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5. The fruits of separate property are traced to the source and classified
accordingly. The creditor of the husband cannot subject the proceeds or
dividends of the separate property of the wife to his claim. George v.
Ransom (1860) – page 20.
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a. The respective interests of the husband and wife in community
property during continuance of the marriage relation are
present, existing, and equal interests.
2. The legislature has not clearly stated any purpose to create a vested
interest in community property in the wife. The husband has
discretionary powers relating to matters affecting the community
property and the wife could only obtain such powers upon death of the
husband or divorce.
3. During the marriage, the wife’s interests are protected against fraud and
mismanagement. Stewart v. Stewart (1926) – page 24.
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3. Accounting to the spouse, and holding as a
trustee, any benefit or profit derived from any
transaction by one spouse without the consent
of the other spouse which concerns the
community property.
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legal counsel and the time the agreement was
signed.
3. The party against whom enforcement is sought,
if unrepresented by legal counsel, was fully
informed of the terms and basic effect of the
agreement as well as the rights and obligations
he or she was giving up by signing the
agreement, and was proficient in the language
in which the explanation of the party's rights
was conducted and in which the agreement was
written. The explanation of the rights and
obligations relinquished shall be memorialized
in writing and delivered to the party prior to
signing the agreement. 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. The agreement and the writings executed
pursuant to paragraphs (1) and (3) were not
executed under duress, fraud, or undue
influence, and the parties did not lack capacity
to enter into the agreement.
5. Any other factors the court deems relevant.
iv. Formalities
1. A writing effecting a transmutation of property must contain on its face
a clear and unambiguous expression of intent to transfer an interest in
the property, independent of extrinsic evidence. Estate of Bibb (2001) –
page 55.
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personal nature that is used solely or principally by the spouse
whom the gift is made and that is not substantial in value
taking into account the circumstances of the marriage.
c. This section does not apply to or affect transmutations made
before January 1, 1985.
2. No extrinsic evidence.
3. Use MacDonald Language
a. In addition to the language requirement of § 852, there must be
language that shows that the person knows that they are
changing the character of the property.
4. Did anyone gain an advantage from the transmutation?
a. Yes – then there is a presumption of undue influence per
Haines. This is difficult to overcome.
i. It must be shown that the transmutation was free and
voluntary, with full knowledge and that the person
completely understood its effect.
iv. Circumstantially, the Court May Conclude That the Property Must Have
Been Purchased with Community Funds. When there is no evidence of the
character of property, it may be presumed to be community property if in
possession of one of the spouses at the close of a long marriage. Estate of Jolly
(1925) – page 73.
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3. Earnings During Separation - § 771
a. 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.
viii. Date of Separation. The date of separation occurs when either of the parties
does not intend to resume the marriage and his or her actions “bespeak the
finality of the marital relationship.” Legal separation requires intent by one of
the parties to end the marital relationship and conduct evincing such intent. All
factors bearing on a party’s intent should be considered by the courts. In Re
Marriage of Hardin (1995) – page 88.
1. There can only be one Date of Separation (DOS). Thus, the married
couple that technically separates for awhile, then gets back together, and
then separates for good… there is only one DOS.
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presumption is that the property is the community
property of the husband and wife, unless a different
intention is expressed in the instrument.
d. Concurrent Estates
i. Methods of Holding Property - § 750
1. 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.
ii. Owner of Legal Title is Owner of Beneficial Title – Evidence Code § 662.
1. The owner of the legal title to property is presumed to be the owner of
the full beneficial title. This presumption may be rebutted only by clear
and convincing proof.
v. When Spouses Take Title In Joint and Equal Form But Contribute
Disproportionately to the Purchase Price
1. The Lucas Gift Presumption. Because the act of taking title in joint
and equal form is inconsistent with the claim that a separate interest is
preserved, the court will presume that a gift has been made to the
community unless there is an agreement or understanding between the
parties that the contributing spouse would maintain a separate property
interest. The presumption cannot be rebutted by mere tracing.
a. In Re Marriage of Lucas (1980) – page 112.
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a. The presumption may be rebutted by either of the following:
i. A clear statement in the deed or other documentary
evidence of title by which the property is acquired that
the property is separate property and not community
property.
ii. Proof that the parties have made a written agreement
that the property is separate property.
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of a party that substantially enhances the earning
capacity of the party.
b. Loan Assignment.
i. A loan incurred during marriage for the education or
training of a party shall not be included among the
liabilities of the community for the purpose of division
pursuant to this division but shall be assigned for
payment by the party that received the education or
training.
1. There is a rebuttable presumption 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.
ii. 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.
iii. 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.
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unemployment that were incurred during the marriage
to permit the supported party to devote time to domestic
duties.
b. The extent to which the supported party contributed to the
attainment of an education, training, a career position, or a
license by the supporting party.
c. The ability of the supporting party to pay spousal support,
taking into account the supporting party's earning capacity,
earned and unearned income, assets, and standard of living.
d. The needs of each party based on the standard of living
established during the marriage.
e. The obligations and assets, including the separate property, of
each party.
f. The duration of the marriage.
g. The ability of the supported party to engage in gainful
employment without unduly interfering with the interests of
dependent children in the custody of the party.
h. The age and health of the parties.
i. Documented evidence of any history of domestic violence, as
defined in Section 6211, between the parties, including, but not
limited to, consideration of emotional distress resulting from
domestic violence perpetrated against the supported party by
the supporting party, and consideration of any history of
violence against the supporting party by the supported party.
j. The immediate and specific tax consequences to each party.
k. The balance of the hardships to each party.
l. The goal that the supported party shall be self-supporting within
a reasonable period of time. Except in the case of a marriage of
long duration as described in Section 4336, a "reasonable period
of time" for purposes of this section generally shall be one-half
the length of the marriage. However, nothing in this section is
intended to limit the court's discretion to order support for a
greater or lesser length of time, based on any of the other
factors listed in this section, Section 4336, and the
circumstances of the parties.
m. The criminal conviction of an abusive spouse shall be
considered in making a reduction or elimination of a spousal
support award in accordance with Section 4325.
n. Any other factors the court determines are just and equitable.
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a. In Re Marriage of Lopez (1974) – page 137.
i. There is no real definition for Goodwill: “It has been
aptly stated: ‘Accountants, writers on accounting,
economists, engineers, and courts, have all tried their
hands at defining goodwill, at discussing its nature, and
at proposing means of valuing it. The most striking
characteristic of this immense amount of writing is the
number and variety of disagreements reached.’” ~ In re
Marriage of Lopez
2. Personal Goodwill is too inaccurate to determine to consider a
community property asset.
a. Ex. A director becomes a star director from a small film, then
gets divorced. His future earnings would be huge, but you
cannot determine what his personal goodwill will be
determined.
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1. A putative spouse is not legally married but has a good faith belief that
she is lawfully married. Once she learns that her marriage is invalid,
she is no longer a putative spouse.
2. A putative spouse has almost the same property rights as the lawful
spouse. All property that would have been community property or
quasi-community property if the marriage had been lawful is treated
as “quasi-marital property”.
3. The putative spouse has the same rights in quasi-marital property that
she would have in community property or quasi-community property.
§ 2251.
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5. The consent of either party was obtained by
force.
6. Either party was, at the time of marriage,
physically incapable of entering into the
marriage state, and that incapacity continues,
and appears to be incurable.
ii. The general rule is that questions relating to interests in real property are
determined by the law where the property is located. However, this rule doesn’t
apply where the funds used to purchase the property were acquired by spouses
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while domiciled in another state. Grappo v. Coventry Financial Corp. (1991) –
page 210.
d. Constitutional Limitations
i. Due Process and Privileges and Immunities Clauses
1. Quasi Community Property – § 125
a. Property acquired 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. Property acquired 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.
3. Quasi community property legislation does not violate the due process
clause or the privileges and immunities clauses. The concept of quasi-
community property, which is applicable only if a divorce or separate
maintenance action is filed after the parties have become domiciled in
California, does not abridge privileges and immunities of national
citizenship because valid independent reasons bearing a close relation to
the resultant discrimination exist in its support. Addison v. Addison
(1965) – page 215.
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2. Reimbursing a husband for a separate property contribution made in
1976 to property divided as community property in 1992 would violate
the wife’s due process rights. In Re Marriage of Heikes (1995) – page
229.
2. Indirect Tracing.
a. If at the time of acquisition, all community property income
was exhausted by family expenses, then the property must have
been purchased with separate property funds.
iii. If funds used for acquisitions during marriage cannot otherwise be traced to
their source and the husband who has commingled property is unable to
establish that there was a deficit in the community accounts when the assets
were purchased, the presumption controls that property acquired by purchase
during marriage is community property.
1. In re Marriage of Mix (1975) – page 265.
a. In this case, Esther sufficiently traced and identified the source
and funds of her separate property.
iv. Where funds are paid from a commingled account, the presumption is that
the funds are community funds. The exact amount of money allocable to
separate property and the exact amount of money allocable to community
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property must be ascertained before it can be said the money allocable to
separate property is not so commingled that all funds in the account are
community property.
v. The Credibility Test (fn. 5).
1. In re Marriage of Frick (1986) – page 268.
a. In this case, Jerome failed to sufficiently trace the payments to
his separate property. He failed the credibility test.
3. Example:
a. A separate capital contribution of $100,000 and a 10% rate of
return for 10 years. The separate property portion of the
business is $200,000 and the remainder is community property.
3. Example:
a. H owns business before marriage worth $100,000 with a salary
of $30,000. He divorces 10 years later and the business is
worth $400,000. There are $20,000 of family expenses. The
community portion is $100,000 ($300,000 - $200,000) and the
remainder (of growth and value at marriage) is separate
property.
iii. The mere incorporation of a business does not change its character. § 2640
does not apply to separate property businesses and is inherently not applicable
to businesses.
1. Marriage of Koester (1999) – page 275.
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1. Compute interest on the capital investment in such business and allocate
that amount to separate property (Pereira) or
2. Compute the reasonable value of the spouse’s services to his separate
property and allocate that amount to community property, and the court
is free to choose whichever formula will achieve substantial justice
between the parties.
a. Tassi v. Tassi (1958) – page 281.
ii. The community and separate property’s respective interest should be based on
the ratio of capital contribution to purchase price of property acquired before
and during marriage. In Re Marriage of Frick (1986) – page 310.
iii. A Party May Trace Their Separate Property Through Successive Purchases.
A party’s entitlement to a separate property contribution reimbursement is not
limited to the original community property to which the contribution was made
and, when that original property is refinanced and the proceeds used in part to
purchase or pay down the indebtedness on the original and other assets, the
contributing spouse can trace the contribution to, and be reimbursed from, those
assets. Marriage of Walrath (1998) – page 314.
e. Credit Acquisitions
i. Property Acquired on Credit During Marriage is Presumed to Be Community
Property. There is a rebuttable presumption that property acquired on credit
during marriage is community property. To overcome this presumption, it is
necessary to use the intent of the lender test, and adduce evidence that the sale
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or loan was granted solely on the basis of the spouse’s separate property and
credit.
1. Gudelj v. Gudelj (1953) – page 295.
f. Improvements
i. Separate Property to Improve Other Spouse’s Separate Property – Gift
Presumption
1. When one spouse uses separate property funds to improve the other
spouse’s separate property, that contribution is presumed to be a gift.
iv. Personal injury recovery against the other spouse is always the separate property
of the injured spouse.
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services rendered by the employee, it is probably the employee’s separate
property.
iii. Retirement benefits are treated as community property to the extent that the
right to benefits was earned during marriage. That the benefits are actually
received after separation is immaterial.
vi. The Time Rule Method of Apportionment is Used When The Benefit is
Community and Separate
1. Multiply the Value of the Benefit by a Fraction Representing the
Community Interest
a. Numerator – number of years/months of employment while
married.
b. Denominator – number of years/months of total employment.
i. In Re Marriage of Brown (1976) – page 355.
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vii. The Qualified Domestic Relations Order (“QDRO”)
1. A separate document, made part of the court’s judgment, that tells the
plan administrator how to divide up the benefit.
2. You have to join the plan administrator to ensure that the court has
jurisdiction.
viii. Trial Court Has Broad Discretion to Divide Community Property. Upon
dissolution of a marriage, the trial court has broad discretion in the division of
the community property interest in a spouse’s pension rights and can exercise its
discretion in that division as it sees fit.
1. Division in Kind – The community interest is divided between the
parties, and the plan, when benefits become payable, usually makes
separate payment to each according to their proportionate interest.
2. Cash Out Method – The entire community interest at its present value
is awarded to the employee spouse with offsetting assets awarded to the
employee spouse to accomplish an equal division.
a. Determining present value is difficult and often puts the
recipient at a disadvantage because they might die earlier.
ix. No Indefinite Jurisdiction. The Court does not have the power to retain
jurisdiction over the division of a community asset indefinitely. In Re Marriage
of Bergman (1985) – page 363.
xii. Enhanced Benefits Are Community Assets. A nonemployee spouse who owns
a community property interest in an employee spouse’s retirement benefits
under a defined benefit retirement plan owns a community property interest in
the retirement benefits as enhanced.
xiii. Characterization Turns on Employer Intent. In determining how to
characterize an employment benefit, the courts will often look to the employer’s
intent in providing it.
1. Marriage of Lehman (1998) – page 388.
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i. Disability Benefits
i. Disability benefits are characterized according to what the disability benefits
replace. If they are intended to replace marital earnings, the disability pay is
community property. If they are intended to replace separate earnings, it is
separate property.
ii. If the insured spouse does not become disabled during the last policy term
before the parties’ separation, the community will have no interest in benefits
produced by renewals of the policy for subsequent terms because the renewal
premium will not have been paid during the marriage with community funds
and with the intent of providing community retirement income. Marriage of
Elfmont (1995) – page 413.
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b. The Personal Belongings Exception
c. Conveyances of Community Property Real Property
Exception
d. Family Law Attorney Lien Exception - § 2033
i. Either party may encumber his or her interest in
community real property to pay reasonable attorney's
fees in order to retain or maintain legal counsel in a
proceeding for dissolution of marriage, for nullity of
marriage, or for legal separation of the parties.
iii. If an insurance contract provides that the insured husband has the right to
change the beneficiary without the wife’s consent when she is named as such,
any such change of beneficiary without her consent and without valuable
consideration other than substitution of beneficiaries is voidable, and after the
death of the husband the wife may maintain an action for her community share
in the proceeds of the policy.
iv. Election. When the husband attempts to dispose of his wife’s share of the
community property as well as his own, naming her as one of the takers, she
must elect between her community rights and her husband’s gift. Tyre v. Aetna
Life Insurance Co (1960) – page 445.
i. The innocent spouse has a right of reimbursement against the tortfeasor spouse
if community assets were used to pay a debt arising from the acts of the tortious
spouse. Marriage of Beltran (1986) – page 453.
e. A Spouse’s Management Rights Are Violated When The Other Spouse Hides
Community Assets. Wilcox v. Wilcox (1971) – page 469.
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ii. During the marriage, the injured spouse can set aside the transfer and bring
the property back into the community estate.
1. During Marriage Wife May Revoke Husband’s Gratuitous Transfer.
The Section 172 right of a husband to gratuitously transfer community
property at any time is subject to the right of the wife to revoke such
transfers within the statutory period. But the right of revocation of the
gift does not prevent their immediate vesting in the donee.
2. Non-Transferring Spouse May Ratify. Later acts of ratification by the
non-transferring spouse may constitute consent to such a transfer and
bar the non-transferring spouse from recovering half of the property.
a. Spreckles v. Spreckles (1916) – page 473.
iii. After the termination of the marriage, the injured spouse can recapture only
one half of the property, on the theory that the injured spouse can trace his or
her half interest into the hands of the third person and recapture it as
separate property.
1. If a spouse after the death of the decedent proves a lack of consent to a
gift, it will be avoided to the extent of the non-consenting spouse’s one-
half interest in community property transferred. When evaluating the
community property, each spouse has a half interest in each community
asset rather than the community as a whole. Estate of Wilson (1986) –
page 480.
iv. No Encumbrance of Real Property For Atty Fee Without Both Spouses
Signature. Both spouses, either personally or by duly authorized agent, must
join in executing any instrument by which community real property or any
interest therein is sold, conveyed, or encumbered.
1. BAD LAW - Droeger v. Friedman, Sloan & Ross (1991) – page 484.
a. Encumbrance Now Okay. § 2033 of the Family Code now
permits either spouse to encumber real property in order to pay
for a family law attorney.
g. Creditors’ Rights
i. A creditor may reach any property over which the debtor has the legal right of
management and control.
1. Necessities. When one spouse incurs debt for necessities during
marriage, the other spouse is personally liable for the debt, and after
separation personal liabilities for necessities remain.
2. Torts. A spouse is not liable for the other spouse’s torts except where
she would have been liable if the marriage did not exist. Community
property is subject to tort liability of either spouse.
a. Tort For Benefit of Community – liability will be satisfied
from community property first, then from separate property.
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b. Tort Not For Benefit of Community – liability will be satisfied
from separate property first, then from community property.
ii. All community property, whenever acquired, is liable for the satisfaction of the
husband’s debts including a judgment against the husband for his tort. Because
the husband has the power of management and control of the community, he
also may subject the community to liability for his tort. Grolemund v. Cafferata
(1941) – page 518.
vi. Property received by a nondebtor spouse in a marital dissolution is not liable for
a debt incurred by the persons’ spouse before or during marriage, and the person
is not personally liable for the debt unless the debt was assigned for payment by
the person in the division of property. In Re Marriage of Braendle (1996) –
page 532.
b. Under Family Code § 2310, there are two grounds for dissolution:
i. Incurable insanity.
ii. Irreconcilable differences.
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1. Bifurcation. Only slight evidence is necessary to obtain birfucation and
resolution of marital status, while a spouse opposing bifurcation must
present compelling reasons for denial. Gionis v. Superior Court (1988)
– page 565.
2. Court Has Broad Discretion to Award Family Home. The trial court
has broad discretion to determine which party should be able to reside
in the family home, however, the court must also consider relevant
evidence in determining the duration of the award. Facts for the court
to consider include economic impact on the noncustodial parent,
emotional and social impacts on the minor, and tax impacts. In Re
Marriage of Stallworth (1987) – page 583.
a. A Duke Order: The Court allows the parent and child to remain
in the home, and defers the sale of the family home until a
stated condition occurs.
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3. Offset Required Where Major Undivisible Asset Awarded. Where a
major item of community not reasonably subject to division is awarded
to one party, the other shall be compensated in some manner so as to
maintain the required equal division of community property. In Re
Marriage of Tammen (1976) – page 590.
4. Debts Are Not Divided Equally, They Are Divided As the Court Sees
Fit. If there are no assets to divide, only debts, or after the equal
division of the assets there remain debts to be disposed of, the court has
the discretion to order the payment of such debts in a manner that is just
and equitable, depending on the respective earning capacities of the
spouse and other relevant factors. In Re Marriage of Eastis (1975) –
page 593.
iii. Valuation
1. Assets and liabilities must be valued as near as practicable to the time of
trial, unless one party shows good cause why a different date for
valuation should be used. § 2552.
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1. There shall be no set aside unless the court find that the facts alleged as
grounds for relief materially affected the original outcome and the
moving party would materially benefit from the granting of relief.
a. This means that even if a party shows duress or one of the other
grounds for relief, that party may still not get the judgment set
aside if he fails this test.
viii. Assets that are Omitted in the Pleadings are Subject to Future Litigation.
1. Property which is not mentioned in the pleadings as community
property is left unadjudicated by decree of divorce, and is subject to
future litigation, the parties being tenants in common meanwhile. Henn
v. Henn (1980) – page 628.
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