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Community Property/Marital Property
University of California, Davis School of Law
Ikemoto, Lisa C.

Community Property Outline

Professor Lisa Ikemoto

Spring 2012

I. Introduction

a. Marriage and partnership end in one of two ways:

i. Divorce or termination

ii. Death of one spouse or partner

b. Two types of marital property laws

i. Common law marital property

ii. Community property (includes CA)

a. Property acquired during marriage by labor

b. To characterize whether it’s community or separate property: Basic Criteria

1. When was it acquired?

2. How was it acquired?

c. § 760 Community Property

i. Except as otherwise provided by statute, all property, real or personal, wherever situated, acquired by a married person during the marriage while domiciled in this state is community property.

d. § 770 Separate Property of Married Person

(a) separate property of a married person includes all of the following:

(1) owned before marriage

(2) gift, bequest, devise or descent

(3) rents, issues, and profits of property described in this section

(b) married person may, w/o consent, convey own separate property

e. § 772 Earnings and Accumulations while living separate and apart

i. The earnings and accumulations of a spouse … while living separate and apart from the other spouse, are the separate property of the spouse.

II. Premarital Agreements (key date: January 1, 1986. Pre-1986: common law. From 1986: California Uniform Premarital Agreement Act)

i. Pre-1986 – Common Law

a. Statute of frauds – must be written and signed

1. Statute of Frauds has no application on executed oral agreements

i. Freitas (1916) – wife agreed to marry if she is named beneficiary of life insurance policy. The agreement was not in writing. He named her beneficiary after marriage, but later changed it w/o her knowledge. She sues. Affirmative action (transfer of title, etc.) of an oral contract strongly indicates enforceability.

2. Estoppel may be used to exclude statute of frauds requirement when there is detrimental reliance

i. Estate of Sheldon (1977) – Oral premarital contract to keep husband and wife property separate. Wife never changed her will after this contract. Wife had 2 children, Helen and Marion, each got an equal share of her estate after the wife died. The husband assumed wife’s property as community property and assigned “his” property interest to Helen (wife’s child). Marion argues it should be 50-50 and that the oral contract was enforceable. Decedent detrimentally relied on the oral agreement because she relinquished any claim to Al’s estate, thus estoppel may be used.

b. Public Policy

1. An antenuptial agreement violates the public policy only if its terms encourage or promote dissolution/divorce. Simply thinking about divorce at time of marriage is insufficient.

i. Marriage of Dawley (1976) – Woman got pregnant and agreed to marry the father of the child only for a short amount of time. She argued (1) public policy, and (2) undue influence. Held: Does not promote dissolution, and he did not take a “grossly oppressive and unfair advantage of [her] necessities or distress.”

1. Other factors as to procedural stds:

a. Timing

b. Independent counsel

c. Disclosure, understanding

ii. Marriage of Noghrey (1985) – premarital agreement strongly encouraged wife to file divorce because she would get the house and $500,000 or half of the husband’s assets.

1. Today: SPLIT OF AUTHORITY:

a. Marriage of Dajani: $1666 upon divorce was unenforceable per Noghrey.

b. Marriage of Bellilio: $100K upon divorce was Enforceable! (Noghrey distinguished)

ii. Retroactivity

a. Spreckels v. Spreckels (1897) – CA SC refused to apply a CP statute retroactively to property acquired prior to date of statute.

b. Marriage of Bouquet (1976) – CA SC approved retroactivity of a CP statute.

c. Marriage of Heikes(1995) – Ct allowed only very limited retroactivity with respect to joint titles and reimbursement. Unfair when “completely incapable of complying with” the new law at time agreement was made.

d. Marriage of Fellows (2006) – cited § 4 of the family code. § 4(c) made retroactive any amendments or additions to the family code. Legislation is considered retroactive unless the Legislature makes it prospective.

1. Due process: Considerations include: (1) the significance of the state interest served by the law and the importance of applying the law retroactively to effectuate that interest, and (2) the extent of reliance on the former law, the legitimacy of that reliance, the extent of actions taken based on that reliance, and the extent that retroactive application of the new law would disrupt those actions.

iii. From 1986 – California Premarital Agreement Act (CPAA)

a. Retroactive per § 4(c), but depends on individual fact patterns as whether it violates due process rights. Premarital Agreements Generally

1. Deemed unenforceable IF:

i. Not voluntary, OR

ii. Must not be unconscionable when made, AND

1. Party not provided disclosure, AND

2. Party did not voluntarily and expressly waive disclosure in signed writing, AND

3. Party did not have, or rsnbly could not have had, adequate knowledge of property or financial obligations of the other party.

iii. Voluntary –

– Between 1986 & 2001, courts determined voluntariness by “substantial evidence” standard.

– After 2001, a premarital agreement is voluntary if the court finds in writing that:

1. Represented by independent legal counsel or, after being advised to seek independent legal counsel, expressly waived, in a separate writing, representation.

2. Seven days b/w time party was first presented with K and time K was signed (for person trying to enforce against)

3. If unrepresented, was fully informed of terms and basic effect of K, was proficient in language of explanation of rights and of K.

a. Explanation of rights and obligations given up are memorialized in writing and delivered to party prior to signing, and party signed a document stating they received info and indicating who got it from.

4. Agreement was not executed under dur

ugh to show HIS intention to transmute.

b. Estate of Nelson (1964) – husband was real estate broker and was protective of his property. He said that property was “ours” – which has significant meaning because he’s a real estate broker. Court ruled he intended to transmute.

c. Post-1985 Transmutation – NOT RETROACTIVE

i. Section 851 – transmutation subject to laws governing fraudulent transfers

ii. Section 852 (key provision)

a. Transmutation of real 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

b. If it’s real property, must be recorded to be effective against 3rd party

c. Has limitation – this section does not apply to gifts insubstantial in value given in the circumstances of marriage

1. Marriage of Benson (1949) – House was community property and was made in writing to transmute to wife’s separate property. In exchange, wife would sign a writing transforming husband’s retirement accounts to his separate property. House was conveyed but no writing was ever made re: his retirement accounts. Husband loses. There is NO EXCEPTION to 852(a). There must be writing with EXPRESS declaration that is clear on its face.

iii. Section 853 – Effect of Will

a. Statement in a will of the character of property is not admissible as evidence of transmutation in a proceeding commenced before death of person who made the will

iv. Transmutation statute only applies to transfer of property between spouses, does not apply between a 3rd party seller and a spouse/family

a. In re Summers – husband, wife and daughter bought a house together as joint tenants. They all subsequently filed bankruptcy. Trustee of wife’s bankruptcy files suit, arguing the house is community property. Held: xfer was b/w 3rd party and spouses, so no application of transmutation state. 3rd party deed specifying JT rebutted comm property presumption and rendered CA’s transmutation statute inapplicable.

v. Examples:

a. IRA consent form, in writing, signed: No (MacDonald)

b. Written instruction to brokerage forms to “transfer” stock certificates to his wife. No. (Barneson)

c. Grant deed signed by H transferring his SP interest in real property to himself and W as JTs; Rolls Royce registration in both names. Yes; No. (Bibb)

d. Revocable living trust stated all property not identified as SP is CP. No. (Starkman)