Marital Law + Community Property

Putative Spouse Requirements (2)

(1) Cohabitation (2) Good faith belief of legal marriage If the division of property is in issue, court will divide, in accordance [with equal division], that property acquired during the union which would have been community property or quasi-community property if the union had not been void or voidable. This property is known as "quasi-marital property."

Pensions - Vested and Unvested Rules

*Vested* pension rights, if earned during marriage, are CP. For *Unvested* pensions, the "Brown" court said unvested pensions represented a "contingent interest in property." (More than a 'mere expectancy,' since expectancy does not rise to the level of any "interest," but a contingent interest is still a "right," even if it is a contingent right).

CP + SP @ Death of Spouse

1. At death, if a spouse dies without a will (intestate), all the community property goes to the surviving spouse. 2. The separate property also goes to the surviving spouse if there are no other heirs; otherwise, the surviving spouse receives either one-half or one-third of the decedent's separate property (surviving spouse gets at least 1/3 if splitting SP with dead spouse's heirs, if dead spouse dies intestate). 3. If a spouse dies with a will (testate), that spouse may devise one-half of the community property and all of his or her separate property to anyone he or she may choose.

Comingling - General

1. Available community property funds are presumed to be used to pay for family expenses (food, rent, vacations, and medical and dental care are for family expenses). Separate property funds are deemed to be used for family expenses only when community funds are exhausted. 2. When separate property funds are used to pay for family expenses, the separate estate has no right to reimbursement unless the parties have agreed to reimbursement. *The rationale for these rules is the duty of the spouses to provide support for each other during marriage.

Pre-Marital Agreements - 1986 Act

1. Premarital agreements made on or after January 1, 1986 are required to be "in writing and signed by both parties." Consideration not necessary, but must also be stated with sufficient certainty to be an enforceable contract. Parol evidence is not allowed to insert missing terms and conditions absent from the agreement. (Note: But normal promissory estoppel rules apply, like in any contract case—limited to where the party seeking enforcement "performed his/ her part of the bargain and in so doing irretrievably changed his position.") *PMAs signed under 'duress' (i.e., presented on the wedding day to the poorer spouse) no longer allowed. (But recall recent 'Marriage of Dawley': wife, a businesswoman, sought her own legal advince before signing the PMA. Court said no duress)

Separate Property - SP Earnings

1. Property owned before marriage, gifts and the like during marriage, and earnings after the economic community ends are all SP. 2. Any dividends that accrue from that stock are also his separate property. If Wilma receives a gift of stock from her parents during marriage, that stock is her separate property, and any dividends that accrue from that stock are also her separate property Similarly, inheritances received during marriage are also the separate property of the spouse who receives the inheritance.

Two Presumptions - Property with Title

1. Property titled in one spouse's name is treated differently from jointly titled property, and 2. Title in one spouse's name does not mean that that property is the separate property of that spouse. The presumption that applies to property titled in one spouse's name is the general community property presumption that property acquired (or possessed) during marriage is presumed to be community property. THE TITLE WILL NOT CONTROL; IT IS THE SOURCE OF FUNDS THAT CONTROLS

1986 PMA Act - 2 Ways to Invalidate PMAs

1. Prove that the agreement was not executed "voluntarily." This would require a showing of fraud, coercion, or lack of knowledge. *Consider these 'factors' when deciding if agreement was 'voluntary:' Factors (1) proximity of execution of the agreement to the wedding; (2) surprise from the presentation of the agreement; (3) the presence or absence of independent counsel or an opportunity to consult independent counsel; (4) inequality of bargaining power (indicated in some cases by the relative age and sophistication of the parties); (5) disclosure of assets; and (6) the understanding and awareness of the intent of the agreement. 2. The party against whom enforcement is being sought has to prove both that the agreement was UNCONSCIONABLE when it was executed and that before execution of the agreement, the spouse was NOT PROVIDED WITH FAIR AND REASONABLE DISCLOSURE OF THE PROPERTY OR FINANCIAL OBLIGATIONS OF THE PARTY. Also there must be proof that the party did not voluntarily waive, in writing, his/ her right to disclosure of the property or financial obligations, and the party did not have actual or reasonably could not have had adequate knowledge of the property or financial obligations. *NOTE: the unconscionability of the agreement must have been present at the time "it was executed." And fair and reasonable disclosure of property or financial obligations will save even an unconscionable agreement.

Transmutation - Post-1985

1. The transmutation must be accomplished "in writing by an express declaration." 2. It is the spouse "whose interest in the property is adversely affected" who must make, join, consent to, or accept the express declaration in writing. NOTE: The critical time is the date of the alleged transmutation not the date of the acquisition of the property.

Analyzing CP vs SP Presumption

1. When was the property acquired? (If during marriage, presumptively CP) 2. What funds were used to acquire the property? (SP Proponent can rebut the community property presumption by showing that the funds used to buy the property came from her separate property) 3. Now must successfully trace the funds used to acquire the property to SP.

The Big Dates

1975 - 'Special Woman's Presumption' before this date (husband managed CP before this date) Lucas - pre-1984 - A seperate property contributor could only get reimbursement if there is an agreement between the parties to that effect (oral or written). Oral or implied agreements about the character of the property will suffice. 1984 - still the effective date for reimbursements to titles of community property 1985 - Transmutations must be in writing after this 1986 - PMA Act required all agreements to be in writing and signed by both parties. Subject to the statute of frauds exceptions. 1987 - For property in Joint Title, before this date could still use oral evidence. After this date, must use written evidence like everything else. 2001 - Community Property with Right of Survivorship invented 2005 - Pre-2005, if a husband uses his SP funds to improve wife's SP, presumed gift. // Post-2005, presume reimbursement (unless written waiver).

Transmutation - Post-1985 - Small Gifts

A gift between the spouses of clothing, wearing apparel, jewelry, or other tangible articles of a PERSONAL nature (think jewelry as best example), That is used solely or principally by the spouse to whom the gift is made, and That is not substantial in value taking into consideration the circumstances of the marriage. All three requirements must be met, or there has to be an express declaration in writing to transmute the gift to the separate property of the donee spouse. Note: A 'substantial' gift, like a diamond ring, will not be transmuted into SP without express writing. Likewise, an automobile is not a 'tangible asset of personal nature' and so can't be transmuted as a gift without writing.

Conveyance of Separate Property

A married person may, without the consent of the person's spouse, convey the person's separate property.

Pensions - Vested, but not yet Matured

A pension has "matured" when it provides an unconditional right to immediate payment (usually, a pension matures when an employee reaches the eligible age for retirement). If a spouse's pension vests but he continues to work (i.e., puts off collecting the pension), that still-working spouse is required to pay other spouse her share until he retired. But other spouse's share becomes "fixed" and does not increase as working-spouse's pension rights increase.

Community Real Property - What if one spouse sneakily sells the house to an innocent buyer?

A presumption of validity of the sale if the purchaser in good faith did not know about the marriage of the spouse who sold the property. Yet wronged spouse has a right to "void" the sale if sneaky spouse acted without her. Thus buyer would have no right to the property. AND the COMMUNITY must repay the purchase price to the innocent buyer.

1986 PMA Act - Amendments

After marriage, a premarital agreement may be amended or revoked only by a written agreement signed by the parties. *Remember: agreements prior to the Premarital Agreement Act will still be controlled by prior case law.

Degrees Acquired During Marraige

An educational degree is NOT divisible property and therefore cannot be subject to division at dissolution—not CP. HOWEVER, at divorce, the student spouse will also be saddled with the student debt—with the diploma goes the debt. Or, if school all paid for, then the COMMUNITY is paid reimbursement by the student spouse (i.e., spouses will split reimbursement that comes in from student spouse 50/50). NOTE: this only apply if degree was acquired to enhance student spouse's earning potential. Those payments include direct payments for tuition, fees, books, supplies, and transportation. They may also include any special living expenses related to the education experience itself, but DO NOT include ordinary living expenses, because they are incurred regardless of whether one spouse is attending school. And the amount reimbursed includes interest at the legal rate, starting from the end of the calendar year in which the contributions were made. AND, the attainment of a degree and the efforts of the spouse who supported the student spouse may also be considered as factors in the awarding of spousal support. BUT FINALLY, there is a rebuttable presumption that the community has substantially benefited from community contributions made more than ten years before commencement of the proceeding so those don't need to be paid back.

Apportionment

Arises when the couple uses both community and separate funds to purchase property. The portion of separate property will be in direct proportion to the contribution toward the purchase price. (Remember to SPLIT the CP portion of the price between the two spouses)

Business Bought With SP and Run During Long Marriage

At divorce, non-business owning spouse may feel the Community efforts during the marriage contributed to the success of the biz (even if it was spouse doing all the work in the biz, his labor belongs to the Community). Question becomes whether the efforts of the community increased the value of the business; if so, community may be entitled to portion of that INCREASE. PEREIRA Approach: If the increase in value can be attributed to community effort. Allocates a "fair return" (legal interest, i.e. 10%) on the separate property investment and allocates any "excess to the community property." (Better for Community) VAN CAMP approach: If the increase in value is attributed to something OTHER than community effort/labor, then determine the "reasonable value" of the spouse's services and allocates that as community property and the remainder is separate property. (Better for SP owner) (i.e., if business goes up in value due to a trend of people wanting its products, not due to working spouse's labor) NOTE: the "Gilmore" case shows it's not always easy to tell if SP business' increase in value is due to community effort or changing market conditions. In that case, court found SP spouse "worked short hours and took many vacations," and increase in biz value likely due to changing market conditions.

Comingled Funds - Joint Bank Accounts

At divorce, the contributions to bank accounts of married persons are presumed to be community property and can be rebutted by tracing to separate property.

Debts - Exceptions To General SP Rule - "Necessaries of Life"

Because spouses have a duty to care/pay for each other, a spouse's separate property is liable for "necessaries of life" incurred by the other spouse (if CP funds exhausted). So if one spouse bought furniture (a "necessary of life"), spouse with SP funds would be liable to pay for it, because it's her duty to provide necessaries to spouse.

Debts - General Rule

CA Law protects creditors in that the community estate is liable for a debt incurred by either spouse before or during marriage. It does not matter which spouse controls the community property or whether one or both spouses are party to the debt. One spouse can obligate the community property for his or her own premarital debt What about Separate Property? A spouse's SP is liable for his or her own debts but not for the debts of the other spouse.

Transmutation

Change property from one category (CP or SP) to the other. RULE: Must be an "express declaration in writing . . . by the spouse whose interest in the property is adversely affected." EX: the title to a car must read, "To 'Wife', as her separate property" to show husband knew he was giving up his CP interest in the car, which was purchased with community funds.

Premarital Debt - Child Support

Child support (arising from previous marriage) is treated like any other premarital debt—meaning the Community is responsible for it. If non-parent spouse does not wish to pay, he must shield his earnings in separate bank account (separate property also need not be liable).

Spouse Managing CP Business

Code gives "primary" management and control to "a spouse who is operating or managing a business or an interest in a business that is all or substantially all community personal property;" may act alone in most transactions. However, the managing spouse must give "prior written notice to the other spouse" for major actions such as "sale, lease, exchange, encumbrance or other disposition of all or substantially all of the personal property used in the operation of the business." Still, if the managing spouse fails to give that prior written notice, the validity of the transaction will not be adversely affected. A spouse's recourse for that failure is remedy of breach of fiduciary duty and the ordering of an accounting.

CP - One Spouse Giving Gift

Code prohibits gifts or disposal of community personal property for less than fair and reasonable value unless the other spouse has given written consent. The nonconsenting spouse has the right either to ratify the gift or to revoke the gift and sue to recover all the property for the community. If gifts have been 'used up,' nonconsenting spouse can go after gifter spouse to get relief. After the death of the donor spouse, the nonconsenting spouse has the right to ratify the gift or to void the gift up to one-half the value of the gift.

Division of Debts at Divorce

Courts characterize the liabilities of the parties as either Separate or Community and then divide them up. Community debts are divided equally. Separate debts go to spouse who incurred the debt. (A separate debt can be incurred during marriage and before separation if the debt was "not incurred for the benefit of the community.") Debts Not Divided Equally: 1) educational loans are assigned to the spouse receiving the education. 2) if a spouse is found liable for a tort and "the liability is not based upon an act or omission which occurred while the married person was performing an activity for the benefit of the community," the liability is assigned to the tortfeasor spouse without offset. 3) debts incurred before marriage belong to the spouse who incurred the debt.

Division of Debts at Divorce - Debts Incurred After Separation

Debt treated differently depending on category it fits into during period of Separation: 1) Common necessaries of life - A spouse is responsible for the debts incurred by the other spouse if they are for common necessaries of life (food, housing, clothing, etc) 2) Necessaries of life - A spouse is responsible for the debts incurred by the other spouse if they are for necessaries of life OF THE CHILDREN—i.e., necessary for the spouses' *station* in life (membership in a country club, etc.) 3) Non-necessaries - A spouse is NOT responsible for items that could not be categorized as either a common necessary or a necessary. NOTE: after entry of a judgment of dissolution but before the divorce is final, a spouse is responsible for his/ her own debts. Any debts incurred during that time period "shall be confirmed without offset to the spouse who incurred the debt."

Management of Community Property (In General)

Either spouse acting alone may manage the community property, but both spouses must join together for certain events, such as gifts and real property transactions.

Insurance Payout After Divorce?

Even though the insured spouse kept paying insurance payments after divorce, he only had that 'right to renew' because of payments he made with CP during the marriage. So he must reimburse the community for the value at separation of the community's contractual right to renew the disability policies. The most significant fact is when the private disability policy was acquired and benefits paid.

Transmutation - Post-1985 - Estate of McDonald

FACTS: Dying wife signs document that says the couple's CP IRA should be transferred to the husband. Court says this writing is *not* sufficient. The Court explained that to meet the "express declaration" requirement, the document must "contain language which expressly states that the characterization of ownership of the property is being changed." No such language was found in the "I consent" form. The Court indicated that "magic words" would suffice: "transmutation," "community property," or "separate property." Don't NEED those exact words, but giver spouse's intent must be clear, i.e., ""I give to the account holder any interest I have in the funds deposited in this account." Even more important, the Court interpreted the language of the statute to preclude the introduction of extrinsic evidence to supplement the words in the written document.

ESTATE OF CLARK

FACTS: Father contests his son's will, which leaves him nothing. Person listed in son's will settles with father, and father gets 50% of son's estate (rather than 100% he would be entitled to if he went to court and won). Is the settlement money SP (if it would be had the father inherited his son's estate) or CP (i.e., was the settlement acquired through 'onerous title' during marriage?) RULE: Not CP. The settlement payout was acquired by the father way of the compromise of a statutory right which was in itself property and which he owned prior to his marriage. Property acquired by compromise is separate property if the right compromised is separate.

Debts - Exceptions To General SP Rule - Premarital Debt

Here, some protection for non-debt-owing spouse: Earnings of a married person during marriage are not liable for a debt incurred by the person's spouse before marriage, if: 1) Non-debt spouse keeps his earnings in an account in which debt spouse has no right of withdrawal, and 2) He does not commingle those earnings with any other community property. Non-debt spoues's SP ALSO NOT liable for debt spouse's debt. BUT, debt spouess SP would be liable for that debt.

Disability Payments (at retirement)

If a spouse *chooses* disability pay over a retirement benefit, then court will label as CP the amount of payout up to the amount the retirement benefit would have been (say 65% of pay) and then SP only the amount of disability payout OVER the amount of retirement (i.e., if disability payout is 75% of pay, then only 10% is characterized as SP).

Severance paid out after divorce?

If it's a severance meant to replace FUTURE PAY (forward-looking), then not CP. However, if the amount of severance is adjusted based on years worked at company, then MAY be CP (doesn't matter if they call it "severance"; if it's affected by years worked at company, it looks more like a pension to courts). Decided based on the facts of the case.

Transmutation - Post-1985 - Trusts

If one spouse creates a "TRUST" stating she's turning all her separate property into community property (usually for tax purposes), this CAN be evidence of transmutation, even if the trust doesn't use the 'magic words.' And, unlike wills (which become active at time of death), trusts become active at time of execution / signing. The reason? Courts say the spouse can't 'have it both ways' (i.e., get tax benefits of trust during marriage, then have the trust not count in event of divorce) *Note: CP presumption also applies to property 'possessed' during marriage, where court doesn't know where/when the property originated

Married Woman's Special Presumption (strange, one-off, very specific rule)

If property was acquired PRIOR TO January 1, 1975, by a married woman in an instrument in writing, it is presumed to be her separate property. AND the presumption is rebutted not by the source of funds, but by the INTENTION of the husband.

Property Held in Joint Title - What if bought with SP funds, or mix of SP and CP funds?

In joint title situations only, the funds used to buy the property DO NOT control. Instead, it's said the spouses have an 'agreement' to hold the property jointly. I.e., property acquired during marriage held in joint tenancy will be presumed to be community property at divorce. When the spouses put the property in joint title, the community property presumption can never be rebutted by tracing to funds used to buy the property. An agreement can only be rebutted by another agreement—and, post-1984 that agreement has to be in writing or in a clear statement in a deed or title. Tracing to funds will not rebut the presumption that property held in joint tenancy is community property at divorce. HOWEVER, there is a right to reimbursement (w/out interest and w/out accounting for any increase in property value) of "contributions to the acquisition of the property to the extent the party traces the contributions to a separate property source." (I.e., SP spouse can get back her down payment). Note: Pre-1984, oral agreement b/t parties that JT property should be SP CAN be enough

What If Property Acquired With Credit Before Marriage, but Loan Repaid with CP Funds During Marriage?

In this case, the Community gets an interest in the property (i.e., not just entitled to mere reimbursement for CP funds for loan payments). 'Moore' Formula: 1. Community funds paid to reduce the principal on a separate loan will result in the community obtaining a proportional interest in the property according to the formula established by the Supreme Court in the Moore case. 2. Community funds paid for interest on the separate loan and for taxes and insurance will not be included in the calculation of the community interest in the property.

Property Held in Joint Title

Joint tenancy has the unique feature of the right of survivorship—but things are more complicated when couple divorces. At divorce, all property acquired during marriage in joint tenancy is presumed to be community property and should be split 50/50. However, there are special extra steps when it comes to SP...

Lucas + Anti-Lucas

LUCAS Under Lucas, when married couple takes title in joint and equal form, any SP used to acquire the asset is presumed to be SP unless oral or written agreement to contrary. At divorce, all property taken by couple in joint form is considered CP, but SP contributing spouse gets reimbursement. ANTI-LUCAS

One Spouse Gifting Away CP?

Must have written consent of both spouses before one spouse spouse sells, conveys, or encumbers community personal property used as the "family dwelling, or the furniture, furnishings, or fittings of the home, or the clothing or wearing apparel of the other spouse or minor children which is community personal property. So, if wife obtained loan and used house furniture as collateral and defaulted, and bank came and took the furniture, husband would be able to make them bring the furniture back b/c he never gave written consent to encumbering the furniture. ALSO, each spouse shall act in GOOD FAITH with respect to the other spouse in the management and control of the community property .

Spouses' CP Business - Fiduciary Duty

NOTE: Spouses have a fiduciary duty to each other: confidential relationship with duty of the highest good faith and fair dealing. Specifically: 1. Access at all times to any books kept regarding a transaction for inspection and copying 2. Rendering upon request true and full information of all things affecting any transaction which concerns the community property 3. Accounting to the spouse, and holding as trustee, any benefit or profit derived from a transaction by one spouse without the consent of the other spouse which concerns community property Courts used to say spouses have DUTY TO DISCLOSE "upon request;" now say duty to disclose even "without demand." Note: "gross mishandling" of CP funds or "grossly negligent or reckless conduct" can be a breach of fiduciary duty. GENERALLY: the claim of breach of fiduciary duty presents an avenue for overturning interspousal transactions that advantage one spouse. The issue is whether that advantage is "unfair to the other."

Community property with right of survivorship

New type of status in CA, post-2001. This title is created when "expressly declared in the transfer document" If the marriage ends in divorce, the property will be treated as community property. If the marriage ends in death, the property will be treated as joint tenancy, and the surviving spouse gains the property by right of survivorship.

Divorce Procedure - Separate and Apart

No one test to determine: court will look at facts of marriage and factors such as: living together; comingling funds; sexual relations; vacations; holding themselves out to be married; dating other people; etc. NOTE: Court will (almost) never find a couple is living 'separate and apart' if still living in the same houes According to Baragry case: Happens when spouses have come to a parting of the ways wit h no present intention of resuming marital relations." The Court directs examination of the parties' conduct that evidences a complete and final break in the marital relationship. (In "Baragry", husband and wife maintained facade of marriage for years before final divorce; wife hoped they'd get back together. Court says he didn't get to enjoy the appearance of marriage and then claim he'd been practically divorced the whole time)

Tenancy in Common

Not likely to see in CA. As of 1987, tenancy in common, like joint tenancy, will be presumed to be community property at divorce. BUT, unlike joint tenancy, the people owning property in tenancy in common can have equal or unequal interests (vs JT's, who have equal, indivisible title in the property). AND at death, tenancy in common DOES NOT carry a right of survivorship. If one spouse dies without a will, part of property goes to other spouse, and part goes to dead spouse's heirs. ALSO NOTE, in JOINT tenancy, if one joint tenant assigns or sells his interest in the property, the joint tenancy is "severed" and the joint tenancy is transformed into a tenancy in common. (This feature of joint tenancy is particularly important when one spouse dies in the midst of divorce proceedings. If divorcing spouse dies, she'll want her half of the property to go to her heirs, not the spouse she's divorcing)

Restrictions on Property During Divorce Proceedings

Once the spouses begin living separate and apart, their earnings become their separate property. Also, once the spouses begin living separate and apart, the community property is not liable for most debts incurred during that time period. However, fiduciary duty does not end when the spouses separate. The fiduciary duty continues until the "date of distribution of the community or quasi-community asset or liability in question." In fact, divorce proceedings initiates a temporary restraining order that prohibits the spouses from "transferring, encumbering, hypothecating, concealing, or in any way disposing of any property, real or personal, whether community, quasi-community, or separate, without the written consent of the other party or an order of court. EXCEPTIONS: (1) in the usual course of business, (2) for the necessities of life, and (3) extraordinary expenditures (a spouse must notify the other spouse of any "proposed" extraordinary expenditure at least five days before incurring such an expenditure and account to the court for all extraordinary expenditures) REMEDY: Remedies for the breach of the fiduciary duty by one spouse for oppression, fraud, or malice includes an award to the other spouse of 100 PERCENT of any asset undisclosed or transferred in breach of the fiduciary duty! (So one spouse could try to hide she won the lottery; then have to give ALL the lottery winnings to other spouse, if found out)

1986 PMA Act - Topics that Can and Can't Be Contracted

Permissible: 1. Property (including all rights thereto), 2. Choice of law (separate property versus community property principles), 3. Any other matter, including personal rights and obligations, not in violation of public policy or a statute imposing a criminal penalty. *The only subject matter that is specifically prohibited from being included in a premarital agreement is child support: "The right of a child to support may not be adversely affected by a premarital agreement." However, can have a 'minimum' amount of child support (e.g., '14 months') in a PMA. NOTE: Per case law, "SPOUSAL support waivers executed by intelligent, well-educated persons, each of whom appears to be self-sufficient in property and earning ability, and both of whom have the advice of counsel regarding their rights and obligations as marital partners at the time they execute the waiver are deemed to NOT violate public policy and NOT to be per se unenforceable.

Property Held as "Community" In Title

Post-1987, this is treated by the same rules as Joint Title. But pre-1987, SP proponent may have a right to reimbursement if she can trace to her separate property contribution OR if she can show there was an ORAL agreement that it should be separate property. (Post-1985, due to transmutation law, such an agreement transmuting the property would have to be an express declaration in writing)

What if spouses use CP to improve SP Property?

Pre-2001, assumption is the CP improvement funds are a gift to the SP-owning spouse and thus no reimbusement for CP funds. Post-2001, *some* CA courts now say reimburse the CP. AND: if the husband expends community funds, without the consent of his wife, for the improvement of his separate property, the community is entitled to reimbursement (even pre-2001). Cant use CP funds sneakily in own self-interest And not: injured spouse Is entitled to amount expended OR amount prop improved, whichever is greater.

What if one Spouse pays with SP for improvement to other spouse's SP property?

Pre-2005: When one spouse used separate property funds to improve the other spouse's separate property, that contribution would be presumed to be a gift. That presumption could be rebutted—with evidence that the separate property was not a gift. Post-2005: New law passed gives a right to reimbursement "for the party's separate party contributions to the acquisition (or improvement) of property of the other spouse's separate property estate during marriage." So Husband that contributed his own SP to the improvement of wife's SP house (say, add a pool) would get a reimbursement of the SP $ he put in, at divorce.

Property Acquired With Credit During Marriage

Presumed to be CP, but when property is acquired on credit during the marriage, the separate property proponent must trace by using the INTENT of the LENDER (i.e., was SP put up as collateral? Etc.) If credit found to be given to the Community, then the Community will have some interest in the property acquired with the credit.

Transmutation - Prior to 1985

Prior to '85, was *easy* to transmute property from SP to CP—even an oral conversation or implied agreements to change the character of the property between spouses could suffice. However, the *belief* of the spouse arguing the property had been transmuted is insufficient; needed to prove the *intent* of the other spouse was to transmute the property, too. In terms of property concepts, the question is really not one of "agreement" but of a "gift" by the spouse who would be giving up his or her interest in the property.

Lucrative Title

Property acquired by lucrative title is that acquired through gift, succession, inheritance, or the like. It has its basis in pure donation on the part of the donor. It may or may not be community property, depending on whether the donor intends it to be for the benefit of both spouses or to be for one of them alone.

Two types of Marital Property + What they are + How Dealt With

Separate property - property owned before the marriage or acquired afterward (by gift, bequest, devise, or descent), and the rents, issues, and profits of the property so described. Community Property - acquired other than by gift or inheritance by either spouse during marriage *The time of the acquisition, before marriage or after separation, is a significant determinant of the character of the property of the spouses. **The type of acquisition, either through labor or through a gift or inheritance, will also determine whether the property is community or separate property.

SP Reimbursements - What Qualifies

Some types of SP contributions to joint title property can be reimbursed in event of a split: 1) Down payments; 2) Payments for improvements, and 3) Payments to reduce the principal of a loan used to finance the purchase or improvement of the property. Excluded from the definition of contributions are: 1) Payments of interest on a loan; and 2) Payments for maintenance, insurance on, or taxation of the property. (Those payments that are excluded are viewed as "expenses" rather than "contributions to the acquisition of the property." Generally, expenses are not considered reimbursable.) NOTE: Spouse can WAIVE reimbursement right in writing. ALSO NOTE: The amount reimbursed shall not exceed the net value of the property at the time of division.

Transmutation - Post-1985 - Wills

Sometimes a statement in a will can serve as a transmutation (i.e., "I bequeath to my beloved wife, Wilma, my coin collection as her separate property.") BUT, it would not be admissible "as evidence of a transmutation of the property in a proceeding commenced before the death of the person who made the will." That means that in a divorce proceeding, the statement in Harry's will could not be used to show that the coin collection was transmuted into Wilma's separate property.

Quasi CP

Special classification for out-of-state property acquired when the spouses were domiciled out of state. The quasi-community property classification has the unique effect of treating property like community property only upon death or divorce. When a couple changes their domicile to California, the property rights they have from the prior domicile remain intact throughout the life of their marriage. Upon death or divorce, however, California law applies. In the divorce context, that classification reaches "all real or personal property, wherever situated" if: 1. the property was acquired by either spouse while domiciled elsewhere, and 2. the property would have been community property if the acquiring spouse had been domiciled in California at the time of acquisition, or 3. in exchange for real or personal property, wherever situated, which would have been community property if the spouse who acquired the property had been domiciled in this state at the time of acquisition. In death context: 1. the property was acquired by a decedent while domiciled elsewhere, and 2. the property would have been community property of the decedent and the surviving spouse if the decedent had been domiciled in California at the time of acquisition, or 3. in exchange for real or personal property, wherever situated, that would have been community property of the decedent and the surviving spouse if the decedent had been domiciled in California at the time the property so exchanged was acquired.

Property Held in Joint Title - Steps For Analyzing Joint Title Property (pre-and-post 1984)

Step 1) Determine the character of the property. Any joint tenancy deed or title held in joint tenancy is presumed to be community property at divorce. The presumption applies no matter when the property was acquired. A) Rebuttal of the presumption may be by agreement only, not tracing to funds. If the property was acquired prior to 1984, oral or implied agreements regarding the character of the property will be sufficient to rebut the community property presumption. B) If the property was acquired in 1984 or thereafter, the community property presumption may be rebutted only by a written agreement or a clear statement in the title or deed. C) If there is an agreement, the property will be characterized according to the spouses' agreement. The spouses could agree that the property is the separate property of one spouse or part separate property/ part community property. D) If there are no agreements, the joint tenancy property will be characterized as community property and split between the spouses. Step 2) Then determine if there is any right to reimbursement when there has been a separate property contribution to the acquisition of the property. (Relevant only if characterization as CP in Step 1) A) For acquisitions in 1984 or thereafter, there is a right to reimbursement based on tracing. B) Appreciation of the property goes to the community; it is not apportioned. C) Pre-1984, reimbursement is available to the separate property contributor only if there is an agreement to that effect.

Onerous Title

That property acquired by husband and wife during the marriage through their labor or industry or other valuable consideration is said to be acquired by onerous title. With the exception that property acquired through valuable consideration which is wholly the separate property of one spouse naturally retains the character of separate property, property acquired by onerous title is always community property.

General Community Property Presumption

The "general" community property presumption is that property acquired during marriage is presumed to be community property. Unless the spouse who claims that the property is separate property rebuts that presumption, the presumption becomes conclusive. At divorce, that means that community property will be divided equally. At death, if one spouse dies without a will, all the community property will go to the surviving spouse. A spouse has the right to will one-half of the community property to anyone chosen by the testator. NOTE: Recently, kin Marraige of Vallie, the CA Supreme Court confirmed that the standard of proof for rebutting the general community property presumption is preponderance of the evidence.

Unmarried Cohabitants

The 'Marvin' court held: 1. Distribution of property acquired during a nonmarital relationship is governed by judicial decision, not community property statutes. 2. Express contracts between nonmarital partners will be enforced unless based on meretricious sexual services. 3. If there is no express contract, the courts will examine the conduct of the parties to determine whether they had an implied contract, agreement of partnership or joint venture, or some other tacit understanding. 4. Quantum meruit and other equitable remedies may be available for nonmarital partners.

Comingled Funds - Exhaustion Method

The SP proponent can rebut the community property presumption if, at the time of acquisition, all community income was exhausted by family expenses. Then clearly the property must have been purchased with separate property funds. Note, however, can be tough to prove that, at time of the property purchase, the CP funds in the bank account were exhausted (especially years later). When that spouse makes the choice to commingle funds, that spouse "assumes the burden of keeping records adequate to establish the balance of community income and expenditures at the time an asset is acquired." (However, if records destroyed by something out of SP proponent's control—i.e., flood or fire—court may cut him a break)

Degree Acquired Before Marriage, But CP Used To Pay Off Student Loans?

The community shall be reimbursed for those contributions. And the remaining debt shall be assigned to the student spouse exclusively.

Division of CP at Divorce

The court shall divide the community estate of the parties equally. There are very few exceptions to the rule of mandatory equal division. Debts are not considered property, yet many couples have accumulated community debts and community property during their marriage. At divorce, those debts that are unpaid at the time of trial must be divided equally or "confirmed" to one of the spouses.

Earnings and accumulations while living separate and apart

The earnings and accumulations of a spouse and the minor children living with, or in the custody of, the spouse, while living separate and apart from the other spouse, are the separate property of the spouse.

Apportionment - When property value has increased during marriage

The increase in value is also apportioned according to the proportions of the contributions to the purchase of the property. Formula: First do the percentages of the increase, THEN do the percentages of original purchase price, then add the two together to see what each spouse gets (do it in two steps, as that's necessary in complicated cases)

Comingled Funds - Direct Tracing Method

This is the method preferred by the separate property proponent because it does not require exhaustion of community property funds. When both types of funds are in a bank account, under the Direct Tracing Method, the separate property proponent need only show that separate property funds were in the account and the separate property proponent intended to use the separate property funds to acquire the property in question. The burden is "not simply that of presenting proof at the time of litigation but also one of keeping adequate records."

Division of Debts at Divorce - When Debts Exceed Assets

To the extent that community debts exceed total community and quasi-community assets, the excess of debt shall be assigned as the court deems just and equitable, taking into account factors such as the parties' relative ability to pay.

Property Titles in a Marriage

When the title to property is in one spouse's name, the title does not determine the character of the property. Instead, we look to: 1) The SOURCE of the funds that are used to acquire the property, or 2) The express written INTENTIONS of the spouses (if the funds originated as CP) If property is acquired during marriage, it will be presumed to be community property unless rebutted by tracing to separate property funds or by showing the express written desire of the negatively impacted spouse to 'transmute' the property from CP into SP in the other spouse's name. *Same rule for property that does not have a title.