SP PROPERTY: For CP funds used to pay principal on SP property, use buy-in rule to calculate CP interest for CP mortgage payments that reduced the principal debt. Buy-in rule not triggered by payment of insurance premiums, mortgage interest or property taxes. CP funds used to make improvements on other spouse’s SP property presumed to be gift, but if CP funds used to improve spouse’s own property, CP funds not presumed to be gift and community can be reimbursed for greater of improvement costs or increased property value due to improvements. PROPERTY PURCHASED WITH CREDIT: Purchases made with borrowed funds are treated like cash purchases in terms of ownership interest. If credit or purchase money loans are used to buy property, it is presumed CP, but can be overcome by proving lender relied primarily on borrowing spouse’s SP.
--------------------------------------------------------------------------HAVE ANY ACTIONS BEEN TAKEN BY THE PARTIES TO CHANGE THE CHARACTER OF THE PROPERTY? MANAGEMENT & CONTROL OF PROPERTY
management and control of CP
RULES REGARDING THE CONTROL OF SP AND CP: Each spouse has exclusive management and control of his SP, and equal CONVEYANCE OF REAL PROPERTY: Both spouses must jointly execute a written instrument in order to validly convey community real
property. If CP that is titled in one spouse’s name only is then sold to a BFP
EXCEPTIONS TO THE EQUAL CONTROL RULE FOR PERSONAL PROPERTY: GIFTS OF CP:
----------------------------------------------------------------------HOW AGREEMENTS AFFECT PROPERTY RIGHTS
PREMARITAL AGREEMENTS: ORAL AND WRITTEN TRANSMUTATIONS DURING MARRIAGE:
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