Cloned from: Community property



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Default statutory definitions of property apply unless

the character of the asset has been changed by:
  • the parties agreement
  • the parties conduct or
  • how title was taken
separate property: defined
  • property owned by either spouse before marriage or
  • property acquired after marriage by gift will or inheritance or
  • property acquired during the marriage with expenditure of separate funds
  • the rents issues and profits derived from separate property
community property: defined
property, other than SP acquired by either spouse during marriage
  • salary or wages earned by either spouse
  • income from CP
community property: statutory presumption
All assets acquired during the marriage are presumptively CP. Absent a showing of the aprties agreement or that title was taken in a form that overcomes the presumption, the burden of proof that a particular asset is SP is on the contending party
community property: CA presumption extended to
As of 2004, the CP system applies to registered domestic aprtners upon a filing of a Declaration of Domestic partnership with the secretary of state. partners must be either:
  • opposite sex couples where one person is over the age of 62 or
  • same sex couples

CP system applies the same way
community property: In re Marriage cases
Prop 8 cannot be applied retroactively to same sex couples lawfully married before the passage of prop 8

CP system applies to them the same way but they are spouses, not domestic partners
when does the economic community end?
the economic community ends (and therefore anything acquired by either spouse is SP) when:
  • permanent physcial separation AND
  • intent, manifested by one or both spouses, not to resume the amrital relationship

maintaining the facade of marriage does not end the economic community and property acquired is still SP
CP not divided upon divorce
the court retains continuing jdx to award CP that was not previously adjudicated and on motion the ommitted or unadjudicated CP will be divided 50/50 UNLESS the court finds that "the interests of justice require unequal division"
CP is divided upon divorce..
Absent a property settlement agreement all CP is divided 50/50
  • disparity in earning power is considered only as to spousal and child support
  • each and every asset must be divided 50/50
CP: economic circumstances exception
there can be a non-pro rata distribution, giving a particular asset wholly to one spouse and "cashing out" the other spouse with other assets (each taking a 50% split):
  • family residence: family residence and loss of hom would uproot minor children
  • closely held corporation stock
  • pensions: given to the earning spouse with the otehr taking equitable assets so they dont have to see each other anymore
CP: statutory exceptions to equal 50/50 split rule where one spouse ends up with more than 50%
  • one spouse misappropriates CP, whether before or during pendancy of divorce
  • one spouse has incurred educations debt--treated as SP debt
  • one spouse incurred tort liability not based on an activity for the benefit of the marriage
  • personal injury awards: CP but on divorce is awarded to the injured spouse (unless justice requires otherwise)
  • negative community: community liabilities exceeding CP assets--relative ability of spouses to pay debt is considered to protect creditors
CP: lifetime and testamentary gifts of CP by one spouse
  • Innocent spouse can set gift aside because neither spouse can make a gift of CP without the others written consent
  • the power to equally manage CP is not the power to give it away
  • on divorce the innocent spouse can take equal offsetting assets worth 50% of that CP
  • If discoereved after death of the donor spouse, innocent spouse can set aside the gift as to their 50% CP and can take from either the donee or the dead spouse's estate
  • same result if insured spouse under CP life insurance policy names a 3P as the benficiary --innocent spouse can recover their 50% CP from the beneficiaty or the estate
CP: lifetime and testamentary gifts of CP by one spouse: exception
US govt savings bonds
  • federal law trumps state law and there is federal preemption here
  • innocent spouse cannot recover thier 50% CP interest in those bonds
CP: testamentary gifts of CP by one spouse
Each spouse has power to devise all thier SP and 50% CP (thier share)
  • widows election will
H bequeaths entire CP interest: W cannot slectively read the will, so she must elect to either:
  • take under the will and receive the residuary estate but msut allow the rest of the will to operate OR
  • can elect to take against the will by claiming 50% CP. But she must then relinquish all testamentary gifts in her favor
CP: acquisitions of credit during marriage: community credit presumption
  • Down payment with CP--this % of the property is CP
  • the other % (bought on credit)--R-funds borrowed during marriage and goods purchased with those funds are presumptively CP credit
CP: acquisitions of credit during marriage: community credit presumption: lenders intent
borrowed funds (and credit purchases) are classified according to the primary intent of the lender in terms of satisfaction of the debt
  • was the lender really only lending to one spouse or did they rely on the credit of both for repayment?
  • if the note is secured by SP the credit is SP in that percentage (down payment from CP is that % CP)
spouses fiduciary duties
spouses are subject to fiduciary duties that arise from their confidential relationship, imposing a duty of the ihghest good faith and fair dealing with each other. if one spouse gains an advantage from a transaction a presumption of undue influence arises. that spouse has a burden of proof to show she did not breach her FD
  • under 2002 statute, a grossly negligent and reckless ivnestment of CP funds is a breach of FD (not just Angles tix, something really bad)
altering the character of an asset by agreement: generally
absent any contrary agreement, the statutory definitions of SP and CP control
  • BUT CA allows parties to opt out of the Cp/SP definitions by agreement, either to particular assets or as to all acquisitions
  • agreement can be made before marriage or during marriage
  • when agreement during marriage is uses to change the characterization of an asset (CP to SP, HSP to WSP etc) this results in transmutation
  • transmutation can be by gift or agreement
altering the character of an asset by agreement: premarital agreement: general rule
premarital agreements must be in writing, signed by both aprties. Oral agreements are invalid.
altering the character of an asset by agreement: premarital agreements: exceptions to writing requirment
  • where oral agreement is fully executed (performed) marriage alone is insufficient performance to an exception to the writing requirement b/c otherwise it would eliminate the writing requirement. must be conduct sufficient to execute the agreement
  • estoppel based on detrimental reliance
  • in both cases it still goes to the jury to determine the existance of the K, but this evidence can come in
altering the character of an asset by agreement: premarital agreements: what can spouses agree to?
just about anything
  • parties cana gree that after marriage each parties salary and wges will be that parties SP
  • that neither will claim a family allowance in the others estate
  • that ana greement will govern disposition of property on separation, divorce or death
altering the character of an asset by agreement: premarital agreemetns: what can parties NOT agree to?
parties cannot agree to limit either party's contribution to furnish child support. this is prohibited by statute as the right to support belongs to the child
altering the character of an asset by agreement: defenses to premarital agreements
  • not signed voluntarily (In re Marriage of Bonds)
  • unconscionability
altering the character of an asset by agreement: defenses to premarital agreements: involuntarily signed
2002 statute: a premarital agreement shall be deemed not voluntary and hence unenforceable unless the court finds the party challenging the agreement:
  • was represented by independent elgal counsel at the time the agreement was signed OR waived this in a separate writing AND
  • was given at least 7 days to sign AND
  • if not represented by independent elgal counsel, was fully informed in writing (in a language that party is proficient in) of the terms and basic effects of the agreement. the aprty must execute a document declaring that they got the information and identify who provided it
altering the character of an asset by agreement: defenses to premarital agreements: unconscionability: spousal support
CASC held that the right to spousal support cannot be waived or modified in a premarital agreement
  • CA legislature: provision in premarital agreement regarding spousal support is unenforceable on one of two grounds:
  • party challenging was not represented by independent counsel at the time it was signed OR
  • provision is unconscionable at the time of enforcement, even if represented (look at the financial position upon entering the marriage and now)
altering the character of an asset by agreement: defenses to premarital agreements: unconscionability: anything besides spousal support
agreement is unenforcebale if unconscionable when made AND
  • no full and fair disclosure of the other partys property or financial obligations
  • right to such disclosure is not waived in writing AND
  • party challenging has noa dequate knowledge of the other partys property or financial circumstances

by statute, unconscionability is a matter of law to be determined by the court, NOT a jury
altering the character of an asset by agreement: marital agreements (transmutation): before 1985
oral transmutation was permitted, whether by express agrement or implied agreement in fact

spouse not expected to act formally
sticky wicket upon divorce b/c no agreement in writing
altering the character of an asset by agreement: marital agreements (transmutation): after 1985
must be:
  • in writing
  • signed by spouse whose interest is adversely effected and
  • must explicitly state that a change in ownership is being made
  • applies to ALL transmutations (CP to SP, SP to CP, HSP to WSP etc)
  • usual exceptiosn tow riting requirments (SOF, estoppel, part performance) DO NOT apply

ONLY EXCEPTION: gifts of tangible personal property or a personal nature which "are not substantial in value taking into account the circumstances of the marriage)
altering the character of an asset by agreement: marital agreements (transmutation): H executes will stating he owns no SP
by statute, in any proceeding commenced before the death of the person who made the will or created a revocable trust, a statement in a will or revocable trust as to the character of the property is not admissible as evidence of the transmutation
effect of how title is taken: property acquired before 1975: married womens special presumption
where CP was used to take written title in a married womans name before 1975 and the title did not indicate it was CP or JT, the property is presumptively the Ws SP
  • exception to the general rule that property titled in one spouses name does not overcome the CP presumption
  • rationale: before 1975 H had sole control over CP, so if title was taken in Ws name, H must have intended a gift
effect of how title is taken: property acquired before 1975: married womens special presumption: can this be rebutted?
  • presumption is not rebuttable as against TP BFP who buys the asset from W in reliance of the fact that it is titled in Ws name and therefore must be Ws SP
  • presumption is rebuttable as between H and W---H could rebut by showing he did not intend to make a gift to W, but had some other reason for taking title in her name 9creditor concerns, or W took title in her name w/o Hs consent)
effect of how title is taken: property acquired before 1975: married womens special presumption: how title is taken, does the presumption apply?
  • title taken as "beth hurwitz (or) beth hurwitz, married women": yes, asset is WSP
  • title taken in name of "beth hurwitz and megan somogyi" yes, asset is held by beth and megan as TIC
  • title taken in name of "beth hurwitz and justin tiffany as husband and wife": no, asset is CP
  • title taken in name of "beth hurwitz and justin tiffany as JT with rights of survivorship": no, asset is held by beth and justin as JT
  • title taken in name of "beth hurwitz and justin tiffany" (no reference to marital status): yes, asset held as JT
effect of how title is taken: property acquired before 1975: married womens special presumption: solid gold short list
  • title is taken is Ws name alone before 1975: property is WSP
  • title in name of W and H before 1975 but title is not taken in JT form and not as "husband and wife" or "Mr and Mrs": property is 50% WSP and 50% CP [W will wind up with 75%]
  • title in name of W and some 3p before 1975: W is TIC with 3P
presumptions arising from taking title in "joint and equal" form: general definition
"joint and equal form": title is taken listing both spouses by name ---"Mr and Mrs Clause", "Beth and Justin Tiffany", '"Mr and Mrs Santa Clause", "Beth Hurwitz and Justin Tiffany, husband and wife"
presumptions arising from taking title in "joint and equal" form:In Re Marriage of Lucas (H and W purchase a home, using WSP for down payment, title taken jointly. W contributed SP for improvements)
held: taking title as joint tenants (which by statute makes the house CP) property was presumptively CP. taking title in a form that raised the CP presumption was inconsistant with idea that W intended to reserve an SP interest---Ws subjective intent irrelevant
Absent proof of an agreement that W was to have SP interest, by taking title in CP form W must have intended gift to the community. Unless such ana greement is established, W has no SP ownership interest and no claim for reimbursement
presumptions arising from taking title in "joint and equal" form: In re Marriage of Lucas, DEATH of one party
Lucas is still the law---W has no SP ownership interest and no claim for reimbursement unless she can establish that there was an agreement that W was to have SP interest or W was to be reimbursed
presumptions arising from taking title in "joint and equal" form: In re Marriage of Lucas, DIVORCE
W seeks to trace and show the house is 1/4 WSP because of down payment and W seeks reimbursement for improvements made with WSP
  • CA legislature passed 2 anti-Lucas statutes on the ownersip and reimbursement when the issue arises on divorce or separation
presumptions arising from taking title in "joint and equal" form: In re Marriage of Lucas, DIVORCE: ownership interest under anti-Lucas statute
family code § 2581: for purposes of division of property on divorce or separation, property acquired during marriage in joint and equal form is presumptively CP and subject to equal division on divorce
CP presumption can be rebutted by:
  • express statement in deed or other instrument of title that the property, or portion thereof is SP or
  • written agreement by the parties that the property or portion thereof is SP
presumptions arising from taking title in "joint and equal" form: In re Marriage of Lucas, DIVORCE: reimbursement interest under anti-Lucas statute
family code § 2640: for purposes of division on divorce or legal separation, spouse who made the contribution of SP to the acquisition or improvement of CP is entitled to reimbursement without interest for contributions to DIP:
  • Down payment
  • Improvements or
  • Principal payments on mortgage

no reimbursement for SP used to pay interest on mortgage, taxes, insurance or maintenance
  • so if no express statement in the deed or other writing indicating any SP interest:
  • W cannot claim 1/4 house as SP because of down payment, BUT would receive reimbursement for contributions to DIP
using $25k of HSP funds and $25k of CP funds, H purchases house, on divorce...
  • if deed names H and W as husband and wife as grantees, the anti-Lucas statutes apply. On divorce the house is CP and subject to equal division unless Hs SP ownership interest is specified in the deed or recognized in a separate written agreement between H and W. H is entitlted to reimbursement for DIP
  • If deed names H as grantee the anti-Lucas statute does not apply because the house was not taken in joint and equal form. under the source rule and tracing, the property is 1/2 CP and 1/2 HSP
effect of parties actions on characterization of assets: installement purchase premarriage; debt paid down with CP post marriage
proration rule: installment purchases before marriage, payment with CP funds after marriage (or during marriage if W inherits land subject to mortgage and pays off note with CP) the community takes a pro-rata portion of the property measured by the % of principal debt reduction attributable to the expenditure of community funds

principal debt reduction attributable to CP/prucahse price=% of CP
  • CP componant measured by amount of principal debt reduction attributable to community funds, not mortgage interest, taxes or insurance
effect of parties actions on characterization of assets: whole life insurance policy: some premiums paid with SP before marriage and some with CP after marriage
the proration rule applies: the percentage # of premiums paid with CP becomes the % of the policy payout owned by the community---if 20% of the premiums were paid with CP, 20% of the resulting payout is CP
effect of parties actions on characterization of assets: term life insurance
for term insurance the characterization of the funds by which the last premium was paid determines the character of the payout
effect of parties actions on characterization of assets: CP used to improve SP
governed by the real property doctrine of fixtures: the improvements becoem aprt of the property and expenditures of CP on the SP property does not change the charactorization of the property
  • the community can bring ana ction for reimbursement and can get the greater of: the CP expenditures or the increase in value of the property
  • anti-Lucas does nto apply because only expenditures of SP on CP trigger anti-Lucas
effect of parties actions on characterization of assets: H spends CP improving WSP house
is H entitled to assert a community reimbursement for the expenditure of CP funds on WSP house? split of authority, cite both:
  • no reimbursement: CP expended on other spouses SP gives rise to a presumption of a gift to WSP estate; presumption of gift can be rebutted only by evidence of an agreement to reimburse community estate
  • reimbursment: other cases have rejected the gift presumption and grant reimbursement
effect of parties actions on characterization of assets: house owned as CP with title taken in joint and equal form. H uses SP to improve and he assert reimbursement claim?
yes: situation governed by anti-Lucas because title held in joint and equal form and SP was expended in improving the CP: upon divorce the party who expended SP can ger reimbursement (w/o interest) for DIP BUT
  • if issue arises on death of a spouse the situation would be governed by Lucas and there could be no claim for reimbursement absent proof of an agreement to reimbure
reimbursement rules: solid gold outline
  • if H expends CP to improve own SP (nest fethering) community has a reimbursement claim for the greater of the cost to improve or the enhanced value
  • if H expends CP to improve WSP, split of authority on action for reimbursement
  • if H expends SP to improve CP, anti-Lucas governs at divorce or Lucas governs at death
effect of parties actions on characterization of assets: commingled bank account
the mere fact that SP funds are commingled with CP funds does not transform the SP into CP. BUT the burden of proof is on the contesting spouse to show each asset was purcahsed with SP and is therefore SP
  • problem with recapitulation: does not show that CP funds were unavailable when each asset was purchased
effect of parties actions on characterization of assets: commingled bank account: family expense presumption
it is presumed that expenditures for family expenses (food, housing, clothing recreation etc) were made with CP funds (to the extent they were available) even though SP funds were available
  • but because of commingling and inadequate records some family expenses may have been paid with SP funds, in which case the presumption is of a gift to the community with no reimbursement interest
  • H will need an agreement to reimburse to rebut
effect of parties actions on characterization of assets: commingled bank account: family expense presumption rebuttal: 2 accounting methods
  • exhaustion: H can show there were no CP funds remaining in the account when a purcahse was made and thus the asset is SP OR
  • direct tracing: requires that sufficient SP funds were available and H intended to use SP funds to buy the asset--if shown the asset is SP
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