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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
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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
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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)
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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
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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
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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
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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
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Basic presumptions of Severance Pay
- Courts are split - argue both sides
- Replace future wages?
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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
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Basic presumptions of Business and Professional goodwil
CP if earned during marriage
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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
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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
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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
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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
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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
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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
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Basic Rule of Distribution at Divorce
- Divide each community asset equally in kind.
- Thus, each spouse receives 1/2 of each community asset.
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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
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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
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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.
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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
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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
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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)
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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
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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)
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