COMMUNITY PROPERTY OUTLINE: SUMMER 2013 (KLUECK)
INTRODUCTION
Definitions
i. Community Property (CP): Property acquired during marriage. All earnings during marriage & all property acquired with those earnings are considered CP, as well as all debts incurred during marriage.
ii. Separate Property (SP): Property that either spouse acquired before marriage or after death, divorce, or while living separate & apart. Also includes property acquired during marriage by gift or inheritance, or any property traceable to SP source.
1. Earnings & accumulations of a spouse while living separate & apart from the other spouse are the SP of that spouse. Includes rents, issues, profits form property described as SP
iii. Quasi-Community Property (QCP): Property acquired by a married couple while living in a non-CP state that would be characterized as CP if the couple had been living in CA at the time the property was acquired. (Quasià “as if”)
Concurrent Estates
i. Community Property (CP): Property acquired during the course of marriage
1. ½ interest of H or W is devisable because NO ROS
2. Tax treatment at death: Surviving spouse gets “step-up basis” to entire property
ii. Joint Tenancy (JT): Each spouse owns equal SP interest (½-½) in undivided whole
1. Right of Survivorship
a. Prevents spouses from devising property
b. Allows surviving spouse to avoid probate
2. Unilateral transfer by one spouse severs JT and creates a TIC
3. ½ SP interest of non-debtor spouse immune from debtor spouse’s creditors
4. Tax treatment at death: Surviving spouse gets “step-up in basis” only as to the ½ that was “inherited” through the death of the other spouse
iii. Tenancy in Common (TIC): Separate, but undivided interest in whole, and unequal shares okà Presumed CP at divorce.
Major Subthemes
i. Less Oppressive to Women: CA CP law became gradually less oppressive to women from the start of statehood in 1850à1975 when equal management & control of CP by H&W was enacted
ii. Tennis Match Between Legislative & Judiciary: Judges adopt precedent, which will be undone by the passage of a statute, or a legislative statute’s effect will be expanded or contracted by court precedent & decisions
iii. Legal Changes Are Connected to & Driven by Societal Trends: Changes in CA society and how its citizens conduct their lives will eventually give rise to litigation or legislative enactments relating to those societal changes
1. Ex: Women’s movement into workplace & academia resulted in increased ability to support themselves independently from their husbandsàlead to no-fault divorce in 1970
PRENUPTIAL AGREEMENTS
Prenuptial Agreements (PAs): An agreement made before marriage to become effective upon marriage.
Development of PAs & Public Policy
i. Low Divorce Rates Until Late 1960s-Early 1970s: Historically, PAs disfavored under the law because thought to encourage divorce & discourage marriageà viewed as contrary to public policy
1. Relevant Case: Higgason (COA 1973)àPA not enforced based on public policy considerations
ii. Family Law Act (1970): “No Fault” Divorce Law increased divorce rates
iii. Late 1970s & Beyond: Greater recognition of PAs based on UPAA (Effective 1/1/1985)
1. Relevant Case(s):
a. Dawley (COA 1976)àPA enforced
i. Generally, PAs are still disfavored, but if you have 2 sophisticated, college-educated professionals both represented by counsel, societal views disfavoring divorce should not interfere with the right to contract
b. Noghrey (COA 1985)àPA not enforced because bad for public policy
i. Written on back of wedding program: the house in Sunnyvale and $500K or ½ of H’s assets
ii. Promise from H is too much of an incentive to divorce
Modern Requirements Under the California Premarital Agreement Act (CPAA- 1985)
i. FC § 1611 Writing: PAs must be in writing & signed by both parties
1. Consideration is not required
2. Example of statutory scheme that is consistent with common law rule
ii. FC § 1615 Enforcement: PAs are not enforceable if they were entered into involuntarily, are unconscionable, or lack full disclosure.
1. Made Involuntarily RULE: A PA was not executed voluntarily (and thus, unenforceable) if the party against whom enforcement is sought was not:
a. Represented by independent counsel at the time the agreement was signed or advised to seek independent counsel and expressly waived representation it in a separate writing
b. Was given at least 7 calendar days to sign
c. Fully informed in writing of the terms and basic effect of the agreement as well as the rights the party is giving up
i. If unrepresented, needs to be in a language in which the party is proficient and declared in a separate writing that they received such information and indicate from who they received the information from
d. Not under duress, fraud, or undue influence, and the parties did not lack the capacity to enter into the agreement
e. Catch-all: Any other factors the court deems relevant
2. If the agreement is unconscionable
a. Unconscionability: If the agreement was extremely unfair, meaning terms that are unreasonably favorable to one party which precluding meaningful choice to another party
3. If the party was not provided full disclosure of the property of financial obligations of the other party
iii. Relevant Case: Bonds (CA SC 2000): Enforceable because W understood what she was giving up regarding her property rights, her consent was not coerced, and she had reasonable opportunity to obtain counsel (“voluntariness” not given strict scrutiny)à EXTREME opposite of Higgason
Child Support & Spousal Support Waivers
i. Child support cannot be waived by a PA
ii. Spousal Support Waivers
1. Traditionally: Judicial determination of whether the SSW is enforceable refers back to the execution of the agreement/when the PA was signed
a. UPAA 1983 View: If the SSW causes one party to the agreement to be eligible for support under a public assistance program at the time of separation or divorce, a court, notwithstanding the agreement, may require the other party to provide support to the extent necessary to avoid that eligibility.
b. CPAA 1985 View (Effective 1/1/1986): Omits UPAA provision allowing enforcement of SSW if one spouse requires public assistance.
2. Modernly: Pendleton & Bonds, & Amendments to CPAA §1612(c)
a. SSW is NOT per se unenforceable if the party against whom enforcement is sought was represented by independent counsel and the other party was not.
UNENFORCEABLEà COA says referring to the property as “theirs” is not enough to establish transmutation from SPàCP. Title never put in W’s name, and hidden belief of a party (W) or continuous use of property by the community not enough to show an implied agreement between the parties to alter the character of SP.
a. RULE: Mere continuous use of property by community NOT a valid execution of an oral agreement
3. Material Difference from Raphael: DEATH
a. In Jafeman, H could testify against W and in Raphael, H was deceased at the time of the proceeding.
FC § 852(a)
i. FC § 852(a): Passed in 1984; Effective 1/1/1985
1. Transmutations of real or personal property must be:
2. Made in writing
a. Benson (CA SC 2005): Agreement NOT recognized because lacked writing requirementà§852(a) does not operate like the SOFs in that the requirement of a basic writing is subject to an implied exception for “part performance” on the contract’s termsà if the legislature intended an exception to the express written agreement requirement, they would have included it in the statutory language
3. By an express declaration*
a. Definition: The writing must clearly and unmistakably state on its face that a change in the character or ownership of the subject property is being made and that both parties understand this.
b. *The dispute will be over whether the declaration is express
4. That is joined in, signed by, or consented to by the adversely affected spouse
ii. Purpose:
1. Increase certainty as to whether a transmutation actually occurred
2. Overrule existing case law that did not require transmutations to be written & express
3. Blocks ability to transmute property based on oral, behavioral, or documentary evidence that is easily manipulated or unreliable
iii. Relevant Cases(s): Express Declaration
1. MacDonald (CA COA 1990): IRA Standard Form Contract did NOT satisfy §852(a) express declaration requirementà Even though it was W’s intention before she died to waive her CP interest in the property, the writing neither expressly stated W knew the characterization of the asset nor her intention to affect a change in character or ownership (intent to transmute)
2. Bibb (CA COA 2001): Deeds satisfy §852(a)à By their very nature, they state the characterization of property
a. NOTE: Bibb also states that DMV registration forms do not satisfy §852(a) requirements
3. Barneson (CA COA 1999): Written instructions to “transfer” stock certificates do not expressly state that the character or ownership of property is being changed.
a. NOTE: A transmutation may be effected by means of transfer, but a transfer does not necessarily mean a transmutation has occurred
