COMMUNITY PROPERTY
Professor Brandt
Spring 2012
HISTORY: Community Property law was adopted from Spain (taken from Scandinavia). Upon marriage, the identity of the husband and wife do not merge (no coverture—condition of a married woman who can only act, legally, through the personality of her husband). Even though H and W maintained separate identities, the H managed the property of the community. Idaho brought community property law to the state from California to protect husband’s mining interests (allowed H’s to continue managing the community’s interests).
The theory behind community property is that the labor, investment, etc. of the spouses are for the good of the marriage/family, so property generated from this labor should be jointly owned. The community is most analogous to a Tenancy in Common (owe each spouse responsibilities, can only dissolve by dissolving marriage). The community is NOT an entity (like a partnership)! Community Property States: Arizona, California, Idaho, Louisiana, Nevada (?), New Mexico, Texas, Washington, Wisconsin.
I. Formation of a Marital Community.
A. Community is formed by marriage.
1. Common Law Marriage—Recognition of non-ceremonial marriage.
a. A marriage which is no solemnized requires the mutual consent (express or implied) of competent parties, followed by a mutual assumption of marital rights, duties, or obligations. Metropolitan Life Insurance Co. v. Johnson (Idaho).
i. Problem: When did community start? When starting living together? When buy a major asset together?
ii. Usual Rule: Marriage forms when relationship began (when enough factors established to show consent date relates back to beginning of relationship).
b. Must prove by a preponderance of the evidence. Burden then shifts to opposing party to prove there is no marriage.
c. IDAHO abolished common law marriage in 1996 (with pre-existing common law marriages grandfathered in). Texas is the only state that still recognizes common law marriages.
2. Unmarried Cohabitation—Upon dissolution of relationship, court must examine the “meretricious relationship and the property accumulations and make a just and equitable disposition of the property.” In the Matter of the Marriage of Lindsey.
B. The Putative Spouse Doctrine—Remedial doctrine for a spouse who believed in good faith that he/she was married but is not actually married.
1. Elements: (Spearman v. Spearman)
a. Ceremony of Marriage (cannot be common law). Vryonis v. Vyronis.
i. Religious ceremonies may be sufficient to satisfy this element (i.e. a ceremony following Islamic law) even though parties did not follow American process (ceremony and license).
ii. Court is looking for proof of parties’ intent.
b. There must be a good faith belief in validity of marriage.
i. To negate good faith, second spouse does not have to have actual knowledge. Spearman.
ii. This is an objective test. Spearman.
2. Burden of Proof—There is a presumption in favor of the validity of the second “marriage,” so:
a. First spouse (in time) must show that marriage wasn’t dissolved. Spearman v. Spearman.
i. Although this could be a heavy burden, the law only requires the first spouse to examine jurisdictions where the couple domiciled (don’t have to look everywhere, just where most logical).
b. Burden then shifts to second “spouse” to prove that first marriage was dissolved.
i. If cannot meet burden, second marriage is VOID.
3. Remedy—Put innocent spouse in position he/she would have been in had the marriage been valid. However, it is not possible to fully compensate both spouses in probate situations.
a. Normal remedy—putative spouse gets 100% of community property.
b. Probate situations:
i. H dies intestate—first spouse must split her share with the children (so she is really getting less than ½ of the community property) and putative spouse gets remaining 50%. Hafner v. Hafner.
ii. H dies testate—H can dispose of ½ of community property that putative spouse cannot touch. So putative spouse gets 50% of community property, and will read as leaving 50% to first spouse. Children can be disinherited, so children basically get nothing. [Isn’t this rewriting the will?]
[Is this accurate? Is it as if the com. prop. acquired during the first marriage is treated as separate property so that second spouse doesn’t get that, but does get what would have been com. prop. during that marriage?]
II. Classifying Property as Community.
A. Evidentiary Presumptions—Pro-Community Presumption: Property acquired during marriage is presumed to be community property.
1. Burden of Proof: Party asserting community classification must show acquisition date during marriage. Burden then shifts to the other party to show that the property is separate. Stanger v. Stanger (Idaho).
a. Party asserting property is separate must prove by clear and convincing evidence. Janovich v. Janovich.
i. Testamentary evidence is not enough! Worzala v. Worzala (Idaho), Janovich.
ii. Party asserting property is separate has a very high burden of persuasion. Stanger (H exchanged farm for annuity K with parents. H was the only grantee on the deed and only obligor on the annuity K, parents amended tax return to indicate gift to H only; but court ruled community property because of contractual elements to transaction that made it inconsistent with a gift. If not a gift, then community property).
b. Must rebut presumption with evidence showing separate property.
i. The Source Doctrine—Property acquired with separate property consideration adopts that characterization (i.e. it is separate property).
ii. If can prove acquired with separate property, must demonstrate that it stayed separate (i.e. good accounting).
2. Variations of the Pro-Community Presumption (depends on jurisdiction):
a. Possession Version—All property possessed during marriage is presumed to be community property. (Much broader presumption and imposes a greater burden on person arguing for separate property.)
b. Subset Version—In long marriages, all property owned at the time of death/divorce is community property. (Usually for marriages 25+ years and where one spouse dies, then equities clearly favor surviving spouse.)
3. Effect of Presumption—If property is classified as community: (1) automatically split in ½ in CA and LA, OR (2) equitable distribution of assets (can be uneven distribution, especially when factors, such as length of marriage, is considered) in other 7 community property states.
B. Proving Separate Ownership by Manner of Acquisition.
If given to H OR W, separate property. If given to H AND W, community property
1. Property Acquired Through Succession (fewer conflicts because written document).
a. If devise is to fulfill
ally, no offset for reasonable rental rate. It is basically a wash because non-owner spouse got to live in the house, but the community paid interest and taxes.
ii. Apportionment—Pro Rata Share of Property (some community, some separate). In re Moore (California).
A. Instead of apply inception of right method to classify property and then giving the community a right of reimbursement, this approach applies a pro rata share method to classify property.
B. This is not a reimbursement claim—the community gets a pro tanto (i.e. as you go along) share of the equity in the house (share in ownership, not just right to reimbursement).
1. Gives spouse a pro tanto equitable lien.
2. Lien gives spouse a secured (?) interest.
c. Idaho: Bliss v. Bliss—Wrong Decision Results in Wrong Law.
i. In Bliss, community property was used to pay separate debt of H.
ii. Community has no right of reimbursement if the value of the separate asset/property is not enhanced (here, since separate property is a debt, there is no enhancement in value of an asset).
A. What about other reimbursement valuations (i.e. loan)?
B. Seems court is saying that enhancement in value is the only test applicable in Idaho.
D. Pensions: A Special Application of the Pro Rata Share Rule.
NOTE: No apportionment problems if the pension was 100% acquired during marriage. There may still be other problems related to the effect of vesting or post-divorce changes in the pension plan.
1. Basic Rules—Pensions 101.
a. Two Types of Pensions:
i. Defined Benefit Plan—(traditional) characteristics are more like an insurance policy. There is a guaranteed benefit. The guaranteed benefit is determined by a formula included in the plan.
A. Like an insurance policy because the benefit is the same (i.e. defined) no matter how well the investment portion of the plan is doing.
B. The funds are not earmarked for a specific person, but still like a savings plan.
ii. Defined Contribution Plan—characteristics are like a savings and investment account. Contributions to the plan are invested and earnings are reported in individual accounts to participants on a regular basis. There is no guarantee on the value of the plan because the value depends on how the investment portion performs (i.e. stocks, bonds, etc.). There is no guaranteed benefit and no formula for determining the plan’s value.
A. Example: 401K plans.
B. These plans have been popular because of the high returns in the recent inflationary markets.
