Community Property

3/02/03
I. New Family Law Act (NFLA) Changes (no-fault divorce)
A. Procedural (Vocabulary)
1. Plaintiff (person suing for divorce) now called: Petitioner
2. Defendant now called: Respondent {terms might get switched in an appeal}
3. Title of the Action = In Re Marriage of _____.
4. Divorce now called: Dissolution of Marriage
5. Annulment: A defect that was in existence at time of marriage
Now called: Judgment of Nullity of Marriage
6. Separate Maintenance = Legal Separation (people still living together, but assets divided)
7. Alimony called: Spousal Support
B. Substantive
Divorce
a. Before ChangeHad to have grounds for divorce (marital misconduct plus corroborating evidence)
b. After ChangeNo Fault Divorce
1. Only 2 types of grounds for divorce:
a. Irreconcilable Differences leading to irremediable breakdown of the marriage
b. Incurable Insanity proven by medical evidence
2. Statutes
a. 2335: Evidence of misconduct is inadmissible except in child custody hearings. (A spouse is still
entitled to alimony regardless of misconduct.)
b. 2550: Mandatory equal division of community property (estate)
i. Unless the economic/emotional impact of loosing the home would be a hardship on the wife
and kids (that outweighs the immediate economic hardship of deferment on the out-spouse), then
wife (or maybe H) can keep physical possession, and sale and division of the proceeds will be
deferred until the kids are of age. Family Code 3800 (or 3801). OR
ii. Unless the parties otherwise agree (H agrees to give W 80% b/c he wants the be a nice guy)
c. 2552: Date of valuation is as close to trial as practical unless there is a good cause reason.
II. Characterization of Property
A. General Rules (Sections of the Family Code)
1. 760: Except as provided by statute, all property acquired during marriage is community property.
i. Jolly: W had no money when H married her. During marriage, H worked and W stayed at home. Ten years after H
died, W died. W had real property at death and it was unclear whether she got it on her own after H died or
whether it was a product of her community funds from her marriage. Ws family didnt want Probate Code
6402.5 (Property that had formerly been Community Property goes half to Hs heirs and half to Ws heirs
where: (1) Decedent is a surviving spouse [formerly married and not remarried], (2) there were no children or
issue from the former marriage, and (3) Decedent left no will) to kick in.
Analysis: Since W did not work, had no property at time of marriage, and evidence supported that she had not
received a gift, devise, etc. (particularly since she was old), the presumption that property acquired during
marriage is community property was not rebutted.
Conclusion: The Real Property is community property
2. 770: Separate property is:
a. Property owned before marriage
b. Gifts, devises, bequests or descents
c. Rents, issues [comes out of rent or profits] and profits of property described in this section.
Intent of the Lender: Determines the characterization of property purchased with a loan
i. Ford: H (husband) and Hs brother are tenants in common on two pieces of property. H swaps with brother so
each would be a 100% owner in one property. H then buys the brothers property with a loan secured
entirely by Hs separate property.
Analysis: W (wife) points to four pieces of evidence that the property was considered community property. Three
of them have no bearing on how the lender thought of the property. The only one that does is Ws
signature on the mortgage and promissory note. However, Supreme Court precedent (Flournoy and
Martin) was that the Ws signature on a mortgage could not affect the rights of the parties. As such, the
property in question was a profit of Hs separate property.
Conclusion: The property is Hs separate property
ii. Grinius: Shortly after marrying, H and W opened a restaurant with money they got from an SBA loan and a

regular loan. Only H signed the SBA loan but both signed the regular one. The SBA loan was secured by
both Community and Separate Property but H put secretly put the title in his name alone.
Analysis: Until now, a court would look to whether the lender relied on CP or SP in extending its loan. Here,
however, the court overrules the old standard (even though it was established by the Supreme court
{Grudelj} and this is an appellate court), and says that a lender may rely in both SP and CP. Since the
lender in this case did rely on both, the presumption that property acquired during marriage is Community
Property is not overcome.
Conclusion: The restaurant is Community Property
3. 771: Earnings of spouse (and of minor children living with or in custody of the spouse) while living separately
and apart are separate property of that spouse
Note: Living separately and apart is a term of art. The real test is not if they are living under same roof but if they
are living as husband and wife.
4. 772: Earnings and accumulation after legal separation are separate property.
5. 781(c): Personal injury award is separate property.
Note: Originally, they husband and wife could not sue each other for damages; Under Self, they can. Insurance
companies now often put clauses in K's saying that people in same household cannot sue under K.
6. 2581: Property held in joint form is presumed to be Community Property This presumption is overcome only by a
writing or a clear statement the deed. This is only for division of property on dissolution of marriage. It does not
apply to death or creditor claims.
a. Probate Code 5305(b)(1): Notwithstanding 2581(above), the presumption that property held in joint form is CP
may be rebutted by oral tracing of the property to separate property unless there is a writing clearly showing the
property is intend to be CP.
Note: This twists the 2581presumption around.
b. Comparing Joint Tenancy to Community Property
Joint Tenancy
Community Property
Each spouse owns an undivided half. Its separate
Each spouse owns an undivided half.
property so dissolution court has no jurisdiction over it.
Theres no probate since theres a right of survivorship, Spouses can give away their own halves by will.
i.e., the survivor gets all.
You can sell your share of joint tenancy without
You cant sell your share of community property
consent from your spouse or sue for partition, i.e., sell
without consent of your spouse.
the entire property and each spouse gets half of the
proceeds.
Interest is divided equally.
If dissolution is based on fault, the community
property can be unequally divided (but not in CA
cuz of 2550.
i. Tomaier: P sued for dissolution and division of CP. The trial court excluded evidence that would have shown
that a certain real property in CA was acquired with community funds and with the intention that it
remain CP. The trial court found the property to be in joint tenancy. P appealed saying the property
was CP even though the deeds said it was a joint tenancy.
Analysis: The trial court should have allowed in the evidence
Conclusion: The property is CP
c. 683.1 Safe Deposit Boxes: Safe deposit boxes do not create automatic joint tenancies on their contents. Until this
statute, they did so.
B. Transmutation
1. 850: Married persons may transmute community property to separate property, vice versa, and separate property of
one spouse to separate property of the other.
2. 851: Fraudulent transfer laws applyYou cant transfer property with the sole purpose of evading creditors
3. 852: Form of TransmutationTransmutation must be in writing by an express declaration accepted by the spouse
(although signature not required) whose property interest is adversely affected.
Note: If H fails to put the transmutation in writing, W can send him a thank you note to clarify it.
Note: This section does not apply to a gift between spouses of clothing, jewelry, or other tangible articles of a personal
nature used principally by the spouse to whom the gift is made and not substantial in value taking into account the
circumstances of the marriage.
i. Woods: P has no property when he marries rich old lady. At marriage, old lady orally agreed her property would
become CP. After marriage, she declared that it had become CP. However, she never transferred title, control,
or possession of any of her property. Trial court said the Statute of Frauds barred the oral agreement.
Analysis: Transmutation can be accomplished by an oral agreement between parties.
Conclusion: It is CP

Note: This case has been overruled by 852.

4. 853: Estate planning documentsA statement in a will of the character of property in a will is not admissible as
evidence of a transmutation of the property in a proceeding commenced before the testators death
C. Overcoming CP presumption by Proof of Separate Ownership
1. Commingling of Funds: Mixing of SP and CP in one account
a. General presumptions in favor of CP for commingled funds
1. Property added to a commingled account during marriage is CP (Party asserting otherwise bears burden)
2. Family Expense DoctrineFunds withdrawn from a commingled account for paying community living
expenses are presumed to be community funds
3. Withdrawals (generally)Any withdrawal from a commingled account for any purpose is presumed to be
CP because, nearly always, the expenditure falls in one of two categories: (a) Payment of expensesso the
Family Expense Doctrine kicks in, (b) Buying an assetso the general presumption that property acquired
during marriage is presumed to be CP kicks in.
i. Mix: During marriage, W drew from a commingled account to make some investments. Trial court held
that the profits from these investments were Ws SP cuz W was able to trace it to her SP.
Analysis: To rebut the presumption that funds drawn from a commingled account are community funds, a
party can use (1) Recapitulation Theory or (2) Direct Tracing. As in See, W here failed to keep records
adequate to take advantage of Recapitulation. Furthermore, the schedule W introduced that itemized
her expenditures on SP was insufficient to satisfy tracing requirements cuz the schedule entries were
not tied to any specific bank account(s). However, Ws testimony that she intended to make these
expenditures for SP purposes convinced the trial court so this court will uphold its finding since it got
to actually hear W testify.
Conclusion: The funds withdrawn were Ws SP so the profits therefrom likewise are Ws SP
b. Asserting separate character of commingled funds
1. Recapitulation TheoryYou recapitulate the community income and community expenses in an account
where there were commingled funds during the entire period of the marriage; if expenses exceed income,
then all thats left is SP
2. ReimbursementWhere a party uses SP to pay community expenses:
a. During marriageThat party is not entitled to reimbursement unless there is an agreement to reimburse
i. See: W appeals a dissolution decree wherein the trial court allowed H to use the recapitulation theory
to establish that the funds remaining in an account were his separate property and to be
reimbursed for paying community expenses (while married) with SP.
Analysis: H has the burden of keeping records (or showing just cause why he could not, through no
fault of his own) adequate to establish the balance of community income and expenditures to
be able to take advantage of the Recapitulation Theory. It appears H did not keep records.
Furthermore, H may not be reimbursed for using his SP to pay community obligations (living
expenses) unless there was an agreement for reimbursement.
Conclusion: Remanded to apply these rules
b. During separationThat party is entitled to reimbursement unless:
(1) A party intended the expenditure to be a gift to the spouse, OR
(2) There is an express agreement that there is no reimbursement, OR
(3) One party has exclusive use of the asset used and the reasonable rental value of the asset is fairly
close to the amount to be reimbursed.
E.g.: If parties are buying a car and, at separation, H takes the car and pays for it with his SP, he cant
be reimbursed so long as the reasonable rental value is fairly close to the amount of the car payment.
i. Epstein: When a poor H and W separated, they owed their pediatrician some money. Pediatrician
sent both parents a letter saying pay up or I stop treating your kids. H (unlike W,
apparently) didnt want the doc to stop treating the kids so he used his income (separate
property since it was earned while H and W were separated) to pay this community
obligation. At dissolution, H wanted reimbursement from the community for these payments.
Analysis: W cites See saying that since the parties had no agreement for reimbursement, H couldnt
be reimbursed. However, Ct said that since H and W were separated, See does not apply.
Instead the presumption favors reimbursement for a party paying community debts with
separate funds during separation and is only overcome is there is an agreement otherwise.
Conclusion: H is entitled to reimbursement
2. Separate Property Contributions to Community Property
a. Section 2640: A spouse who contributes separate property to the community estate is to be reimbursed for
the contribution UNLESS the spouse has waived his right of reimbursement IN WRITING.
1. Reimbursement is permitted only for:

a. Down payments, AND

b. Payments used to improve property, AND
c. Payments that reduce the principal of a loan
2. It IS NOT permitted for:
a. Payments on the interest of the loan, AND
b. Payments made for maintenance, insurance, or taxation of the property
3.

i.

b.

3.

Other notes regarding the calculation:

a. Interest and inflation are not included,
b. The reimbursement amount cannot exceed the net value of the property at the time of division.
Tallman: H and W bought a home financed in part by a $53K trust deed from the Scotts. W paid the
Scotts $40K of her SP and they forgave the whole $53K. At dissolution the trial court
calculated the whole $53K as reimbursable to W. H appealed
Analysis: Since when W was reimbursed she did nothing (like placing a $13K lien on the property) to
evidence that she expected a reimbursement greater than $40K, the communitynot she
should benefit from $13K saved.
Conclusion: Ws reimbursement amount is dropped from $53K to $40K

Before 2640 (and 4800.2)

i. Lucas: (THIS CASE IS NO LONGER GOOD LAWSEE ABOVE!) W put down $6350 of her SP on
a house she and H bought. She then spent another $2962 of her SP on improvements to the
house. H and W took out a 17K loan on the rest and put title in the property as joint tenancy.
H appeals trial Cts finding that Ws down payment and improvement money was SP.
Analysis: Ct notices that there were 3 different rules on how to treat SP used for a down payment on a
house where title is taken as joint tenancy. Ct adopts Trantafello that says that the down
payment (SP spent on CP) is a gift to the community unless there is evidence of an
agreement to the contrary. P.75. (legislator overruled this case by enacting 2581)
Conclusion: Remanded for determination of whether an agreement existed

Community Property contributions to Separate Property

a. Where community funds are contributed to one spouses separate propertyeven where the other spouse knows
and consents to the expenditurethe community estate gets a pro tanto interest in the SP for:
1. Payments used to improve property, (Wolfe, Bono)
2. Payments that reduce the principal of a loan (Marsden, Gowdy)
but not for:
1. Payments on the interest and taxes. (Moore, Wolfe)
Note: The calculations are at the time of separation
i. Gowdy: H bought a home before marriage. During marriage the community paid on the home. At
dissolution, W wanted a pro tanto interest in the home. The Trial Court followed the
suggestion in Camire that there is a presumption of a gift where CP is used for the benefit of
one partys SP during marriage.
Analysis: It would be anomalous that there be a presumption of a gift in this case when there is a
presumption of reimbursement when SP is spent to improve CP during marriage.
Conclusion: E gets a pro tanto interest in the home
ii. Wolfe: Community funds were used with Ws consent to pay the property taxes and to install a
drip irrigation system on Hs SP. The trial court ordered reimbursement for both.
Analysis: There is little logic in a rule that presumes a gift where community funds are used to improve
a spouses SP but does not engage in such a presumption for community payments on an SP
mortgage (Marsden). And it doesnt matter that W consented cuz most spouses make
spending decisions without considering the possibility that they might divorce. The
community has an interest in the SP for the improvements. However, tax payments are
outside this rule.
Conclusion: Since Ws pleading only asks for reimbursement, there will be no remand to determine
whether the community should actually get a pro tanto interest; However, the CP gets no
reimbursement for the taxes.
iii. Bono: Before marrying, H owned a pitiful trailer. H and W married in 1977 and over the next 17
years, they spent 80K fixing up the trailer.

b.

Analysis: Wolfe applies so the community has an interest in Hs trailer. However, since the facts fail
to indicate whether the improvements actually increased the equity of the trailer, it is unclear
whether the community is entitled to straight reimbursement or a pro tanto interest.
Conclusion: Remanded to determine whether the improvement increased the equity
Formula for calculating the pro tanto community interest in a spouses SP (Marsden):
Steps:
(1) Calculate the percentage of the original purchase price paid by community payments of the principal.
E.g.: If purchase price was $100K and $20K of community funds have been used to reduce the
principal, the community/separate ratio is 20%/80%. So the community interest is $20K and the
separate interest is $80K.
(2) Calculate the amount of appreciation in the value of the property that occurred between the time it was
originally purchased and when community money was first used to make a payment; Add this amount to
the separate interest.
E.g.: If by the time of the 1st community payment, the value of the property is $140K, then you add
$40K to the $80K separate interest.
(3) Determine the amount of appreciation that occurred AFTER the parties married and apportion that
appreciation according to the percentages calculated in Step (1).
E.g.: If the value of the property climbed from $140K at the time of marriage to a present value of
$190K, then the appreciation is $50K. Thus, the community/separate portions would $10K/$40K.
(4) Total the community and separate values and reduce the separate estates value by the amount unpaid
on the loan.
E.g.: If there is $70K left on the principal of the loan then:
The CP interest would be $20K + $10K = $30K
The SP interest would be $80K + $40K + $40K - $70K = $90K
i. Marsden: H and W married in 1975 and W moved into Hs house with him. W left husband in April
1975, moved into an apartment, and filed for divorce. However, she never followed through
on that action until she filed again in July 1978. H claims that the two of them were living
separate and apart the whole 3 years. W says that they were not living separate and apart
between Sep 1976 and June 1977 because they acted like they acted like they were married.
Analysis: (1) Date of separation: Earnings of a spouse while living separate and apart are the SP of
the spouse. The code defines living separate and apart as when spouses have come to a
parting of the ways with no present intention of resuming marital relations; living in separate
residences in not determinative. Baragry says the question is whether the parties conduct
evidences a complete and final break in the marital relationship. The trial courts finding
that the parties did not live separate and apart between Sep 1976 and June 1977 is supported
by the evidence since W took no further action regarding her divorce for 3 years, they
continued having sex, they hung out in Mexico for the summer, they went to the Middle East
together, and W moved in with H for a while.
(2) Valuation of the House: The trial courts valuation of Hs share of the house was
incorrect since it failed to give him the benefit of prenuptial appreciation. The formula to be
followed is listed above.
(3) Stocks: H had a very large and complicated stock portfolio. During marriage, the
community property combined funds in his account. This occurred cuz Hs paycheck was
direct deposited in the account (CP) as were the proceeds from his stocks (SP). H can
maintain the SP nature of the SP funds even though they are in a commingled account if
he can directly trace the funds. However, there is a presumption that funds withdrawn
from a commingled account are CP. While H kept a worksheet that was sufficient to show
that there were adequate funds for him to have withdrawn SP when he purchased stock, he
DID NOT show that it actually WAS SP funds that he used. He MUST show this. Unlike in
Mix, the Trial Court here apparently wasnt willing simply to believe H that when he
withdrew funds he intended for those funds to be SP. The stocks H inherited and never
traded, however, ARE his SP.

4.

Constitutional Limitations on Retroactive Application of Community Property Laws

a. Rank Injustice Test: Retroactive application of a change in community property law that results in the
impairment of a vested property right is a violation of Due Process unless:
(1) The law it is repealing was causing a rank injustice, OR
(2) Factors on p 110 its necessary to subserve a sufficiently important state interest

i.

Buol: H and W bought a house after marrying. W put earnings in a separate bank account and then used
the money to buy a home in joint tenancy. W made all the payments and H and W made an oral
agreement that the home was Ws SP. While on appeal, 4800.1 (now 2581) was enacted which
said a WRITING was required to rebut the presumption that property acquired during marriage in
joint tenancy is CP. Moreover, that code was to be applied retroactively.
Analysis: Section 4800.1 was passed so as to promote the states interest in equitable distribution of marital
property upon dissolution. It was not to cure some rank injustice in the law. Retroactive
application of 4800.1 would substantially impair Esthers vested property right without due
process of law and is therefore unconstitutional.
Conclusion: W gets reimbursed
ii. Cairo: H took his SP inheritance money out of a community account and bought some property with it.
The Trial Court found that the property was CP cuz H did it sorta sneakily. H appeals, however,
arguing that he deserves a reimbursement of his SP contribution to the property.
Analysis: After the court in Fabian found that retroactive application of 4800.2 (law requiring a writing to
overcome the presumption that SP contribution to CP were reimbursable) violates due process where it
impairs vested property rights, the legislature amended 4800 pointing out its desire for retroactive
application was to satisfy a compelling interest. Nevertheless, calling it a compelling interest
doesnt make it so. Retroactively applying 4800.2 to reimburse H for his separate contribution
would unconstitutionally deprive W of her vested community property rights without due process.
Conclusion: No reimbursement for H. (And the legislator quit trying to get a retroactive effect with the antiLucas legislation, after this case.)
iii. Heikes: H owned land as SP. In 1976, he transferred it to himself and W as joint tenants. At dissolution,
H declared that he was entitled to reimbursement in accordance with 4800.2 (law requiring a writing
to overcome the presumption that SP contribution to CP were reimbursable) since there was no writing.
Analysis: After the court in Buol and Fabian found that retroactive application of 4800 would be a
violation of due process in divorce proceedings begun BEFORE 1/1/84, the Legislature amended it to
say it would apply to all divorce proceedings begun AFTER 1/1/84 regardless of the date the CP was
acquired. This enactment is, however, without effect. Section 4800 WAS NOT passed to cure any
rank injustice no matter how many times the Legislature says it was. To apply 4800.2
retroactively here would be to deprive W of her vested property interest without Due Process.
Conclusion: No reimbursement for H
(You cannot give a law retroactive effect to a law that impairs a vested right. The question is: does
transfer into joint tenancy create a vested right? Statute is on p.79, courts holding is on p.146)
Nowadays, this rule2580 or 2581only applies to property acquired after 1-1-1984 (the legislator
never got the retroactive effect the wanted)!!!!
b. Military Pensions
1. Gilmore Choice: Where H and W file for dissolution in a CP state, and one party has a vested and mature
military pension but has not retired, the spouse may select elect one of the following:
(a) To immediately receive her community interest in the amount she would get if the service member
were to retire at the date of the trial. This selection would:
(1) Still allow her to get all COLA (cost of living allowance) increases for the pensions
duration.
(2) NOT permit her to partake in any increases H receives after the date of trial due to
promotion, length-of-service, etc.
(3) Secure her interest so that she would get it even if he does something later on that
terminates his own entitlement e.g. dies or gets a dishonorable discharge.
(b) To wait until his actual retirement but get only her portion of the award as set at the trial date. This
selection would:
(1) Also allow her to get all COLA increases for the pensions duration
(2) Permit her to partake in any increase H receives after the date of trial due to
promotion, length-of-service, etc.
(3) Require that she risk getting nothing in the event that he does something after trial
that terminates his own entitlement such as dies or get a dishonorable discharge.
2. Retroactivity: It is NOT a constitutional violation for a court to retroactively give a spouse a share of a
service members pension where a case has ruled against that spouse by following McCarty
(below).

i.

McCarty: H argued that his military pension was his SP since a federal law said a pension was
the sole property of the service member. W argued that it was CP since in every CP state,
courts had held that a military is CP upon receipt.
Analysis: The US Sup Ct said the federal law spoke for itself; namely, Congress intended a military
pension to be SP and that the statute preempted CA CP law.
ii. Castle: In response to McCarty, Congress passed a law saying that when it passed the federal
pension law, it intended for each state to applied its own characterization of a military
pension. Furthermore, all judgments decided after McCarty should be vacated. In Castle, the
trial court gave W the pension choices (above). H appealed on several grounds including an
argument that retroactive application of Congresss response statute to McCarty was a
violation of separation of powers. W appealed saying Gilmore says she should be able to
select the benefit of Hs future promotion and get it NOW.
Analysis: Court said all of Hs grounds of appeal had been decided against him except one which was
awaiting a Sup Ct ruling. The Separation of Powers argument fails since Congress was
simply clarifying its intention for enacting a statute rather than overruling a Sup Ct decision.
W has misread Gilmore. It offers the choice outline above.
Conclusion: Trial courts award upheld.
D.

Profits from Separate Capital where the Spouse Contributed his/her efforts
1. Van Camp Rule: Increase (I) CP = SP. Calculate the value of Hs services and subtract them from the total
increase in value. The remainder is Hs SP since it represents profits from his biz. The amount subtracted is CP.
i.

Gilmore: H owned a biz when he married W. Over the course of their marriage, the biz increased in value
from $182+k to $786+k due to Hs work efforts during the marriage. At dissolution, W
wanted of the increased biz value arguing it was CP since acquired during marriage.
Analysis: The court looked at both Huber (which applied the Van Camp rule) and Pereira. The trial
court had applied Huber since H introduced evidence which showed that the salaries he
allotted himself during the marriage were a proper measure of the community interest.
The court upheld the trial courts application of Huber. (Pereira formula: Increase in value of
the business the Separate Property component of the increase = Community Property.) (Van
Camp formula: Increase in Business value CP component [all Hs work during the marriage]
= SP.)courts use both the Van Camp & Pereira methods and both are always upheld by the
appellate courtscourts can use whichever one they want.
Conclusion: Trial Courts Van Camp calculation upheld. (Wife is doesnt get anything for the increased
value of the businessshes stuck with of his salaries that he paid himself.)
ii. Tassi: H died owning a meat company. At death, W discovered H had given away a whole lotta property
related to the company to his brother. W believed much of it was CP that she should have
been able to consent to giving away, and therefore sued to disaffirm the gifts. Bro says H
gave him Hs SP and that the salary H took for himself represented the community share of
the increased value of the biz.
Analysis: A spouse who wants to disaffirm a unconsented-to gift after marriage can disaffirm only
50% of the amount of the gift (since the court presumes the other party would have given
his/her 50% share of the property to the donee). The trial court had applied Huber but
calculated that Hs efforts contributed a greater share to increased value of the biz than was
represented by the salary he kept for himself.
Conclusion: Trial Courts Van Camp calculation upheld.
2. Pereira Rule: Increase (I) SP = CP Calculate Hs capital investment in the biz and subtract it from the total
increase in value. The remainder is the return on Hs efforts which is CP.
3. Selecting between Van Camp and Pereira:
a. Trial court is to choose the method that achieves substantial justice.
b. No appeals court has ever overturned the formula selected by a trial court so each party should advocate the
method that grants him the greater return.
c. These formulas also apply to division RP and securities
i. Beam: H inherited over $1.5 mill in the early years of his marriage so he didnt work. He did, however,
dabble around in some loser investments. At dissolution, the community estate was worth $38K but H
gave it all to W. Nonetheless, the greedy bh sued saying that Hs loser investments were his
efforts which should be calculated as CP income. The Trial Ct agreed and applied Pereira by

calculating a reasonable wage to attribute H. However, this calculation showed there was no increase
in the estate so the CP share was zilcho.
Analysis: W argues the TC should have applied Van Camp. This calculation lends to a community income of
$357k. W wanted half. The court said that community expenditures must be subtracted out to
determine the community estate. W argued that H conceded on the stand that he intended to spend his
SP when paying living expenses. The court noted, however, that H testified as such only cuz H
believed all of the estate was his SP. Thus, when expenditures were calculated in, the CP share under
Van Camp was also zippo.
Conclusion: TCs use of Pereira upheld
E. Division of Community Estate that includes Out-of-State Real Property
1. Family Code 2660 (Modernly): Where the community includes RP located in another state, the court must:
(a) First, try to divide the estate so one party gets all the RP in the other state but equal division is maintained,
(b) If (a) is not possible, then require the parties to convey the RP or award the entitled party its value in cash
2. Old-skool rule
i. Rozan: H and W purchased RP in North Dakota using personal property that they acquired while living in
CA.
Analysis: The court upheld the trial courts finding of CA domiciliary since H lived there with the intention to
remain when the PP was acquired. CA law says that PP acquired during marriage is CP. Since PP
was used to buy the RP in North Dakota, the RP was part of the community. Since the court found
extreme cruelty on Hs part, it award W 65% of the RP in ND and sorta told ND that it should give this
judgment full faith and credit. When W later sued in ND, the ND court gave full faith and credit
to the CP status despite its not being a CP state. However, it refused to give the 65% award effect
pointing out that the CA court did not order H to execute a deed.
Conclusion: The RP in ND is CP
F. Goodwill
It is the value that a business has that is separate and apart from its assets; its an expectation of continuing and future
patronage
It can attach to a product, location, name, or reputation
1. Goodwill in a business that is built up during a marriage is CP (NOT after divorcemust be at time of dissolution)
i. Watts: Upon divorce, H (a surgeon) has a biz that W argues has goodwill that is CP. Trial Ct said that there is
no goodwill since there is no market for the practice.
Analysis: Even though there was no market value, the goodwill of the business could have been calculated using
the excess earnings formula. Also, on these facts, the Trial Ct erred in failing to require H to reimburse
the community estate for his exclusive use of both the family residence and the medical practice
between the date of separation and the date of trial (This IS NOT, however, a mandatory rule but on a
case-by-case basis)
Conclusion: Remanded for calculation and award of goodwill and reimbursement for exclusive use of CP
during separation
ii. Aufmuth: H and W married in 1967. H was a law student and worked part time. W was a teacher. In 1969, they
had a kid so W stopped working and they took out a loan to pay for Hs 3rd year. The balance due on
the loan at separation was $1230. Also, in 1974, H became a 5% shareholder in his law firm.
Analysis: A legal education is a property right but is not CP cuz: (1) case precedent (Todd) suggests that it couldnt
be since it would be impossible to value it, (2) a determination that it is CP would require Cts to divide
up postdissolution earnings which are SP. Furthermore, goodwill should not be included in valuing
Hs interest in his firm cuz H: (1) was young, (2) had been a member of the bar for only 7 years, (3)
had been a shareholder for only 2 years.
Conclusion: Legal education is not CP; No allowance for goodwill
2. Valuing Goodwill
Goodwill is relatively easy to determine with commercial ventures; the difficulty is with professional ventures
(legal partnerships, etc.) because the Ct must distinguish between the bizs goodwill and the individuals goodwill. A
persons goodwill is not readily marketable
a. Methods
1. Market ValueGoodwill is the market value of the biz minus the balance sheet (or Profit/Loss Statement)
Accounting Methods
a.
Balance SheetA snapshot in time; it shows the cost of items less depreciation plus improvements
b.
Profit &Loss StatementA period of time
Two measures

1. Cash basis: Shows money in and money out

2. Accrual basis: Keeps track of when income/interest began accruing
2. Excess EarningsAmount the party makes in current biz minus amount an outside company would pay the
party to work for it
3. X times gross income
4. X times net income
b. No case precedent for valuing:
1. Celebrity goodwill
2. Executive goodwill
G. Community contributions to education
1. 2641:
(a) Where CP is used to pay for education or to pay off a loan incurred for education, upon dissolution of
marriage or legal separation (NOT probate):
(1) The community is to be reimbursed for contributions that substantially enhance the earnings capacity
(NOT earnings) of one party; the amount includes interest accruing at the end of the calendar year in
which the contributions were made
(2) Upon dissolution, a loan incurred during marriage for education becomes a separate liability for the
recipient of the education.
(c) The application of this section will be reduced or modified if the circumstances of a given case would render its
application unjust. These circumstances include, but arent limited to where:
(1) The community has substantially benefited from the education, training, or loan incurred. (E.g: H gets a JD
and family lives well together for 15 years). There is a rebuttable presumption that the community has not
substantially benefited where the beginning of dissolution proceedings occurs fewer than 10 years from the
community contributions. The presumption flips when the proceedings begin more than 10 years later.
(2) The education is offset by an education the other party got also funded with CP
(3) The education helps the party getting it to get employment that substantially reduces the need of support
that would otherwise be required,
E.g.: If H is an MD and W is a homemaker and W goes to school and gets a degree, she needs less from H
for support then would be otherwise required
2. Watt Rule: Only the direct expenses (tuition, books, fees, etc.) from the education are reimbursable under
2641; Living expenses are not cuz the parties would have had them anyway.
H. Valuation of an Asset
1. Date of:
a. 2552: For purposes of dividing property at dissolution, the date of valuation of an asset shall be as near as
practicable to the time of trial. However, a party may ask for an earlier date so long as he/she gives notice.
1. Notice (says case law) includes:
(a) A Notice Motion, AND
(b) A Declaration of Good Cause.
2. Good Cause
Often involves a showing a bad faith actions by the other party
E.g.: Doc expects the Ct to award a large amount of spousal support to W at dissolution proceedings so he
starts working only part time before trial to lower his income. W files a declaration saying H is trying to
lower the support award by reducing his income before trial. Ct will likely allow an earlier date for valuing
Hs income.
b. Small Partnership: GreenWhere a party is a partner in a small partnership that depends solely on the efforts
of that party, the dater of valuation of the partnership is as the date of separation and NOT the date of trial (this
is cuz efforts by a spouse AFTER separation are SP)
2. Interest and Taxes
I. Date of Separation
This occurs when either of the parties does not intend to resume the marriage and his or her actions suggest the
finality of the marital relationship (Hardin). All factors are to be considered. None are determinative.
Note: This requires subjective intent that is objectively determined from all evidence of words and actions
i. Baragry: On Aug 4, 1971, H moved out of home and into apartment with his girlfriend. For the next four years, he
would maintain continuous and frequent contacts with his kids who lived with his wife. He, at times, took W to
social occasions. He paid all household bills and regularly brought his laundry to W. He did not, however, have
sexual relations with W and lived with his girlfriend the entire time. W appeals the trial courts finding that the
parties separated on Aug 4, 1971 and argues instead that it should be Oct 14, 1975 (date H filed for dissolution).
Analysis: Ct says that the fact that H and W lived in separate residences is not determinative. The only evidence that

there was a complete and final break in the marital relationship was the absence of an active sexual relationship
and Hs cohabitation elsewhere with a girlfriend.
Conclusion: Date of separation (somehow) is Oct 14, 1975
ii. Makeig: Where H and W lived separately for 14 years until Hs death, the court found there was never a separation
since there was no evidence intent not to be married or any marital discord. The parties had been saving up to
buy a house in which they would live together. They simply never saved up enough.
iii. Kerr: H was a bit nutty. At one point he thought the authorities were coming to take him to a nuthouse so he ran off
to Arizona for a year. When he returned, W refused to take him back. At dissolution proceedings, the court said
the parties had not been separated for that year cuz H ran away from the authorities; not from W, so there was
no intent.
iv. Hardin: After a big argument in 1969, H walked out on W. They two, however, continued there economic
relationship, saw each other often and communicated regularly for the next 14 years. Only then did they file for
dissolution. Trial Ct found the date of separation to be in 1969. W appeals saying it wasnt until 1983 when H
filed for dissolution.
Analysis: The date of separation is when either party perceives a rift in the relationship as final. The Hs and Ws
subjective intents are to be objectively determined from their words and actions. Here, the Trial Ct relied on
insufficient evidence to ascertain what was the subjective intent of the parties.
Conclusion: Remanded for Trial Ct to consider ALL the evidence to make a determination of date of separation
J. Putative Spouses (Spice?)
1. 2251: If either or both spouses believed in good faith that their marriage was valid and it turns out it is void or
voidable, the party(s) shall be putative spouse and the property will get divided as though they were actually
married.
2. 2252: Debt liability for putative spouses is the same as regular spouses.
3. Monti Rule: Where a divorced spouse continues to live with her/his ex-spouse with a good faith belief in the
continued validity of their legal marriage in ignorance of a divorce degree, he/she is a putative spouse
i. Monti: H and W got an interlocutory degree in OH which entitled them to file for divorce. They changed
their minds but Ws attorney filed anyway unbeknownst to W. (Somehow the H found out along the
way.) They moved to CA and had a kid. A few years later they separated and W learned that they had
already been divorced. She sued to get some of the property arguing she was a putative spouse.
Analysis: The essence of the putative spouse doctrine is the good faith belief of a valid marriage. There should
be no requirement that there be a void or voidable marriage.
4. Vryonis Rule: The good faith belief that a marriage was valid must be objectively reasonable.
ii. Vryonis: Silly Persian chick with a PhD and two kids moved to CA and met some dude she wanted to bang.
She was a strict Muslim so fornication was a big sin. She performed some ridiculous Muta
ceremony that is supposed to be sufficient for marriage in Iran. However, the two of them did nothing
at all that made them seem like H and W other than jump each others bones from time to time. When
H told W he was going to marry some other chick, W got pissed off cuz her convenient access to
sex was about to cut off.
Analysis: While there need only be a good faith belief that a void/voidable marriage was valid for a party to be
considered a putative spouse, that good faith belief must be objectively reasonable. It was just too
ridiculous for this chick to believe this Muta shit was legit.
Rule: the good faith belief that youre married must be objectively reasonable
Conclusion: Sorrybut W is no putative spouse
5. Marvin Rule: Where there is a live-in arrangement that is cut off, the court will uphold the agreement to the extent it
does not involve straight-up prostitution.
iii. Marvin: Rich dude meets a bimbo in a strip club or something and moves her in with him. She says they
made an agreement that she would take care of him and he would provide for her for the rest of her
life. He apparently found someone younger or something cuz he kicked her out. She sued to get of
the one million bucks/yr he pulled in while the two of them were together.
Analysis: This IS NOT a CP case cuz there was no marriage. This IS NOT even a quasi-CP case cuz it requires
that at least one party have a good faith belief that there was a marriage. This is a contract case. Livein arrangements are very common today so these agreements should be enforced to the extent they
dont involve straight-up prostitution. The demurrer is overruled and this case should go to trial.
Conclusion: At trial, the court found no agreement, express or implied but awarded the bimbo rehabilitation
money. Her attorney appealed to get special attorneys fees and the appellate court reversed, dropping
even the rehab award. (This is a contract that violates public policy.)
K. Quasi-Community Property
1. 125: Quasi-CP is all RP or PP acquired:

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2.

(a) By either spouse while domiciled elsewhere which would have been CP if the spouse who acquired it had
been living in CA at the time of acquisition
(b) In exchange for RP or PP wherever located, which would have been CP had the spouse who acquired it in the
exchange been living in CA at the time of acquisition
Note: The Family Code definition of Quasi-CP differs from the Probate Codes. Probate Code 66 discusses
property acquired by the decedent whereas Quasi-CP is acquired by the decedent.
Addison Rule: The Quasi-CP statute applies only where:
(a) Both H and W cross the state line into to CA, AND
(b) Only after moving into to Ca do they ask for a divorce.

i. Addison: H and W divorced cuz H was cheating on W. The only CP was the furniture. The trial court
assigned to H the obligation to pay the taxes on his own. Both parties appealed; H to share the tax
obligations and W to have more property declared CP.
The Sociological Problem: The court discusses the problem regarding Quasi-CP: In non-CP states, the trial court
can award one partys SP to the other party if it pleases. In CP states, the trial court cannot do this.
When H and W live in a non-CP state, all of Hs earnings are his SP. If the two then move to a CP state
like CA and then file for dissolution, the W is screwed cuz all the property is SP and the trial court
cannot award it to W.
Thornton case: Congress had passed a quasi-CP statute but Thornton struck it down as unconstitutional. It
violated Due Process b/c it took vested property rights away from one spouse to give them to the other.
It also violated the privileges and immunities of a citizen since it did this property swap because the
parties moved across state lines.
Analysis: The court bitches about Thornton for a while but does not overrule it. It distinguishes it. The court
says that the new form of the statute shot down by Thornton does not disturb the vested property rights
of a party who merely crosses the CA border. The property remains vested in the acquiring party
UNLESS and UNTIL there is a divorce. As such, there is no Privileges and Immunities violation.
Moreover, since the states interest in the matrimonial property of the parties upon dissolution is
compelling, the state may award quasi-CP in accordance with its police powers.
Conclusion: The quasi-CP statute is upheld and applied
ii. Roesch: H worked up the ladder at a steel company to become the CEO. He was then offered a position as a
CEO in CA which he took. H and W filed for divorce. The trial court awarded W some of Hs stuff
but she wanted more.
Analysis: W wasnt entitled to shit since only H moved to CA and Addison requires that BOTH parties move
to CA for the Quasi-CP statute to kick in. W should quit her bitching. Since H didnt contest the
award on appeal, it would remain as it was.
Conclusion. The trial courts award remains.
L. Debt Liability
1. General Rules and Definitions
a. 902: Debt is an obligation incurred by a married person before or during marriage, whether based on
contract, tort, or otherwise.
b. 903: A debt is incurred;
(1) For contract, when the contract was made,
(2) For tort, when the tort occurred,
(3) For everything else, when the obligation arises
c. 910: During marriage does not include the period where the spouses are living separate and apart
d. 9105: Deposit Account: an account maintained with a bank, savings and loan association, credit
union, etc. EXCEPT an account with a negotiable certificate of deposit
e. 912: Quasi-Community Property is treated like CP for purpose of debt liability.
f. Earnings: Compensation for personal services performed
g. Order creditors take: Creditors can take property in any order.
E.g.: If creditor has a right to take either parties SP or the CP, it can take from the SP of the spouse who
DID NOT incur the obligation BEFORE taking from the other partys SP or from the CP if it so elects.
That party may, however, have a right of reimbursement.
2. Liability at division
a. Premarital Debt
(1) 910: Community is liable for debts incurred by either spouse before or during marriage
Hypo: If X sues H and W knows nothing about hit, Ws CP share can be hit up even if she knows
nothing about it.

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b.

(2) 911: Earnings of a married person during marriage are not liable for a debt incurred by the
spouse before marriage so long as:
(a) They remain in a deposit account where the spouse has no right of withdrawal,
(b) They are not commingled
(3) 913: SP of a married person is liable for debt incurred by the person before or during marriage
(a) SP of a married person is NOT liable for debt incurred by the persons SPOUSE before or
during marriage
(b) Where a married person allows CP to be used as security for debt incurred by the persons
spouse, the married person IS NOT also subjecting to his/her SP for liability for the debt.
Post-marital Debt
(1) 914(a): A married person IS liable for the following debts incurred by the persons SPOUSE
during marriage:
(a) Necessaries of life while the spouses are living together,
Necessaries include rent, food, medical expenses, and clothing and takes into account the
spouses social status. E.g.: One court found that keeping a maid was a necessary for a rich
couple
(b) Common necessaries of life while living separately (ex. necessary medical expenses)
Common necessaries includes the above but only takes into account what is necessary to
preserve/sustain life.
(2) 914(b): If the SP of a married person is applied to (a) (above) and there is SP of the spouse who
incurred the debt or CP available, the SP of the married person in entitled to reimbursement.
Note: Unlike 915(b), reimbursement is allowed where property was available even if
there was no income
(3) 4302: Exception to 914 is that while the parties are living apart by agreement, the person
IS NOT liable for any debts incurred by persons spouse including common necessaries.
(4) 915:
(a) A spousal or child support debt incurred during marriage is to be treated as a debt arising
BEFORE marriage,
(b) If CP is applied to a debt in (a) where nonexempt SEPARATE INCOME (NOT SP like
914(b)) was available, the community gets reimbursement

3. Liability after division

(a) After division of the property at dissolution:
(1) The SP of a person who incurred a debt by the PERSON before or during marriage IS LIABLE for
the debt regardless of WHETHER OR NOT the debt was assigned to be paid by the spouse in the
dissolution package.
(2) The SP of a person IS NOT LIABLE for a debt incurred by the PERSONS SPOUSE before or
during marriage UNLESS the debt was assigned to the person in the dissolution package.
(3) The SP of a person IS LIABLE for a debt incurred by the PERSONS SPOUSE before or during
marriage IF the debt was assigned to be paid by the person in the dissolution package.
(b) If a creditor hits up on the SP of a person under (a) for a debt that was assigned to be paid by the spouse in
the dissolution package, the persons SP is entitled to:
(1) Reimbursement,
(2) Interest at the legal rate
(3) Reasonable attorneys fees
4. General rules on reimbursement
(a) The right of reimbursement arises regardless of:
(1) Which spouse put up property for the debt,
(2) Whether the property was put up voluntarily or involuntarily,
(3) Whether the debt is satisfied in whole or in part
(b) The measure of reimbursement is the value of the property at the time the right arises
(c) The right is to exercises at the earlier of:
(1) Three years after the person learns that he/she had to use SP to satisfy the other bastards debt
assignment,
(2) The death of the spouse
II. Family Law Issues
A. Move-Away Cases:

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1. Statutes
a. 7501: A parent entitled to the custody of a child may move away subject to the power of the trial court
to restrain a removal that would prejudice the rights or welfare of the child.
b. 3020(b): It is the public policy of the state that children have frequent and continuing contact with
both parents and to encourage both to share the rights and responsibilities of child rearing.
c. 3040: Order of preference for custody according to the childs best interest:
(1) To both parents jointly or to either parent. The court must consider which parent is more likely to
allow the child contact with the other parent. The court may not consider the gender of the
parents.
(2) If not to either parent, then to someone in whose home the kid has been living in a wholesome
and stable environment.
(3) If not to (1) or (2) then to anyone else the court believes can provide adequate care of the kid
d. 3041: To grant custody to someone other than a parent without parental consent, the court must show:
(1) Granting custody to a parent would be detrimental to the kid, AND
(2) Granting custody to a non-parent is in the kids best interest.
2. Case Rules
a. Where the non-custodial parent requests a custody change when the custodial parent plans to move away:
(1) The custodial parent must show a good faith reason for moving,
(2) If the custodial parent meets this burden, the non-custodial must show that it is essential or
expedient for the welfare of the child that there be a change. (Burgess)
i. Burgess: At dissolution, W wanted permanent physical custody of the 2 kids but expressed her intention to
move 40 miles away. The trial court found it was in the best interest of the kids to move away with W
with H getting liberal visitation rights. The appellate court reversed saying W bore the burden of
proving that the move was necessary for the custody request to be granted and she failed to meet this
burden.
Analysis: The standard of review for custody cases is abuse of discretion. Moreover, because we are a mobile
society, and 7501 allows the parent with custody to move subject to the trial courts discretion, W
need not show the move was necessary. The trial court must only consider the effects of relocation
on the best interests of the kids. Furthermore, H bears the burden of proving a change of custody is
essential or expedient. Since W showed that a move was better for her job, the kids would have better
access to medical care, extracurricular activities, private schools and day-care, and H admitted he
visited there often and offered no prove that W was moving just to harass him, W met her burden
that the move was in good faith, and H failed to meet his burden.
Conclusion: Kids move with mama
ii. Edlund: W wanted to move to Indiana cuz cost of living was lower, school was better, more family was
around, the home she could afford would be bigger (oh yeahand her boyfriend had moved there).
The trial court found a change of custody was unwarranted cuz kids relationship with ma was very
strong, pas day-to-day role in raising the kids was minimal, pas relationship with his girlfriend was
shaky. This is despite a finding by a child psychologist said that a non-move was in the kids best
interest and that it would be detrimental for the kids to move.
Analysis: The trial court did not abuse its discretion in its findings.
Conclusion: Kids move with mama

Questions:
(1) Does it take a writing to overcome the Moore/Marsden presumption?
(2) Whats the deal with Financial Code 852 (99)?
(3) Do I need to use the factors in Buol (p 110) to look for a violation of Due Process or does the rank injustice issue
even extend beyond 4800?
(4) My notes say: The law today re: anti-Lucas legislation is that courts look to the date of the Trax (date property was
acquired) and NOT the date of separation, trial, or law was applied, etc
(5) Whats the deal with the unimproved parcel in Heikes? It says 4800.1 was retroactively applied because H had no
vested interest since he acquired the property in joint tenancy. How is this different from the other 4800.1 cases?
(6) 910: The COMMUNITY is liable for debts incurred by either spouse BEFORE or during marriage BUT

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 911: The EARNINGS of a married person during marriage are not liable for a debt incurred by the spouse
BEFORE marriage
(7) What does 125(b) mean? (the exchange method of getting QCP)
(8) What the hell is the difference between the Probate Code and the Family Code re: QCP again?
(9) Does the Addison rule still apply to the QCP statute?

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