Classification of Assets as SP or CP

What is SP?

1. Property acquired before marriage (inception of title), 2. Property acquired during marriage by gift, devise, or descent, 3. property acquired during marriage but purchased with separate property funds (tracing)

Impermissible terms in Premarital Agreement

1. cannot provide that after marriage, the SP will be CP- can only be done during marriage by conversion agreement; 2. right of a child to child support cannot be adversely affected.

Permissible terms in Premarital Agreement

1. may contract as to property rights with regard to SP and CP whenever acquired, including the right to sell, lease, encumber, or otherwise manage and control property; 2. The income from SP will be SP; 3. The spouse's salary and wages will be that spouse's SP; 4. Modify or eliminate spousal support; 5. govern disposition of property on divorce or death, including marking of a will, trust, or other arrangement to carry out the agreement; 6. rights in life insurance policies; 7. can contain choice of law provisions and can cover any other matter including personal rights and obligations, not in violation of public policy or criminal statute.

Premarital agreement is unenforcible against a party if it was not executed voluntarily OR if it was unconscionable when made AND

1. no fair disclosure was given of the property or obligations of the other party, 2. the right to disclosure was not waived in writing, AND 3. the party had no adequate knowledge of the property or financial obligations of the other party. Unfairness short of unconscionability does not make the agreement unenforceable.

Partition/Exchange agreement rules

1. partition must be based upon voluntary agreement of both spouses. 2. must be written and signed by both spouses- oral partition agreement is unenforceable. 3. CP can be converted into SP by written exchange agreement. 4. Spouse can make gift of his interest in CP to the other spouse, thereby making the property the SP of the donee spouse. 5. Income from any transferred property will be CP unless the agreement provides otherwise.

Claims for reimbursement that are specifically recognized:

1. payment by one marital estate of the insecure liabilities of another marital estate; 2. inadequate compensation for time, toil, talent, and effort of a spouse by a business entity under the control and direction of that spouse; 3. the reduction of the principal amount of a debt secured by a lien on property; 4. capital involvements to property; and 5. the reduction by the CP estate of an unsecured debt incurred by the separate estate of one of the spouses.

An asset is CP unless it was affirmatively shown that:

1. the asset was acquired by gift, devise, or descent; or 2. that it was acquired with the SP of one of the spouses.

Presumption of Community Credit can be rebutted under 2 fact patterns in which separate credit can be established.

1. the lender agrees to look solely to the separate estate of the borrowing spouse; or 2. a spouse purchases the asset using borrowed funds with the intention of immediately paying the debt with proceeds from the sale of SP

The court MAY NOT recognize a marital estate's claim for reimbursement for:

1. the payment of child support or spousal maintenance; 2. the living expenses of a spouse or child of a spouse; 3. contributions of property of a nominal value; 4. the payment of a liability of a nominal amount; or 5. a student loan owned by a spouse.

Rules for conversion agreements

1. written agreement, 2. must be made during marriage with respect to existing property, 3. agreement must be in writing, signed by both spouses, and must specify the property being converted. A conversion of SP to CP doesn't affect the rights of preexisting creditors of the spouse whose SP is being converted.

Third parties without notice of revocation of agreement- 6 month rule

A 3rd party who, more than 6 months after decedent's death, purchases property from the surviving spouse in reliance on a survivorship agreement, and who had no notice that the agreement had been revoked, takes good title as against decedent's successors.

Purchase from Someone other than Personal Representative- 6 month rule

A party who without notice of the survivorship agreement, purchases property from a person claiming from a decedent more than 6 months, after decedent's death takes good title, as against the surviving spouse, to the interest that the person claiming from decedent would have had in the absence of the agreement.

Sale and distributions by Personal Representative of Deceased Spouse

A personal representative of the deceased spouse's estate who has no actual knowledge of the existence of a survivorship agreement is not liable for selling, distributing, or otherwise disposing of the property subject to the agreement. A person who purchases property from the personal representative without notice of the survivorship agreement takes good title as against the surviving spouse.

Palimony Agreement requirements

An agreement between persons living together but not contempt;lating marriage must be in writing and signed by the party sought to be charged.

Community Presumption

An asset acquired during the marriage presumptively belongs to the community, regardless of whose name it is in.

What presumption applies if asset acquired during marriage?

CP

H buys a car the day after his wedding to M. CP OR SP?

CP unless clear and convincing evidence H used SP funds.

Two types of marital agreements

Conversion agreements and Partition/exchange agreements

Measure of reimbursement for time, toil, and effort

If one spouse owns a business, the nonowning spouse can be reimbursed for the value of the other spouse's time, toil, talent, and effort expended in enhancing the value of the sepatately owned business if there were inadequate compensation during the marriage.

adverse possession before marriage and completed during marriage

If the claimant entered a "rightful" claim before marriage, the land is SP. If the claimant was a "naked trespasser" before marriage., the land is CP.

What is CP?

Property- other than SP- that is acquired by either spouse during the marriage.

Where installment payments on a purchase are begun before marriage and completed after marriage, the purchase is

SP

If gifted to both spouses during marriage from a spouse's parent, the gift is

SP as tenants in common.

H gets end of year bonus based on work. H marries just after calendar year ends, but receives bonus just after wedding. Is bonus SP or CP?

SP- inception of title. Key is when earned and here it is before the marriage.

One year after wedding, H's father gives pair of boots that are SP. If H sells the boots and uses the money to buy a statute, CP or SP?

SP- tracing. Items bought with SP are SP.

Inception of Title Rule

Separate or community character of an asset is determined at the time the asset is acquired, and no subsequent actions will alter its character.

Creditors' rights not affected by survivorship agreement

The surviving spouse is liable to account to the deceased spouse's personal representative for the property received by right of survivorship to the extent necessary to discharge liabilities of the deceased spouse. A proceeding to assert such liability cannot be commenced more than 2 years after decedent's death.

If a spouse has SP and later titles that property to the other spouse's name, a strong presumption arises that....

a gift to the other spouse was intended.

If one spouse uses separate funds to buy an asset and causes title to be taken in both spouses' names, it is presumed that

a gift to the other spouse was intended. The presumption can be rebutted by extrinsic evidence showing that no gift was intended, and the asset is then considered the SP of the spouse who furnished the consideration for its acquiescence.

In community property states, deed recitals are not controlling of title, rather the...

community presumption applies.

Partition/exchange agreements- what is it

convert community property into separate property.

Conversion agreements- what is it

convert separate property into community property.

A marital agreement terminates upon

divorce and is not revived if the parties remarry.

If spouse transfers his interest in a CP asset to the other spouse, a presumption arises that...

he intended a fit to his 1/2 community property to the other spouse.

If spouse transfers SP to himself and his spouse as CP, the CP designation is ignored and a presumption arises that

he intended a gift of an undivided 1/2 interest in the land, which the transferee spouse will hold as a tenant in common.

A person owing money to the decedent, registrar, or transfer agent who has had no actual knowledge of a survivorship agreement is protected from claims by the surviving spouse IF

he pays or transfers property to the decedent's personal representative or to decedent's heirs or legatees.

A void marriage does not totally invalidate a premarital agreement, but it is enforceable only to the extent...

necessary to avoid an inequitable result.

a reimbursement claim provides a spouse a remedy when

one marital estate has been used to either contribute or improve another marital estate. The claim against the benefited estate by the contributing estate matures termination of the marriage. Reimbursement does not create an ownership interest in property, is not a claim of right, and does not affect the rules governing management of marital property.

If consideration for real property is CP, the real property is...

presumptively CP, but the intent to make a gift can be shown by a preponderance of the evidence.

Assets acquired on credit during marriage....ownership is deterred at the time the asset is...

purchased on credit.

On dissolution of a marriage or on death of a spouse, the court may impose an equitable lien on the property of a benefitted marital estate too...

secure a claim for reimbursement against that property by a contributing marital estate.

A good faith purchaser from the personal representative is protected even if the sale occurs...

shortly after the decedent's death (before 6 months)

During the marriage, the premarital agreement can be amended or revoked only by a writing

signed by both parties.

Premarital agreements must be in writing and

signed by both spouses, but no consideration is required.

CP survivorship agreement

spouses may agree in writing that all or part of their CP becomes the property of the surviving spouse on the death of a spouse. Must be in writing and signed by both spouses. It can apply to specific or general assets. Either spouse may revoke the agreement by written notice to the other spouse.

Reimbursement for funds expended for improvements is measured by

the enhancement in value to the benefitted marital estate.

If consideration for real property is one spouse's SP....

there is a presumption of a gift to the other spouse's separate estate.

A premarital or marital property agreement may _________ a claim for reimbursement

waive, release, assign, or partition

In commingled bank accounts, courts developed presumption that community funds were...

withdrawn first, before separate funds were withdrawn. The community out first presumption is limited by the lowest intermediate balance principle.