Community Property Rule Statements 1. CP Presumption: Absent an agreement to the contrary, all property acquired during marriage by the labor of either spouse is community property. Characterization is the process of determining whether the an item of property is a spouse’s separate property or community property. To determine characterization of an asset, the court will review: (1) when the assert was acquired; (2) how the asset was acquired; (3) did either or both spouses acts in any way that may have changed the character of the asset. Time: CP may only be acquired during the existence of a marriage. Property owned before marriage or acquired after permanent separation is SP. PI Award: If a cause of action arises during marriage, any recovery is CP. A cause of action arises when the injury is inflicted. At divorce, the injury damages will be awarded to the injured spouse unless the interests of justice require otherwise. Retirement/Pension: California treats unvested as well as vested retirement pensions as CP to the extent that the right to the benefits was earned during marriage. Courts apply the time rule to apportion the SP and CP interests of a pension earned both during and after marriage. Disability: To the extent that disability pay is intended to replace marital earnings, it is CP. Education: Education and training acquired during M are not treated as CP. But at divorce, unless the parties sign an agreement to the contrary, there is an equitable right of reimbursement with interest to the community when: (1) CP funds are used to pay for education or training or repay a loan; (2) and education or training substantially enhances the earning capacity of the party. Life Insurance: Whole life insurance proceeds have been treated as CP in proportion to the percentage of premiums paid by the community. For term insurance proceeds, this apportionment has been challenged by several courts, which held the character is that of the final premium. PMA: A premarital agreement does not require any consideration. It must be signed by both parties. However, an oral agreement may be enforced if full performance. They may not promote divorce. Transmutations:The legislature requires that transmutations made on or after 1/1/85, be evidenced by an express declaration in a writing signed or accepted by the spouse whose interest is adversely affected.
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10. Joint Title: In CA, a married couple may jointly hold property; (1) in a JT, (2) TinC; (3) as CP; (4) or CP with RofS. 11. Married Women’s presumption: When written title to property was placed in a married women’s name before 1975, that property was presumptively her SP. 12. Lucas (joint form + joint funds): The 1980 Lucas case held that the act of taking title in a joint and equal form is inconsistent with preservation of a SP interest. The SP contributor is presumed to have made a gift. The lucas gift presumption remains entirely operative when a marriage ends in death. 13. 1-1-87 Statute Joint presumption: All property held by spouses in joint form is presumptively CP for purposes of distribution at divorce or legal separation. The presumption can be overcome by a collateral written agreement or a stmt of title that the property is SP. If jointly title property is CP, at divorce the SP contributions to the acquisition of the property will be reimbursed to the SP contributor without interest or appreciation.
14. Commingled Funds:Available community funds are presumed to have been used to pay for family expenses. Absent evidence of a reimbursement agreement, a gift is presumed when SP funds are used to pay family expenses. 15. Tracing: There are two permissible tracing methods: Exaustion and direct tracing. The funds are SP when at the time the asset was purchased, CP funds in the account had already been exausted by payment of family expenses, and therefore the asset must have been purchased with SP funds. Direct tracing may be used to show there were SP funds available and the SP proponent intended to use those SP funds to purchase an SP asset. 16. Business Profits: The courts apply two methods to determine the character of a business profits: Van Camp and Pereria. Van Camp is used when the character of the SP business is largely responsible for its growth. While Pereria is used when the management of the spouse was the primary cause of the growth. 17. Quasi CP: Quasi CP is property acquired by either spouse that would have been CP had the spouse been domiciled in CA at the time of acquisition. Quasi-CP retains its SP nature when the parties become domiciled in CA. 18. Marriage requirements: In CA, a lawful marriage requires both legal capacity and performance of formal legal procedures. 19. Putative spouse: A putative spouse is not lawfully married, but has a good faith belief based on objectively reasonable grounds that she is lawfully married. Once she learns that her marriage is invalid, she no longer accrues putative spouse property rights.