CAB Community Property

  1. Analysis approach
    • Basic CA Presumptions governing comm prop
    • Party actions affecting assets' characterization as CP or SP (ex. transmutation)
    • Special rules or presumptions that apply
    • How should property be distributed
  2. Four basic presumptions governing CA community property
    • CA is a community property state
    • All property acquired during course of a marriage is presumed CP.
    • All property acquired before or after a marriage is presumed to be P.
    • In addition, any property acquired by gift, devise, or bequest is presumed to be SP
  3. What happens to CP at divorce or death
    • CP wil be equally divided unless some special rule requires deviation from the equal division requirement
    • Decendent can devise all SP and 1/2 of CP.
    • If intestate, spouse is entitled to all CP (and 1/3 of SP, depending on issue)
  4. Slap down for determining character of asset acquired during marriage
    Courts will trace back to the source of funds used to acquire the asset; a change in form does not change the character of the asset
  5. Basic presumptions of Personal Injury Awards
    • CP if cause of action arose during marriage
    • SP if arose before marriage/after permanent separation
    • Divorce: CP personal injury award will go to injured spouse unless justice demands otherwise
    • Personal injury award against other spouse are always SP
  6. Basic presumptions of Retirement Benefits
    • CP if earned during course of marriage
    • Time Rule: if earned before/after marriage, determine how much of pension is attributable to CP/SP
  7. Basic presumptions of Disability pay and worker's comp
    • Either CP or SP, depending on the wage they are designed to replace
    • To the extend received in lieu of retirement benefits, they are treated like retirement benefits
  8. Basic presumptions of Severance Pay
    • Courts are split - argue both sides
    • Replace future wages?
  9. Basic presumptions of Stock Options
    • A form of employee compensation
    • Treated as CP or SP depending on when earned
    • Time Rule used to determine respective CP/SP share
  10. Basic presumptions of Business and Professional goodwil
    CP if earned during marriage
  11. Basic presumptions of Education/Training
    • Not CP
    • Community may be reimbursed if CP funds were used and earning capacity was enhanced
    • Not entitled to reimbursement if:
    • - community already benefited (10 yrs)
    • - other spouse also benefited
    • - need for special support is reduced by education/training
  12. Basic presumptions of when property is acquired with CP or SP funds
    • the SP and CP interests are determined by apportioning their respective contributions
    • Acquire a pro-rata ownership interest per percent of contributed to purchase price
  13. Basic presumptions of when SP is improved with CP funds
    • When one spouse uses CP to improve other's SP = presumption of gift
    • When one spouse uses CP to improve their own SP = CP may receive either
    • - reimbursement
    • - increase in value
  14. Definition/requirements of Transmutation
    • an agreement between spouses to change the character of an asset or series of assets
    • Must be in writing, express declaration
  15. Affect of use of SP to take assets in joint title: Death vs. Divorce
    • Death: presumed CP. If purchased with SP, spouse is entitled to reimbursement w/out interest or appreciation
    • Divorce: Lucas rule applies. Presumed gift of SP to CP unless oral or written agreement
  16. Basic presumptions of when CP labor is used to enhance value of SP
    • CP is entitled to share in increase of value of SP b/c CP labor was used
    • Pereira accounting: when increase is primarily due to CP labor
    • - SP used x fair ROI (10%) w/ rest CP
    • Van Camp accounting: when increase in value is primarily result of unique nature of asset, not CP labor
    • - Subtract FM salary and amounts paid for community expenses, w/ rest being CP
  17. Basic Rule of Distribution at Divorce
    • Divide each community asset equally in kind.
    • Thus, each spouse receives 1/2 of each community asset.
  18. Pontential reasons for deviating from basic rule of distribution of CP upon divorce
    • Misappropriation
    • Liabilities exceed assets
    • Educational benefits assigned to 1 spouse
    • Tort liabilities are assigned to tortfeasor
    • Family home awarded to one person w/ custody of minor children
  19. Basic Rule of Distribution at Death
    • Will: may devise 1/2 of CP and all SP
    • Intestate: surviving spouse gets All CP to & between 1/3 and all SP depending on other issue/parents surviving
  20. Definition of quasi-community property
    Property acquired by spouses while in another jurisdiction that, had the parties been domiciled in CA, would have constituted CP.
  21. Basic rule for distribution Quasi-CP at Death and Divorce
    • Death:
    • - Titled in Decedent's name: Surviving spouse has 1/2 interest in QCP 
    • - Titled in Surviving Spouse's Name: Decedent's estate has no interest the QCP asset 
    • Divorce: QCP assets are each divided equally in kind
  22. Basic rule for management and control of CP assets during marriage
    • During the marriage the spouses have equal management and control of all CP
    • Real property transfers: both spouses must join
    • Personal belongings, clothing, furniture: both spouses must join
  23. When does a marital economic community begin and end
    begins at marriage and ends at one spouse's death or when the spouses effect a permanent physical separation (with no intent of resuming the relationship)
  24. What property is liable for one spouse's debts incurred during marriage
    • All CP and the debtor spouse's SP are liable for debts 
    • None of the SP of the non-debtor spouse is reachable
    • Note: Follow up with breach of fiduciary duty analysis and court assignment of debt to debtor spouse
  25. what principals apply to cohabitants
    • General contract principals apply to cohabitants
    • Courts should enforce express contracts (barring one for sex)
    • Implied contract can be found from actions of parties (reliance on another, agreements)
Card Set
CAB Community Property
CAB Community Property