Final Study Guide For Community Property

1) Basic Principals and Rebuttable Presumptions a) §760 Property acquired during marriage is community property b) §770 Property acquired after marriage is separate propertyc) CPAA California Premarital Agreement Act 1985 – UPAA 1982

i) Bans support waivers for divorcing spouses in premarital agreements: California’s version of the UPAA (Universal Premarital Agreement Acts) by eliminating the language regarding spousal support waivers

d) § 4301 (Use of separate property to support spouse)i) A person shall use their separate property to support their spouse when

there is no community or quasi-community propertye) § 2581 (community property presumption for property held in joint tenancy)

i) A clear statement in the deed or other documentary evidence of title by which property was acquired that the property is separate property and not community property

ii) Proof that the parties made a written agreement that the property is separate property

f) Property acquired through devise, gift, bequest or descent during marriage is presumed to be separate property i) Gift two types

(1) Onerous through hard work and is considered to be community property as it was acquired through the effort of the community

(2) Lucrative given out of pure generosity and as such is considered separate property

g) Transmutation of property is the characteristic of that asset switching form either separate to community or community to separate thereby changing the adjudication and division of the asset 1985i) § §850 (transmutation of property by agreement or transfer); 851

(fraudulent transfers laws apply); 852 (form of transmutation); 853(effect of will)(1) must be in writing (2) must be unequivocally referred to transmute (3) approved by adverse affected spouse

ii) Tracing(1) Direct Tracing

(a) Requires the actual tracing of separate property funds from separate accounts being used for community assets like updating a couple’s home. Showing separate property funds were available is inadequate, rather the attorney must show the separate funds were used for the alleged purpose

(2) Recapitulation (Exhaustive tracing)(a) To show commingled funds are separate property the attorney

must show that at the time of acquisition all of the community funds were exhausted by the community expenses

iii) Goodwill(1) Market Value

(a) How much would a buyer purchase the business for the day after dissolution? The difference in price between the amount paid to first purchase the business and the amount a buyer would pay today is the goodwill

(2) Capitalization (a) How much is a similarly situated business worth? Then compare

the difference in revenue between the spouse’s business and the new business, the difference in price is presumably the goodwill

iv) Division of a separate property business (1) Pereira

(a) To compute a fair rate of return on the employed spouse’s business investment, that becomes spouse’s separate property and the remaining revenue is for the dependent spouse. Used primarily when revenue to spousal labor

(2) Van Camp (a) Compute a fair salary for the employed spouses labor, times that

by the number of years in the marriage and subtract all community expenses, the remaining amount is the community property. The amount left over outside of the spouse’s salary is the separate property of the employed spouse. Used primarily when the revenue of the business was due primarily to investment purposes and not labor.

h) The role of title i) Title alone is not indicative of ownership ii) Forms of title that raise presumptions of gift or agreement to transmute

(1) Joint tenancy (a) Equal ownership & right of survivorship

(2) Tenancy in common (a) Separate property interests

(3) Community property (a) Property acquired during marriage is community property (b) Pre 1975 to create community property title had to be as husband

and wife or explicitly declared as community propertyi) Pension funds, retirement accounts, savings accounts and banking accounts

can all be community property is acquired during the marriagei) However, stock options and retainers (retirement bonuses) may be

considered separate property because they are not predicated on past work that was done during the marriage but rather for future labor or for retiring

j) Educational licenses and degrees may be considered community property to the extent that the non-working spouse may be entitled reimbursement for efforts, sacrifices and monies paid in helping the working spouse receive their higher education degree

k) Disability benefits are generally the separate property of the injured spouse, while they may be community property during the marriage once the divorce or dissolution happens then it is considered separate property

l) The goodwill of a business is a community asset and may be divided i) There is no one set formula for determining goodwill and at times is little

better than a guess, the number for goodwill will be determined by an accountant the court deems credible

2) Common law system of community property and the seven other states (including California) who adopted the Spanish community property law system a) Spanish community property system is the distinction between community

property (property acquired during marriage) and separate property (property gained before, after or during marriage by gift, devise, bequest or descent)i) Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas,

Washington, Wisconsin (A.C.I.L.N.N.T.W.W.)b) Before 19th century women owned property through men

3) Contrast between modern common law and community property systems a) Common law assumes each spouse wants their own property and treats

them like never married unless stated. b) Community property assumes joint ownership unless a spouse demonstrates

otherwisec) Uniform Marital Property Act was approved by the National Conference of

Commissioners in 1983 and has only been adopted by Wisconsind) Child support

i) Child support is intended to support only the child not the caretaker as well; every state now has guidelines for child support

ii) Spousal Support (alimony)(1) Req: a spouse is eligible for spousal support only if she is unable to

meet her reasonable needs from property, including that distributed to her at divorce, and earnings from her own gainful employment unless the presence of young children or her own incapacity makes such employment unfeasible.

(2) Modern CA: require the courts to make a finding of about the parties standard of living during their marriage and in making the award, consider the parties marital standard of living and the extent to which the earning capacity of each spouse is sufficient to maintain that standard of living. The court must also asses the needs of each party based on standard of living during marriage

Chapter 1: Introduction to community property 4) Wirth v. Wirth

a) Constructive trusts may be found by a court when a party, because of a confidential relationship, relies upon a promise of another that is later breached resulting in unjust enrichment.

b) The court held when a wife pays with her own money then she may be reimbursed only if the husband impliedly or expressly promised to giver her the money

5) Painter v. Painter (13 conditions listed for consideration during equitable distribution) a) Court held equitable distribution not vague and cited judge Consodine and

his 13 areas of consideration pg. 19b) The next contention of what property is available for distribution the court

held all of the property was including gifts, and inheritance items. Chapter 3: Premarital contracts and transmutation of property acquired during marriage6) Marriage of Dawley (IDEAL PRENUPTIAL CASE)

a) California states that a prenuptial agreement violates public policy if it promotes or encourages dissolution or divorce.

b) Unlike other common law states where the mere intention of the parties entering the prenuptial agreement may be enough to invalidate it if the parties entered the agreement anticipating a divorce or break up

7) Marriage of Noghreya) The court ruled this contract was against public policy and therefore

unenforceable because it promoted the dissolution of the marriage or divorce. i) Because Kambiz was worth so much money and Farima was worth so

little, the court held there was an extreme incentive for Farima to divorce her husband because she stood to make a lot of money and gain valuable property.

ii) A prenuptial agreement is against public policy if it promotes divorce or dissolution

8) Freitas v. Freitas a) The California statute of frauds is inapplicable to an executed antenuptial

oral contractb) Manueal T Freitas made a promise to his future wife that if she married him

he would give her a life insurance policy that the carried worth $1,000 in his name. She agreed to marry him and he later died. When She went to collect she found out that Manuel changed the beneficiary from her to his children from another marriage,

c) The widow sued the children and the court held when Manuel first placed his the widow on the insurance plan the deal was consummated and complete and therefore was not barred by the statute of frauds and the widow was entitled to the life insurance plan.

9) Estate of Sheldona) Marion contends there was an antenuptial agreement where the parties

agreed to not share in the others estate. Florence relied to her detriment on this promise and the court held it binding.i) Because the contract had been fully performed and executed Helen could

not claim statute of frauds and that the deal be drafted.

10)Estate of Sheldon a) All that is required to show an executed oral agreement of transmutation of

separate property to community property is proof of acts and conduct of the parties in dealing with their property

11) Transmutation of property during marriage a) Post 1984 transmutation

i) Due to fraud and corruption the California legislature required the spouse whose property would be adversely affected to sign any writing or agreement to transmute personal property to community property

ii) §850 (transmutation of property by agreement or transfer); 851 (fraudulent transfers laws apply); 852 (form of transmutation); 853(effect of will)(1) must be in writing (2) must be unequivocally referred to transmute (3) approved by adverse affected spouse

12)Marriage of Jafemana) Separate property is transmuted into community property if “the record

presents substantial evidence of an implied agreement between the parties to alter the character of Edwards initial equity in the home.”

(a) Mere use will not alter the character of the home nor will personal testimony of a misunderstanding or secret belief

13) Marriage of Benson (highlights the writing requirement of transmutation) (IDEAL TRANSMUTATION CASE)a) For transmutation the writing must state on its face that a change in the

character of the property is being made with the approval of the adversely affected spouse and extrinsic evidence is barred i) §852 (of the California Family Code) if the transmutation statute

requiring a writing, approval of adversely affected spouse and that the language be clear and unequivocal

14)In Re Summers a) When property is transferred from a third party to spouses as joint tenants

then transmutation law does not apply and both interests are treated as joints tenants rather than community property

Chapter 4: Definitional and tracing issues15)Estate of Clark

a) Property acquired by compromise is separate property if the right comprised was separate propertyi) This is why property acquired by inheritance is considered separate

property16)Andrews v. Andrews

a) Onerous goods even when granted by will are considered community property if they are given in exchange for some future service

b) The only way to keep a will granting someone all the property rights of their parents as separate property in exchange for services rendered is by gift devise, bequest or decent and here none of those are applicable

17)Downer v. Bramet a) Court may find gifts from employer such as a ranch to be in onerous title and

therefore community property b) Earnings of property attributable to or acquired as a result of labor, skill, and

effort of a spouse during marriage are community property Chapter 5: Evidentiary presumptions in California Community Property Law18)Lynam v. Vorwek

a) Money acquired by either husband or wife after marriage is presumed to be community property

19)Fidelity and Casualty Company v. Mahoney a) Where the marriage has been for a short period the presumption that

property acquired after marriage is community property is of less weight than in the long term marriages

b) Also because defendant wife never claimed fraud or misrepresentation in regards to the one dollar used to pay the insurance premium the court held if the dollar was community funds it would have been a gift by the new wife as she would have had to show that the dollar used was without her knowledge

20) Holmes v. Holmes a) Where property is deeded to a spouse is purchased with community funds, a

rebuttable presumption arises that such property is the separate property of that spouse

b) However, the fact that the land is purchased from joint savings accounts of the husband and wife does NOT rebut the presumption that property deeded to a spouse is the separate estate of such spouse who holds legal title

Married Woman’s Special Presumption (1) §803. Property acquired by married woman before January 1 st , 1975

designed to help wife manage the property under her control(a) If acquired by married woman the presumption is that the property

is the married woman’s separate property (b) If acquired by married woman and another the assumption is that

the part belonging to the married woman is tenants in common (c) If acquired by husband and wife and title is in husband and wife then

the property or asset is presumed to be community property. 21) Louknitsky v. Louknitsky

a) In a case where the wife claims the realty (house) upon dissolution as her separate property with title solely in her name, does evidence that the husband had no idea the title was solely in wife’s name coupled with the fact that all the payments were made with community funds earned by the husband support a finding of community property?

b) YES. The lack of knowledge regarding the deed coupled with all the mortgage payments being made from community funds earned by the husband support a finding of community property

c) Highlights idea that title does not dictate characteristic of property 22) Estate of Baer

a) A finding by the trial court that certain property is either separate or community property is binding upon an appellate court if the finding is supported by sufficient evidence, even if there may be some conflicting evidence on the recordi) Testimony by the husband in regards to property belonging to his

deceased ex-wife is compelling testimony because the wife is not there to contest any presumptions created

b) Recognizes the difference between a gift from a husband to his wife and granting temporary managerial rights so that if something happened to the husband the wife would have some money until the probate was worked out

23) Dunn v. Mullan a) Married Woman’s Special Presumption Act affected this case because the

interest of a wife under a deed naming both husband and wife as grantees is presumptively her separate property, while husband’s interest is community property (75% - 25% split)

b) Presumptions that property bought during marriage is community property is weaker than the presumption created through title (pre 1975 title)

24) Schindler v. Schindler (PRE 1965 RESULT)a) When property acquired by a husband and wife is titled in joint tenancy, the

fact that the property was paid for primarily with community funds does not establish that is in fact community property. i) This was eventually defeated with the anti Lucas legislation where all

property acquired in joint tenancy is community propertyb) The court when deciding at dissolution whether to treat property held in

joint tenancy as community property will look at whether both husband and wife signed the lease and if they knew what they were assenting to, if so then title will prevail and if not then the court may treat it as a community asseti) §5110 followed shortly after case and stated single family residence held

in joint tenancy for purposes of dissolution or divorce is treated as community property

25) Bowman v. Bowman a) In a divorce proceeding an understanding between a husband and wife to

hold as community property, in spite of form of deed, a dwelling acquired by the parties under a joint tenancy deed can be shown by the parties’ conduct and declarations

b) The parties to this suit had their realty labeled as community property despite the deed stating it was held in joint tenancy, the deed presumption was overcome by evidence of the parties understanding to hold the house as community property and their declarations to hold the house as suchi) This case is distinctly different from Schindler v. Schindler in that in

Schindler the wife relied on her belief that the house was held as community property despite the deed stating joint tenancy but the husband could show he always treated the house as joint tenancy, in Bowman v. Bowman there was evidence that both the husband and wife treated their realty as community property

c) Survivorship marital property

i) Home held in joint tenancy with right of survivorship but treated as community property

26)Marriage of Lucas (CASE SET NEW MARITAL PROPERTY PRESUMPTIONS)a) Case dealt with §5110 and the only way to overcome presumption was an

express declaration stating the contrary intentionb) The court held the statute controlled the outcome and the property was

labeled as community property even though the wife purchased the house with separate property funds as well as maintenancei) This was the legislatures attempt to not allow the title of a property to

control the characterization of the property and ultimately the division of assets at dissolution

c) Lucas Rule: IF NO AGREEMENT TO BE PAID THEN ANY SEPARATE PROPERTY OFFERED TO COMMUNITY PROPERTY IS DEEMED A GIFT

d) Anti Lucas Law i) §5110

(1) single family home held in joint tenancy is treated as community property with right of survivorship

ii) §4800.1 (Both statutes are applied January 1st 1984). (1) All property bought or acquired during a marriage in joint tenancy is

presumed to be community property even if in the form of joint tenancy

(2) Requires express statement in deed that property is to be separate property

(3) Proof of separate property agreement iii) §4800.2 (§2640 is the new statute)

(1) Reimbursed for purchases on community property from separate property if traceable. (Fallback rule unless written waiver)

(2) community property is defined in the section as property that cannot be proven to be separate property

(3) Also applies in separate property contributions to the other spouses separate property.

iv) Court treat separate property contributions to community property as interest free loans while community contributions to separate property as pro rata share.

27)Marriage of Boul (BIG CASE THAT SETS THE STAGE FOR RETROACTIVE APP.)a) This case dealt with the implementation of statutes 4800.1&2 because they

were passed while the case was on appeal. The case determined that the statutes should not apply retroactively because it would place an unjust new burden on couples who were divorcing and could not have meet the new requirements to have a residence labeled separate property because a writing was not required before the law was passed. i) The court held this affected a vested property right for the wife and

therefore was unconstitutional for the legislature to enforce the legislation retroactively

b) Therefore the court decided to apply the law only to properties that were acquired after January 1st, 1984.

28) Marriage of Heikesa) Retroactive application of a law that would require reimbursement where it

was previously not required would deprive spouses and homeowners of a vested right previously guaranteed

b) §4800.2 negatively affected a wife’s vested rights in the couples home upon dissolution because it would have required the wife to reimburse the husband for all improvements made to the community asset from separate funds absent a written agreement however prior to the laws passing when the improvements were made the husbands contributions would have been considered a gift to the communityi) §2640??

29) Marriage of Warrena) Where certain amount of community funds were used to improve wife’s

separate property and neither the husband nor the wife intended the money to be a gift, is the husband entitled to community reimbursement in that same amount rather than in the amount which is the value of the property at the time of dissolution trial? YES. i) The husband is entitled to reimbursement to the community for

community funds spent on separate property however, it is in the amount of money lent not the amount the separate property is worth at dissolution

30)Marriage of Jafeman a) In the absence of a contrary agreement, the use of community funds to

improve the separate property of one spouse does not alter the separate character of the property

b) Where community funds were used to improve the husband’s separate property, the community is entitled to reimbursement only if the expenditure was made without the wife’s consent or knowledge

31)See v. See a) In the absence of a written agreement to the contrary, a husband who elects

to use his separate property instead of community property to meet community expenses cannot claim reimbursementi) The court will assume that if the community funds are empty and there

are still community bills outstanding that the separate funds used to cover those bills are a gift to the community(1)If you commingle accounts then create burden of tracking and tracing

accounts and spending. Characteristic of property is determined at time of acquisition

Chapter 6: Classification of property32) Estate of Murphy

a) A proven excess of community expenses over community income during a marriage dos not establish that there has been no acquisition of property with community funds (Recapitulation Approach, which the court usually rejects as ignoring the character of purchases made)

b) When one choose to comingle their accounts with their spouse they create the burden of being able to trace their funds and purchases upon dissolution if you cannot then the presumption that property acquired during marriage will controli) There are also multiple types of tracing, exhaustive and direct

33)Marriage of Mix a) A spouse may trace the source of funds withdrawn from a commingled

account where the separate property deposits exceed separate property withdrawals

b) Tracing funds have two approachesi) Tracing the exact source of the funds used for the purchase ii) Or by showing all community funds were exhausted at the time of the

purchase(1) Three presumption prevalent in this case (A) property acquired

during marriage is community property (B) earning and accumulations from separate property remain separate property (C) funds used for living expenses are first deemed to have been paid for by community funds. In an commingled funds case first look to see whether the community expenses exceed community income and if so then any remaining funds are deemed separate property

34)Estate of Murphy a) The fact that husband accrues a lot of money both in terms of community

income and separate income does not beat the presumption that property acquired during marriage is community property

35) Marriage of Frick a) Where funds a re paid from a commingled account the presumption is that

they are community fundsi) “The Apportionment Rule” where a separate property asset was

benefitted by some community payments the court have allocated the interest in the property to each spouse proportional to their individual contributions.

b) To meet the burden of demonstrating the characteristic of a property as separate the court requires more than just showing there was enough separate funds to pay any debts or bills, the court requires that you ascertain the characteristic of the account like what amount was spent on the community, how much of the account was community.

36) Beam v. Bank of America (BUSINESS APPORTIONMENT BEGINS!!)a) Court here used a Pereira approach to determine the community and

separate property interest in the husbands separate property business by looking at the a fair rate of return on the husband’s investment as separate income and allow the excess to the community as arising from the husband’s labor

b) Apportionment of business after marriage i) Pereira Approach (Rate of Return)

(1) A predetermined percentage as a fair return on business capital, which is separate property. Rate of return

(2) Meant to allocate a fair return on the husband’s separate property investment and allocate the excess to the community as arising from the husbands(a) The amount by which the actual income of the separate estate

exceeds the return which the initial capital investment could have been expected to earn absent the spouse’s personal management

ii) Van Camp Approach (Value of spouses community labor)(1) Limit the community interest to a fixed salary as the reward for a

spouse’s service. Value of labor. 37) Gilmore v. Gilmore

a) The court used the Pereira approach and determined the small rate of return on the husband’s dealership was not due to his labor but rather was due to pure investment, which is considered separate property. i) The Pereira approach showed all of the revenue the business made was

due to the rate of return on the husband’s investment and not his labor, skill and effort and therefore all proceeds were held as separate property

38) Tassi v. Tassi (IDEAL PEREIRA/VAN CAMP CASE)a) The law assumed any available community funds will be used to pay any

community debts before any separate funds or assets are used to pay for community debts or bills

b) The court has discretion in choosing between the Pereira and Van Camp approaches to allocating a separate property business at dissolution between separate and community propertyi) Pereira approach is to compute an interest on the capital investment in

such business and allocate that amount to separate property(a) Pereira approach is preferred when the business growth is due to

labor of a manager spouseii) Van Camp is to compute the reasonable value of a spouses services to his

separate property (the business) and allocate that amount to community property

(a) Van Camp approach should be used when the income from a separate business was due primarily to investment

iii) Both types of accounting require a deduction of all community expenses from the accrued number before a final amount can be reached.

39)Gudelj v. Gudelj (IDEAL PROPERTY WITH CREDIT CASE)a) Property acquired on credit during marriage is community property and if not

it depends on the intent of the lender to primarily rely upon the separate property of the purchaser or upon the community asset.

b) This is an argument the spouse claiming separate property must make to show that the credit on which the business asset was granted was given in recognition of HIS SEPARATE PROPERTY OR CREDIT and not that of the community to beat the presumption that property acquired by credit during marriage is community property

40) Ford v. Ford

a) The signature of one spouse on a note and purchase money mortgage encumbering separate property of the spouse cannot affect the rights of the parties as to the community or separate character of the proceeds i) A signature of the wife on a note and mortgage were not sufficient to

support an implied finding that the lender relied upon the credit of the community, most judicial decisions indicated that such a signature did not compel a finding in favor of the community

b) A signature alone will not compel a finding for the community especially if the opposing spouse can demonstrate that the seller relied on the separate property asset

41)Marriage of Grinius (IDEAL PROPERTY WITH CREDIT CASE)a) “Loan proceeds acquired during marriage are presumptively community

property; however this presumption may be overcome by showing that the lender intended to rely solely upon a spouses separate property and did in fact do so. Without satisfactory evidence of the lender’s intent, the general presumption prevails.”

b) This case raised the standard for showing property and assets purchased on credit during marriage were separate property because it required a showing that the lender SOLELY relied on the opposing spouses credit rather than PRIMARILY.

c) Property acquired during marriage through credit or a loan are presumptively community property. The general presumption can be overcome by using tracing principals that establish the separate property produced the acquisition.

42) Vieux v. Vieux a) When one spouse before marriage executes and installment contract to

purchase property and then uses community funds after marriage to pay for some of the installments, the community property is entitled to an interest in such property to the proportion that community funds were used for installments.

b) The appellate court holds that when separate property was used or updated with community funds “it would be community property to the extent and in the proportion that the purchase price is contributed by the community.”i) Think of case where separate estate was benefited by community property

and efforts then there is a proportion of the asset that is in fact community property.

43) Marriage of Moore a) In valuing the community interest in a residence purchased by a spouse prior

to marriage, the community interest is to be computed according to the ratio that the reduction of principal resulting from community funds bears to the reduction of principal from separate funds, without credit being given for the amount paid for interest, taxes, and insurance.

b) Community was granted 10% in the couples home upon dissolution because the court found that was the amount of the residence the community had contributed to

44)Marriage of Devlin (TORT DAMAGES AND COMMUNITY PROPERTY CASE)

a) Personal injury awards and damages are considered community property while married however, upon dissolution statute mandates that they be awarded to the spouse who was injured, however if the interests of justice require a different outcome then the injured spouse may not get less than 50% of the award

45)Estate of Logan a) Term life insurance covering a spouse who remains insurable is community

property only for the period beyond the date of separation for which community funds were used to pay the premiums. If the insured dies during that period then the proceeds are fully community property. Otherwise, as in the instant case, the insured remaining insurable, a term policy does not constitute a divisible asset since the policy is of no value and the community has fully received what it bargained for.

46) Marriage of Browna) A spouse should be granted a contingent interest in a non – vested pension

that, if vested, would be deemed community property. i) Employer funded pension plans are not mere expectancy

(1) This case overturned the French v. French precedent that stated non – vested pension rights were a mere expectancy and therefore non –divisible

47) Marriage of Gillmore (IDEAL RETIREMENT BENEFITS CASE CASE)a) Retirement benefits earned by a spouse during marriage are community

property, subject to equal division upon the dissolution of marriageb) Retirement benefits belong to the community especially when they are

matured, as there is no reason for the court to delay their disbursement since the court knows exactly how much will be paid to each spouse.

48)Marriage of Poppe a) While the “time rule” is the most frequently used method of apportioning the

retirement benefits between the community and separate estates of the married couple in a dissolution proceeding, it is not the only acceptable method and is appropriate only where the amount of the retirement benefits is substantially related to the number of years of service. i) Because the navy retirement system is based on points the court ordered

the case remanded and demanded the trial court use a system other than the “time rule” to determine the community interest in a share more favorable to the husband because he accrued 1/3 of the retirement before marriage

49)Marriage of Lucero a) A spouse has the right to elect to share in the increased retirement benefits

generated by the other spouse’s redeposit of previously withdrawn retirement contributions upon payment of a pro rata share of the redeposit of the contributions previously withdrawn from the other spouse’s retirement fund.

50)Marriage of Jones (IDEAL MILITARY BENEFITS CASE)a) A married serviceman’s right to receive disability pay, acquired before such a

serviceman has earned by longevity of service a vested right to retirement

pay, is not a community asset, and thus is not subject to a division upon the dissolution of marriage (especially as in this case, the right to lifetime disability pay came about after losing his leg in combat)

51)Marriage of Stenquist (IDEAL MILITARY BENEFITS CASE)a) A spouse’s military pay is properly divided on the basis of a determination

that the pension rights attributable to the spouse’s military service before the marriage, plus the portion of those rights earned during the marriage attributable to the spouse’s disability, constitute their separate property, while the portion of the pension rights earned during the marriage equivalent to an ordinary retirement pension, computed on the basis of the longevity of service and the rank at retirement, constitute a community asset

52)Marriage of Wrighta) Termination pay (severance pay) received by a spouse after a marital

separation is the separate property of that spousei) The payment of severance pay the court likened to disability pay, it was

given in recognition of future diminished earnings but generally severance pay is given in recognition of past service and in that case it is community property

53)Marriage of Lehman a) A non – employee 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 enhancedi) Essentially is your spouse has a community property interest in your

original retirement benefits then they have an interest in your enhanced retirement benefits(1) Any enhancement in the benefit is a “modification of an asset

(community) not the creation of a new one. 54)Marriage of Hug

a) There is no clear characterization of stock options, rather the characterization depends on the facts of the case and whether or not they were given in recognition of past, present or future services

55)Marriage of Lukens (IDEAL GOODWILL CASE)a) The professional goodwill of a medical practice is an asset properly

considered by a court in a marital dissolution proceedingi) The professional goodwill of a spouse should be measured by arriving at

a present value based upon past results, and not accounting for any post-marital efforts(1) The three factors to be considered for goodwill are (A) the length of

time the professional has been practicing (B) the professional’s comparative success, age, and health (C) and particularly the past profits of the office which would reflect any goodwill income

56)Marriage of Foster (IDEAL GOODWILL CASE)a) TWO METHODS FOR DETERMINING/ CALCULATING GOODWILL: Market

Value and Capitalization (Capitalization of excess earnings v. Market sales valuation

i) Market Value Approach (1) Consider the price a buyer would be willing to pay for the business

the day after separation, then determine how much value the business raised during the marriage (how much its worth now as compared to when it was bought) and the difference is the goodwill community asset, the remaining profits are separate property

ii) Capitalization Approach (1) This approach requires the court to compare the community business

with another similarly situated business and the goodwill is the excess in profit from the income comparison because it shows intangible factors like image and clientele.

57) Marriage of Czapar a) A court may NOT take into account a covenant not to compete that a spouse

might be required to give if the spouse sold the business when the valuing of the business as a community asset awarded to that spousei) Essentially the court may not consider a non compete clause when

valuing a business at dissolution because it is to hypothetical 58) Marriage of Slater

a) A court may not assign a zero value to the goodwill of a business where the court basis its decision on a partnership agreement which defined the factors to be considered in determining the purchase price of such interest

59)Marriage of Sullivan (IDEAL CASE FOR ECONOMIC SACRIFICES AND DEGREES)a) A spouse is entitled to reimbursement of monies and sacrifices made to help

a spouse achieve a professional degree that substantially raised the earning capacity of the community during the marriage

b) Important distinction between compensation and reimbursement, the statute only speaks to reimbursementi) §4800.3 & §4801

60)Marriage of Watta) When awarding spousal support a court must consider the totality of one

spouse’s contribution to the other spouse’s attainment of a degree, including contributions for ordinary living expenses

Chapter 8: Inception and Termination of the Economic Community 61)Estate of Vargas

a) An innocent participant who has duly solemnized a matrimonial union that is void because of some legal infirmity acquires the status of putative spouse

62)Wagner v. County of Imperial a) A putative spouse may bring a wrongful death action even without going

through solemnization of the marriage if that putative spouse was dependent on the decedenti) The fact that there was no solemnization does not affect the good faith

requirement of a putative spouse 63)Estate of Leslie

a) A surviving putative spouse is entitled to succeed to a share of his or her decedents separate property just as a marital spouse would be entitled

64)Marriage of Carey a) The court cannot consider guilt of the parties when dividing their property

equally upon dissolution even if they are putative spouses or never were “officially married”

65)Marvin v. Marvin a) The courts are allowed to consider alimony type support payments for a

“spouse like partner” who was never married but relied on the expectation of continued support from the working spouse