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Community Property
Separate Property
Community Property:
All property acquired during marriage + proceeds.

Separate Property:
Property acquired prior to marriage, after "separate and apart," by gift, bequest, drvise, + proceeds.
Working Principles
Working Principles (DMV IS PETTE)
Working Principles
(a) Inception of Right
(b) Exchange Rule
Inception of Right:
Deemed acquired at earliest time right to property arises.

Exchange Rule:
Change in form is not a change in status.
Working Principles
(c) Transmutation
Change in classification or status:
post '85 transmutations require writing.

pre'85 gifts;
executed oral agreements (intent + subsequent action);
insubstantial gifts of a personal nature (measured by station in life).

Wills can be used to show transmutation, but only after death.
Working Principles
(d) Tracing
Trace property to source;
change in form not a change in status;
often used with bank account purchases.
Working Principles
(e) Presumptions
All acquired during marriage is C.P.;
presumptions must be overcome with clear and convincing evidence.

J.T. treated as C.P. on dissolution;

(1) stating H & W = C.P.;
(2) pre'75 married woman's presumption;
(3) tenancy in common when marriage not stated.
Working Principles
(f) Earnings & Accumulations
Wages, etc.;
include labor, skill, effort.
Working Principles
(g) Separate & Apart
(h) Management & Control
Separate & Apart:
Breakdown of marriage with no intent to resume, no outward indicia of marriage, not due to military service or medical problems.

Management & Control:
Equal for all C.P.
Primary management and control for C.P. business, written notice required to sell or encumber.
Fiduciary duty to spouse when controlling C.P. personal and real property.
Working Principles
(i) Division of C.P.
Equal division;
sale of residence may be postponed.

written agreement, deliberate misappropriation, absent spouse, personal injury on dissolution, education loans.
Working Principles
(j) Valuation of C.P.
As close to time of dissolution as possible;
earlier with 30 days notice and good cause (where business depends on skill of spouse), arbitration for assets less than $50,000.
Specific Applications
Specific Applications (Things That Come In)

Add to C.P. (fc 11)
Specific Applications (Things That Come In)
(a) Earnings
(b) Business Goodwill
(c) Stocks
(d) Borrowed Money
(a) Earnings:
(wages), depends upon date earned.

(b) Business Goodwill:
Subject to valuation and division

(c) Stocks:
Trace to source;
See if C.P. efforts involved.

(d) Borrowed Money:
Intent of lender controls;
look at collateral used for loan.
Specific Applications (Things That Come In)
(e) Pension & Retirement Plans
Pro rata (proportional) C.P. interest to the extent acquired during marriage.

Disability payments C.P. if received during marriage, S.P. if received after separation or dissolution.
Specific Applications (Things That Come In)
(f) Appreciation of S.P.
If C.P. efforts, must discuss

Pereira: S.P. = legal rate of return, remainder = C.P.
Van Camp: C.P. = value of services, remainder = S.P.

Can always show community compensated by salary, but watch fraud if salary not adequate for services provided.
Specific Applications (Things That Come In)
(g) Appreciation of C.P. (After Separation)
Reverse Pereira & Van Camp.
Specific Applications (Things That Come In)
(h) Personal Injury Recoveries
If injury during marriage, recovery = C.P., but awarded to injured spouse on dissolution unless justice demands otherwise (commingling).

In no event does injured spouse get less than 50%.

If other spouse committed tort, then it's S.P.;
C.P. gets reimbursed for medical payments.
Specific Applications (Things That Come In)
(i) Real Property (Mortgage Payments)
On S.P. with C.P. funds: community gets pro rata interest for reduced principal;
reimbursement for taxes, insurance, interest.

On C.P. with S.P. funds: reimbursement;
nothing for taxes, interest, insurance.
Specific Applications (Things That Come In)
(j) Real Property (Improvements)

On S.P. with C.P. funds: reimbursement of expenses or increased value (whichever higher).

On C.P. with S.P. funds: reimbursement only, no interest.

When acquired,
How acquired,
How title held,
Specific Applications
Specific Applications (Thinks that go out)
(a) Commingled Bank Accounts
Presumed C.P.;
presumption overcome by:
(1) direct tracing,
(2) family expense doctrine (preferred),
(3) recapitulation
Specific Applications (Things That Go Out)
(b) Contract Debts
C.P. is liable.

C.P. earnings in separate account of one spouse not liable for S.P. debts of other spouse;
C.P. not liable for child support obligations if debtor-spouse has sufficient S.P..

Quasi-C.P. treated same as C.P. for contract debts;
S.P. liable for S.P. debts of owner, all C.P. debts, and all necessities of life.
Specific Applications (Things That Go Out)
(c) Tort Debts
If for community, C.P. first, then S.P.;
if not, S.P. first.
Specific Applications (Things That Go Out)
(d) Gifts & Transmutation (Between Spouses)
No transmutation without a writing unless gift of personal nature and insubstantial value.

S.P. money to acquire or improve C.P. asset gets reimbursed on dissolution.
Specific Applications (Things That Go Out)
(e) Gifts to 3rd Parties
(f) Quasi-C.P. Gifts
Gifts to 3rd Parties:
Not permitted without written consent, can be set aside prior to death;
after death only 1/2 can be set aside.

Quasi-C.P. Gifts:
Permitted without consent.
Exception: if decreased gets less than fair value and retains quantum of ownership.
Specific Applications (Things That Go Out)
(g) Sales of Community Personal Property
Permitted if fair dealing and adequate price;
but not furniture, clothes, fittings.
Specific Applications (Things That Go Out)
(h) Sales of Community Real Property
Both spouses must execute document;
if not, can be set aside w/in 1 year of recording, or 1/2 after death.

If property in one spouse's name, only a true BFP gets to keep it.
Specific Applications (Things That Go Out)
(i) Life Insurance
(1) Upon Death & Dissolution
Pro rata interest for payments at death & dissolution.
Specific Applications (Things That Go Out)
(j) Professional Training & Education
Reimbursement + interest for actual expenses w/in last 10 years;
loan obligation to educated;
offset expense if both receive education.
Related Topics
Quasi-Community Property
(a) Definition
(b) Treatment Upon Dissolution
(c) Treatment Upon Death
(d) For Debts
(e) Inter-vivos Gifts
Quasi-Community Property:
Definition - all acquired during marriage outside of CA, if property would have been C.P. in CA.

Treatment Upon Dissolution - same as C.P.

Treatment Upon Death - non-earner may not dispose;
earner may dispose of 1/2;
For Debts, same as C.P.;
Inter-vivos Gifts permitted with exception noted above at  (Sales of Community Real Property)
Related Topics
Putative Relationships &
Quasi-Marital Property
One party believed marriage valid;
Quasi-marital property treated as C.P. for division purposes.
Related Topics
Meretricious Relationship (Living Together)
Only contract analysis;
watch for consideration and statute of frauds.
Related Topics
Constitutional Law Issues
(a) Presumption
(b) Due Process (Retroactive Application)
Constitutional Law Issues

Presumption - CA laws preempted by contrary federal law, unless fraud.

Due Process (Retroactive Application) - unconstitutional unless a sufficiently important state interest to override vested interests.
Related Topics
Dates to Know
1975, 80, 83, 84, 85, 87, 91.

Prior to: Money borrowed by husband was presumed to be CP, money borrowed by wife was presumed to be her SP.  Instruments naming wife presumed to grant her the property as SP.
On: Each spouse given equal management and control over CP

1980:  Personal injury recoveries presumed to be community property when the injury occurs during marriage.

1983: Congress passed an act making Federal Pensions subject to CP divisions

4800.1: Joint tenancy property as CP for dissolution purposes.
4800.2: Requires reimbursement upon dissolution for SP contributions used to acquire or improve a CP asset
New liability for debt provisions adopted under 5120 et al.

5110.730 passed, providing that transmutations must be in writing.
4800.3 passed, solving Sullivan problem (education)

1987: "Primary Control" replaces sole control as test for spouse running a CP business, requiring written notice for major dispositions of CP assets used in CP business.

1990: Mandatory arbitration for estates of less than $50,000.

1991: Fiduciary relationship created when controlling or using CP assets.

1994: All sections moved and renumerated into CA. Family Code
Related Topics
Final Distinction
Reimbursements, pro-rata;
dissolution, death.
Related Topics
Premarital Agreements
Effective only on marriage, no consideration needed.

Can cover all real and personal property, earnings, spousal support, management & control.

Cannot cover child support.

Must be "voluntary," and must be provided with a "full, fair, and reasonable disclosure" of property & financial obligations of other party.

"Voluntariness" elements include:
(1) independent counsel
(2) 7-day advance notice

If not dependent counsel, must be fully informed, proficient in the language of the document, and sign a separate document acknowledging above.
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