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CA extends CP system
as of 2004, the CP system applies to registered domestic partners upon filing a Declaration of Domestic Partnership with the Secretary of State, retroactive to Jan 1, 2000.
when does the economic community end?
- 1. permanent physical seperation AND
- 2. intent (just 1 party needed) not to resume the marital relation
- * If facade of marriage maintained, then still married.
continuing jurisdiction to award CP
for CP not divided on divorce, the court retains continuing jurisdiction to award CP that was not previously adjudicated, and on motion the omitted or unadjudicated CP will be divided 50-50 unless the court finds that "the interest of justice require an unequal division."
CP upon divorce
- 1. absent a property settlement agreement, all CP must be divided equally
- 2. disparity in earning power can be considered only as to spousal and child support.
economic circumstances exception to CP 50-50 division
- non-pro rata division, give particular asset wholly to one spouse and "cash out" other spouse with other assets (with each getting 50% of total value).
- Examples -
- * family residence (not to uproot minor child)
- * closely held corporation
- * pension - awarding all of H's pension, other assets to W, so they can go their seperate way.
statutory exception to 50-50 division rule
- * one spouse misappropriates CP, whether before or duing pendency of divorce.
- * one spouse has incurred educational debts; treated separately as separately incurred debt.
- * one spouse incurred tort liability not based on activity for the benefit of the community.
- * personal injury award is CP but on divorce it's given to injured spouse.
- * "negative community" - community liabilities exceed assets; relative ability of spouses to pay debt is considered (to protect creditors)
making a gift of CP
- spouse can set gift aside in its entirety because neither spouse can make a gift without the other's written consent.
- * power to manage = NOT power to give it away
- * on divorce, one spouse can take equal offsetting CP asset to make up her 1/2 of gift.
- * if spouse find out about gift after death of other spouse, she can (1) set aside her half; (2) recover from either donee or the other spouse's estate.
- * only exception to party not allowed to give CP away is when US gov savings bonds are involved.
- each spouse has the power of testamentary disposition over all of his SP, but only over 1/2 of the CP.
- * Widow's Election Will - H's will wrongfully gives X to 3rd party, W can take under the will (and allow the will to operate in regards to that gift), or she can take against the will and claim her half. However, she then must relinquish all testamentary gifts in her favor.
acquisitions on credit during the marriage
- * the community credit presumption - funds borrowed during marriage, and good bought during marriage, are presumptively community credit.
- * borrowed funds (and credit purchases) are classified according to the primary intent of the lender. we look at where the lender is looking for satisfaction of the debt.
- so - if lender relyed on H&W general standing in the community, note = CP obligation. if lender relyed on H's SP land, note would likely be SP obligation.
confidential relationship raises fiduciary duty: presumption of undue influence
- spouses are subject to fiduciary duties, imposing a duty of the highest good faith and fair dealing with each other. if one spouse gains an advantage from a transaction, a presumption of undue influence arises.
- * a grossly negligent and reckless investment of community funds = a breach of a spouse's fiduciary duty.
altering the character of assets by agreement
- absent contrary agreement, statutory definitions of SP and CP control. But CA has always allowed the parties to opt out of the CP and SP characterizations by agreement, either to particular assets or to all acquisitions.
- agreement made before marriage = governed by the Uniform Premarital Agreement Act.
- agreement made during marriage = transmutation (can be by gift or by agreement).
- general rule - premarital agreements must be in writing, signed by both parties. oral agreement are invalid. 2 exceptions:
- 1. oral agreement is fully executed.
- 2. estoppel based on detrimental reliance.
- * parties cannot agree to limit either party's contribution to furnish child support (prohibited by statute)
2 defenses to enforcement of a premarital agreement
- 1. not signed voluntarily (Marriage of Bonds)
- 2. Unconscionability
2001 statute (response to Bonds)
- a premarital agreement shall be deemed not voluntary (thus unenforceable) unless court finds that party challenging agreement:
- 1. was represented by indepedent legal counsel at the agreement signed (or waived in seperate writing); AND
- 2. was given at least 7 days to sign; AND
- 3. if not represented by ind counsel, was fully informed in writing of terms and basic effect of agreement.
2001 CA legislature response to provision in premarital agreement (to waive spousal support)
- unenforceable on one of 2 grounds:
- a. party challenging was not represented by ind counsel at time signed; OR
- b. provision is unconscionable at the time of enforcement.
- * agreement unenforceable if unconscionable when made AND (i) no full and fair disclosure of other party's property or financial obligations; (ii) right to disclosure not waived in writing; and (iii) party challenging had no adequate knowledge of other party's property or financial circumstances.
marital agreements (transmutations)
- before 1985, oral transmutatons ok. after 1985 ...
- must be:
- (1) in writing
- (2) signed by spouse whose interest is adversely affected; and
- (3) must explicitly state that a change is ownership is being made.
- * apply to all transmutations
- * usual exceptions to writing requirement (statute of frauds, estoppel, partial performsnce) do not apply.
- * only exception - gifts of tangible property of personal nature which "are not substantial in value taking into account the circumstances of the marriage."
Is a will admissible in divorce proceeding as evidence of a written transmutation agreement?
NO. By statute, in any proceeding commenced before the death of the will-maker (or one who created a revocable trust), a statemen in a will or revocable trust as to the character of the property is not admissible as evidence of transmutation.
put this at the start of every community property exam
1. CA is a CP state.
2. In CA, there is a CP presumption
3. All assets acquired during the marriage are presumptively CP
4. There are some areas of SP: P owned by either spouse before marriage, P acquired during marriage by gift will or inheritance, P acquired during marriage with $ from separate funds, the rents issues and profits derived from SP.
married woman's special presumption
- where CP was used to take written title in a married woman's name before 1975, and the title did not indicate CP or joint tenancy was intended, the property is presumped as wife's SP.
- (exception to the gen principle that an asset titled in one spouse's name does not overcome the community presumption)
- presumption not rebuttable against 3rd party bona fide purchaser. it is rebuttable against H (show that he did not intent to make a gift to W)
- the 3 situations -
- 1. title taken in W's name alone before 1975 - W's SP.
- 2. title in name of W&H before 1975 (not in joint tenancy form and not "husband and wife" or "mr and mrs") - W gets 1/2 SP + 1/2 CP.
- 3. title in name of W and 3rd party before 1975 - W is tenant in common with 3rd party
case - held that taking title as joint tenants, property was presumed CP. absent proof of an agreement of intended SP interest, by taking title in CP form spouse intended to make property CP.
CA anti-Lucas statutes
- statutes on the ownership and reimbursement issue when issue arises on divorce or seperation.
- Ownership - for purposes of division of property on divorce or separation, property acquired during marriage in joint and equal form is presumptively CP, and is subject to equal division on divorce. CP presumption can be rebutted by:
- 1. express statement in the deed or other instrument of title that the property is SP; or
- 2. written agreement by parties that the property (or a portion) is SP.
CA anti-Lucas statutes
for purposes of division on divorce or legal separation, spouses who made contributions of SP to the acquisition or improvement of CP is entitled to reimbursement without interest for contributions to Down payment, Improvements, or Principal payments on mortgage (DIP). but not reimbursement for SP used to pay interests on mortgage, taxes, insurance, or maintenance.
- installment purchase before marriage, payment with CP funds after (or pays off mortgage on inherited land with CP funds), the community estate takes a pro rata portion of the property, measured by the amount (%) of principal debt reduction attributable to the expenditure of community funds.
- numerator = principal debt reduction via CP (70)
- denominator = purchase price (100)
- property = 7/10 CP
community funds used to improve SP
- H owns house at time of marriage. then H spent CP to improve house; they increase value of house. do these expenditures for improvements give the community a proportionate share of the ownership of the house?
- NO. situation governed by the real property doctrine of fixtures. improvements become part of the property. expenditure of CP does not change ownership character of house.
- but spouse can bring claim for reimbursement for the community. community gets either greater of the CP expenditure or the increase in value.
community funds used to improve SP
- W owned house as SP. then H spent CP $ to improve it. in divorce is H entitled to assert a community reimbursement claim for expenditure of C funds on W's SP?
- Split authority - argue both ways.
- No - these facts gives rise to presumption of gift to W.
- Yes - reimbursement.
comingled bank accounts
there is a family expense presumption - it is presumed that expenditures for family expenses were made with community funds (to the extent they were available), even though separate funds were available.
quasi-community property principles
ACP is property acquired by either spouse that would have been community property had the spouse been domiciled in CA at the time. At divorce, QCP is treated as though it were CP.
community labor used to enhance value of SP business: Pereira
used when the W/H's management was the primary cause of the business' growth. The SP consists of the manager's capital plus a fair rate of return for each year (normal rate is 10%). The remainder is CP.
community labor used to enhance value of SP business: Van Camp
applied when the character of the business itself was the primary cause of growth. Under Van Camp, the manager's services are valued at the going market salary. The amount of family expenses that were paind from the business earnings are then subtracted. The remainder represents the community portion of the business. The remainder is SP.
EE retirement benefits accumulated during marriage, whether or not vested at the time of divorce, are CP
disability retirement benefits and workers' comp
- they are treated as wage replacement.
- they are classified according to when recieved and not when earned.
a form of compensation. the the extent stock options are earned during the course of marriage, the community has the right to share in their value.
- education + training recieved during marriage are not CP. however, the community may be entitled to reimbursement when community funds were used to pay for education or training of a spouse and that education substantially enhanced the earning capacity of the spouse. Loans outstanding ar divorce are assigned entirely to the educated spouse.
- reimbursement will NOT be awarded: (1) where the other spouse has also recieved a community funded education; (2) where the education or training has reduced the need for spousal support, or (3) where the community has already benefited (if more than 10 years passed = rebuttable presumption that community has benefited)
spousal gifts / transmutations
transmutation is the spousal transformation of the character of property. before 1-1-1985, oral agreements to transmute property as well donative acts inferred from one or both parties' behavior to transmute property were allowed. as of 1-1-1985, transmutations must be evidenced by an express declaration in writing that is signed or accepted by the spouse whose interst is adversely affected.
characterization of an asset as either CP or SP depends on three factors:
- 1. the source of the item
- 2. actions of the parties that may have altered the character of the item
- 3. any statutory presumptions affecting the item.