Community Property

PRINCIPLES OF CONTRACTUAL MODIFICATION

(1) Contractual modification before the couple is married-Premarital agreements, prenuptial agreements, antenuptial agreements (2) Contractual modification after they are married a. Husband and wife agree to change the character of property while they are married b. Transmutations (post-marriage, during marriage, changes of the character of property)

CFC § 2660: Division of Real Property Situated in Another State

(a) Except as provided in subdivision (b), if the property subject to division includes real property situated in another state, the court shall, if possible, divide the community property and quasi-community property as provided for in this division in such a manner that it is not necessary to change the nature of the interests held in the real property situated in the other state. (b) If it is not possible to divide the property the court may : (1) Require a conveyance in the other state. (2) Award equitable value

CFC § 297: Domestic Partners and Partnerships

(a) Two adults (b) file a Declaration of Domestic Partnership with the Secretary of State pursuant to this division, and, at the time of filing, all of the following requirements are met: (1) common residence. (2) Neither person is married to someone else or is a member of another domestic partnership with someone else (3) not related by blood (4) Both persons are at least 18 years of age. (5) Either of the following: (A) Both persons are members of the same sex. (B) one or both of the persons are over the age of 62. (6) consenting to the domestic partnership.

CFC § 1615: Unenforceable Premarital Agreements:

(c) It shall be deemed that a premarital agreement was not executed voluntarily unless the court finds in writing or on the record all of the following: 1. The party against whom enforcement is sought: was represented by independent legal counsel at signing or, expressly waived, in a separate writing, representation by independent legal counsel 2. 7 calendar days between presentation with the agreement and advised to seek independent legal counsel 3. if unrepresented by legal counsel: had informed consent of the terms and conditions as well as the rights and obligations she or he was giving up by signing the agreement, and was proficient in the language in which the explanation was conducted and the agreement was written in. Signed an agreement giving an explanation of what was being waived. The unrepresented party shall, on or before the signing of the premarital agreement, execute a document declaring that he or she received the information required by this paragraph and indicating who provided that information. 4. No duress, fraud or coercion to sign.

REBUTTAL OF THE GENERAL COMMUNITY PROPERTY PRESUMPTION

-The usual method of rebutting the general presumption is to trace the asset at issue back to a separate property source:

Three approaches to determining concurrent estates at DIVORCE

1. Common law approach 2. Single family residence presumption 3. CFC § 2580/81

Separate property

1. Property acquired before the marriage kept separate from community property 2. Property acquired by bequest or gift

Property Within the System

1. The value of a professional education-not to be property within the system 2. The professional practice itself, and goodwill element of the practice, is property within the system 3. Earnings and accumulations of a spouse during separation are that spouse's separate property 4. Personal injury damages, although classified as community property, are treated much like separate property on dissolution of marriage

Hard transmutation period

After Jan. 1, 1985-Transmutations of real or personal property on or after Jan. 1, 1985 must be in writing and signed by both parties-May be amended or revoked only by a written agreement signed by the parties

Community property

After a marriage, the two people involved are seen as in a partnership, and all property acquired during the marriage by the skill or labor of either spouse belongs equally to both spouses. All property is owned 50% by each spouse as soon as it is acquired, and each spouse has control over it-in the event of death: A spouse can alienate separate property by will, but the ½ of the community property owned by them will go to the still-living spouse

Common Law Rule

After marriage what's mine is mine and what's yours is yours. Thing are ours if property character is changed.

The Domicile Requirement

An attempt by the legislature to protect new California domiciliaries who has married and acquired property in a common law jurisdiction resulted in the development of the quasi-community property concept

Domestic Partnerships

Applies to same-sex couples of any age, and to male-female couples where at least one of the partners is age 62 Domestic partners have the same rights and obligations as married persons

Quasi-CP at divorce or death

At the time of divorce, the property that would have been the one spouse's separate property becomes quasi community property, which is treated the same as CP Quasi-community property is created for spousal protection - it is not meant to take from the surviving spouse and give to the deceased spouse's heirs

Indirect tracing:

Based on a presumption that family expenses are paid from community funds. Separate funds are deemed to have been used to meet community expenses only when community funds are exhausted.

Easy Transmutation Period

Before Jan. 1, 1985-it was very easy to change, during the marriage, the character of community and separate property 1. Could be oral, implied or express 2. Have to find some evidence to show a change in property: -Most exacting thing would be an oral agreement stating a change in property -But a court will find implied agreements-Painting hung in the house was spouse's separate property, but referred to as "our" painting 3. Establish with testimony at trial 4. Gifts were easy to imply-Easy to infer intent

Single Family Residence Presumption (statute)

CCC § 164: When a single family residence of a husband and wife is acquired by them during marriage as joint tenants, for the purpose of the division of such property upon divorce or separate maintenance only, the presumption is that such single family residence is the community property of said husband and wife-Only applied for house acquired through 1965-1983

Putative Marriages

CFC § 2251: Status of Putative Spouse; Division of Community or Quasi-Community Property: (a) If a the court finds that either party or both believes in good faith that the marriage was valid, the court shall (1) Declare the party or parties to have the status of a putative spouse (2) If the division of property is in issue, divide that property acquired during the union which would have been community or quasi-community property if the union had not been void or voidable. This property is known as "quasi marital property" A valid marriage or registered domestic partnership is a prerequisite to the existence of a marital community, there can be no community property without a legally binding marriage or domestic partnership

Concurrent Estates

CFC § 750: Methods of Holding Property: A husband and wife may hold property as joint tenants or tenants in common, or as community property, or as community property with a right of survivorship. Property can't be more than one of these.

THE "EQUALITY" PRINCIPLE

CFC § 751: The respective interests of the husband and wife in community property during continuance of the marriage relation are present, existing, and equal interests

STATUTORY DEFINITION OF COMMUNITY PROPERTY

CFC § 760: Community Property Defined: All property, real or personal, wherever situated, acquired by a married person during the marriage while domiciled in this state is community property

STATUTORY DEFINITION OF Separate PROPERTY

CFC § 770: Separate Property Defined: (a) Separate property of a married person includes all of the following: (1) all property owned by the person before marriage; (2) all property acquired by the person after marriage by gift, bequest, devise, or descent; (3) the rents, issues, and profits of the property described in this section

COMMON STATUTORY PRESUMPTIONS RESPECTING SEPARATE PROPERTY OF MARRIED PEOPLE

CFC § 770: Separate property of a married person includes all of the following: (1) all property owned by the person before marriage; (2) all property acquired by the person after marriage by gift, bequest, devise, or descent; (3) the rents, issues, and profits of the property described in this section ii. (b) A married person may, without the consent of the person's spouse, convey the person's separate property

COMMON STATUTORY PRESUMPTIONS RESPECTING EARNINGS ACQUIRED DURING A SEPARATION

CFC § 771: 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

Contributions made to and education

CFC §2641 Only applies to divorce-(a) Repay "Community contributions to education or training" as used in this section means payments made with community or quasi-community property for education or training or for the repayment of a loan incurred in this state or resident outside this state (b) Subject to the limitations provided in this section, upon dissolution of marriage or legal separation of the parties: (1) The community shall be reimbursed for community contributions that substantially enhances the earning capacity at the legal interest rate, accruing from the end of the calendar year in which the contributions were made. (2) A loan incurred during marriage for the education or training of a party shall be paid by the student. (c) The reimbursement and assignment required by this section shall be reduced or modified to the extent circumstances render such a disposition unjust, including, but not limited to, any of the following: (1) There is a rebuttable presumption, affecting the burden of proof, that the community has not substantially benefited from community contributions to the education or training made less than 10 years before the commencement of the proceeding, and that the community has substantially benefited from community contributions to the education or training made more than 10 years before the commencement of the proceeding. (2) The education or training received by the party is offset by the education or training received by the other party for which community contributions have been made. (3) The education or training enables the party receiving the education or training to engage in gainful employment that substantially reduces the need of the party for support that would otherwise be required

SEPARATE PROPERTY CONTRIBUTIONS IN ACQUISITION OF A COMMUNITY PROPERTY ASSET

CFC§ 2640: Reimbursements: (a) "Contributions include: -down payments, -payments for improvements, and -payments that reduce the principal of a loan used to finance the purchase or -improvement of the property BUT DO NOT INCLUDE: payments of interest on the loan or payments made for maintenance, insurance, or taxation of the property. b. If no waiver then reimburse without interest or adjustment for change in monetary values and shall not exceed the net value of the property at the time of the division. (c) RULE-A party shall be reimbursed for the party's separate property contributions to the acquisition of property of the other spouse's separate property estate during the marriage, unless there has been a transmutation in writing. The amount reimbursed shall be without interest or adjustment for change in monetary values and may not exceed the net value of the property at the time of the division.

Determining Concurrent Estates at DEATH

CPC § 5601: Joint tenancy created before or during marriage severed if former spouse not decedent's surviving spouse; situations where joint tenancy is not severed (Occurs during bifurcated trials)

Single Family Residence Presumption

Community property presumption applies The statute confirms that the property is assumed to be community property but that can be rebutted by any agreement or understanding (written, oral, implied)

Classic Common Law Approach to determine concurrent estate at death

Community property presumption applies but can be rebutted by title in joint tenancy but that can be rebutted back to community property or separate property by agreement or understanding (written, oral, or implied) that it is community or separate property

Common Law Approach for Concurring Estates at Death:

Community property presumption rebutted by title in joint tenancy-To rebut joint tenancy back to community or to separate property, just need an agreement or understanding, oral or written, express or implied. Extrinsic evidence is permitted (also consider transmutation)

Joint Tenancy with Right of Survivorship

Effective only for documents drafted on or after July 1, 2001-CCC § 682.1-(a) Community property of a husband and wife, when expressly declared in the transfer document to be community property with right of survivorship, shall, upon the death of one of the spouses, pass to the survivor, without administration. Prior to the death of either spouse, the right of survivorship may be terminated pursuant to the same procedures by which a joint tenancy may be severed. (b) This section does not apply to a joint account in a financial institution .

SPECIAL PRESUMPTIONS BASED ON THE FORM OF TITLE

Generally, there is no inherent state of title presumption (i.e., we presume that because property is titled a certain way, that determines whether it is CP or SP)-But there are instances in which title can be conclusive to give rise to a presumption

Presumptions Based on the Form of Title

Generally, there is no inherent state of title presumption-But there are instances in which title can be conclusive to give rise to a presumption

Married Woman's Special Presumption (MWSP)

If property is titled to a married woman's name before 1975, it is presumed that it is her separate property-A husband can rebut this presumption by showing he didn't have intent to make it her separate property.

Limitations on the Classification Process

Limitations on property, persons in the system

Lucas Rule

Lucas is still good law for determining reimbursement of separate property contributions of property at DEATH = absent any agreement to the contrary, the SP will be absorbed by the community

CFC § 850: Transmutation by Agreement or Transfers

Married persons may by agreement or transfer, with or without consideration, do any of the following: a. Transmute community property to separate property of either spouse b. Transmute separate property of either spouse to community property c. Transmute separate property of one spouse to separate property of the other spouse

Nonmarital Cohabitation

No marital property rights

2 Business Profits Tests

Pereira: Involves the allocation of a fair return on the spouse's separate property investment as separate income, and then the allocation of any excess to the community (VAM x 10%)(M) + (VAM)-TBV=CP Van Camp: Determine the reasonable value of the spouse's services, allocate that amount to the community property, and treat the balance as separate property (Salary/yr x M)=CP, CP-VAS=SP

Life Insurance

Proceeds are CP Two types: (1) Term insurance-Last Payment Rule Just death coverage; pay the premium per year, and you get coverage for that year. There is no investment component (can be SP) (2) Whole-life (traditional) insurance-Paying more per year than for a term insurance policy in the early years, which creates a sort of built in savings account

THE "TRACING" PRINCIPLE

RULE: (George v. Ransom) Rents and profits of separate property shall be deemed separate property; rents and profits of community property shall be deemed community property

CFC §§ 2580, 2581 to determining concurrent property at divorce

RULE: Property acquired during the marriage in joint tenancy is presumed to be community property (general community property presumption) this rebuttable by: (a) A clear statement in the deed or any other document that this is separate property or joint tenancy and not community property or (b) Proof that the parties have made a written agreement that the property is joint tenancy or separate property

Direct tracing:

Separate funds do not lose their character as such when commingled with community funds in a bank account so long as the amount thereof can be ascertained. You need 2 things: 1. Accurate accounting 2. Intent to use SP to buy the property

Premarital Agreements

The property rights of husband and wife prescribed by statute may be altered by a premarital agreement or other marital property agreement. A premarital agreement shall be in writing and signed by both parties.-CFC § 1500; 1611: Form and Execution of agreement: (Bonds case)

Express Declaration

The writing signed by M of a transmutation of property is not an "express declaration" as required by the statute unless it contains language which expressly states that the characterization or ownership of the property is being changed

Persons Within the System

There is The Requirement of a Valid Marriage or Registered Domestic Partnership

BUSINESS PROFITS

When separate and community property combine in the production of something new, courts have determined that the new production should be apportioned according to the relative separate and community contributions

CFC § 803

Whenever any real or personal property was acquired before January 1, 1975, by a married woman by an instrument in writing, the following presumptions apply and are conclusive in favor of any person dealing in good faith and for a valuable consideration with the married woman or her legal representatives or successors in interest, regardless of any change in her marital status after acquisition of the property: a. the presumption is that the property is the married woman's separate property b. If acquired by the married woman and any other person, the presumption is that the married woman takes the part acquired by her as tenant in common, unless a different intention is expressed in the instrument

CFC § 852: Validity of Transmutations

a. A transmutation of real property or personal property is not valid unless made in writing by an express declaration that is made, joined in, consented to, or accepted by the spouse whose interest in the property is adversely affected 1. Has to be in writing 2. Has to be an EXPRESS DECLARATION 3. Does not say signed 4. No extrinsic evidence allowed - has to be clear from the face of the document that they are changing the character of the property (small gift exception 852 C)

Spousal Protections (Common Law)

a. Equitable distribution doctrine (divorce): Property from the wage-earning spouse shall be distributed, at the event of a divorce, to the non-wage-earning spouse (typically 50%) b. Forced share (death): Surviving spouse gets a certain percent (generally ½) of the deceased spouse's property-Husband wage-earner dies intestate, nothing to wife c. Elective share (death): Surviving spouse can elect to take the statute-specified elective share (generally intestate share), or what is given under the will-Husband wage-earner dies, leaves everything to friend Bob, nothing to wife

CFC § 125: Quasi Community Property:

all real or personal property, wherever situated, acquired before or after the operative date of this code in any of the following ways: (a) By either spouse while domiciled elsewhere which would have been community property if the spouse who acquired the property had been domiciled in this state at the time of its acquisition. (b) In exchange for real or personal property, wherever situated, which would have been community property if the spouse who acquired the property so exchanged had been domiciled in this state at the time of its acquisition. Doesn't take place immediately

GENERAL PRESUMPTION

an acquisition during the period of marriage is community property-cfc 760-When an item was acquired during marriage, but the evidence shows that its acquisition was by gift, inheritance, or testamentary disposition to one spouse, the case is said to be taken out of the general presumption of community property and put within the common presumption of separate property. The burden of disproving the presumption shifts to the person making the statement.

Retroactive Application of § 2581

if taking away a vested property interest then yes (Boul)

Transmutations

post-marriage change of property

COMMINGLED FUNDS

refers to combining or intermixing of community and separate property funds into a common mass or pool Property comes within the general presumption of community property when there are deposits and withdrawals over time and the commingled funds are used to purchase other assets. But it may be possible to rebut this presumption by tracing the asset to a separate property either directly or indirectly.

SEPARATION

under § 771 that condition when spouses have come to a parting of the ways with no present intention of resuming marital relations(Baragry) and the date of separation occurs when EITHER party does not intend to resume the marriage and his or her actions seem final. Outside perception doesn't matter. (established by a preponderance)

Married Woman's Special Presumption

§ 803 raises a presumption that the property is a married woman's separate property when it is titled so in writing and was acquired by a married woman prior to January 1, 1975-A husband can rebut this presumption by showing he didn't have intent to make it her separate property (Horman v. Maden)