COMMUNITY PROPERTY
I. OVERVIEW spouse unless justice dictates
A. Does CP Law Apply?
B. Source?
C. Actions that Alter Character of
Property?
D. Statutory Presumptions?
E. Management & Control of CP During
Marriage?
F. Disposition/division?
II. DOES CP LAW APPLY?
A. Economic Comm begins at legal
marriage
B. Valid Marriage: consent, capactity-18/or
parent or court order, license and
solemnization
1. CL marriage: CA does not recognize
CL marriage unless CL married in
another state and came to CA.
a. Full faith and credit clause
C. Putative Spouse: Good faith belief based
of objectively reasonable basis of marriage
= ½ Quasi-marital CP
D. Marriage by Estoppel - Both parties
know they are not legally married but hold
themselves out as a married—prevent
equitable injustice.
E. Unmarried Cohabitants: K law applies
to treat as partnership/joint venture
(cannot be meretricious). Can either
expressly K into CP, or implied K based on
conduct.
F. Domestic registered partners.
G. QCP = Property from non-CP state which
would be CP if it were in a CP state.
1. Treated as: SP during marriage, CP for
creditors.
2. Divorce: QCP = CP = divided 50/50
a. QCP Real Property: 50/50
i. Offset with other CP to avoid
partition
3. Death of Acquiring spouse: QCP = CP
= divided 50/50 (personal ppty)
a. QCP Real Property: passes to
acquiring spouse by devise b/c no PJ
over him
b. Remedy: If CP funds used to buy
out-of-state property  resulting or
constructive trust
4. Death of Non-acquiring spouse: gets
no QCP if predeceases acquiring
spouse.
H. Duration of Economic Community:
From marriage until (1) Permanent
physical separation and (2)
communicated and subjective intent not
to resume marital relations.
1. Valuation: Assets valued at date of
trial, unless good cause requires
otherwise.
III. SOURCE
A. Source Rule: property takes the
character of the item used to acquire or
produce it.
B. Earnings: during marriage = CP; before
or after marriage = SP.
1. Good Will = Total value – Assets; CP if
earned during marriage
2. Stock Options – awarded and vested
during marriage = CP. Awarded but not
vested during marriage, look at intent
for giving stock option:
a. Reward past services: DOH –
DOD/DOH – DOE
b. Retention: DOG – DOD/DOG – DOE
3. Pension Benefits = #Years employed
while married/#Year necessary for
pension
a. Death of non-participant spouse:
interest terminates and interest not
devisable
b. Military Spouses get CP in military
retirement
c. Preemption: ERISA
4. Disability/Workman's Comp: treated
as wage replacement and classified
according to when received, but if
replaces pension  CP
5. Severance Pay – argue both wage
replacement (SP) and earned during EC
(CP).
6. Federal Preemption: U.S. Savings
Bonds (exception to “gifts to others”
rule, supra)
C. Personal Injury Damages
1. Tort recovery
a. SP if other spouse is tortfeaser
b. CP if CoA arose during marriage
(but upon divorce, goes to injured
2. Discovery after death of spouse:
otherwise)
2. Tort liability – look at whether tort was
committed for benefit of SP or CP, and
satisfy out of that first, then reach
other community. Cannot reach non-
tortfeasor's SP.
D. Gifts/inheritances: SP
E. Real Property: look at when acquired;
acquired when perfected; title can related
back to K date unless for single family
residence as joint tenants.
F. Rents, issues and profits: source rule
G. Property Acquired on Credit
1. Presumption: property acquired during
marriage on credit is presumptively on
community credit, and therefore CP.
2. Test: Look to primary intent of the
lender to determine the character of
the property upon acquisition.
H. Life Insurance
1. Cash Value Whole policy: pro rata rule
2. Term policy: last premium payment
determines character
3. CP Funded policy benefiting 3P: ½
proceeds is CP
I. Education Expenses– not CP (debt stays
with educated spouse), and subject to
reimbursement if funded with CP and
education enhanced earning capacity,
UNLESS:
1. Community has already substantially
benefited (presumed if 10+ years since
graduation)
2. Other spouse also received CP funded
education
3. Education reduced need for spousal
support
IV. ACTIONS THAT ALTER THE
CHARACTER OF PROPERTY?
A. In CA, parties may agree to opt out of
SP and CP classifications for any or all
assets/acquisitions (no consideration
required)
B. Premarital Agreements
1. Reqs: (1) In writing and (2) Signed by
both parties.
2. Exceptions: (1) Oral agmt fully
performed [marriage alone not
enough]; (2) detrimental reliance
[cannot K out of child support]
3. Defenses to enforcement:
a. Involuntarily signed –
presumption of involuntary
signature, unless:
i. Represented by indie counsel
(or waived counsel in writing
and informed of terms & effects
in writing); and
ii. Given 7+ days between advise
to seek counsel and signing
date.
b. Unconscionability (court
decides) re:
i. Wavier of spousal support:
provision unenforceable if (1) no
representation by indie counsel;
or (2) even w/indie counsel,
terms unconscionable when
ENFORCED.
ii. Other provisions: provision
unenforceable if (1) no fair,
reasonable and full disclosure of
party's property or financial
obligation (or waiver of such);
and (2) terms unconscionable
when MADE.
C. Transmutation - during marriage agmt
that changes the character of property
(evidence of transmutation in a will is not
admissible in before-death proceedings)
1. Before 1985: oral agmts permitted
2. On or After January 1,1985: agmt must
be (1) in writing; (2) signed by
adversely affected spouse; (3) expressly
state change in ownership is being
made.
a. Exception: Gifts of tangible
personal ppty (clothes, jewelry) +
not substantial in value
D. Gifts Between Spouses
1. Writing + Donative intent + Delivery
of property (implied where spouse
purchases property in name of other
spouse or to pay community debt; but if
SP is for down payment on CP, no gift
presumed and there is entitlement to
reimbursement)
E. Gifts to Others – neither spouse can
make a gift of CP w/out other's consent
1. Discovery during lifetime: restore gift
to CP estate
spouse gets ½ of gifted CP, recoverable
from deceased spouse's estate or
donee's estate.
F. Commingled Bank Accounts – SP not
transmuted to CP, but presumption of CP
unless rebutted by Exhaustion or Direct
Tracing accounting methods:
1. Exhaustion method: no/low CP funds +
deposit of SP, then acquisition of asset
 asset = SP.
2. Direct Tracing method: sufficient SP
funds + intent to use SP funds
3. Presumption: Family Expense:
expenditures for family expenses are
made with CP before SP, SP
contributions are gifts.
4. Note: Anti-Lucas statutes do not apply
to joint bank accounts.
G. CP Services (Time, Energy, Services)
Used to Enhance Value of SP Business
1. Pereira – new/creative idea, long
hours, modest salary – favors CP
a. SP = Value of business at marriage
+ 10% annual simple interest
b. CP = remainder
2. Van Camp – capital investment, large
salary and bonuses – favors SP
a. CP = Value of labor at market rate
– Family expenses paid from CP
b. SP = remainder
3. If value increases between end of
EC but before divorce, swap SP and
CP, above.
H. CP Funds Used to Improve SP
1. Spouse uses CP to improve OWN SP =
No Gift reimbursement for greater of
cost of improvement or enhanced
value.
2. Spouse uses C to improve OTHER
SPOUSE'S SP: gift presumed, but may
have right to reimbursement (split in
jdx - argue both)
3. Spouse uses SP to improve CP:
a. Divorce  Anti-Lucas– reimburse
for DIP
b. Death  Lucas – if title in joint &
equal form, no reimb. unless proof
of agmt to reimburse
I. CP Funds Used to Pay Off Purchase
Price Owed on SP Acquired Before
Marriage (MORTGAGE)
1. CP gets pro rata ownership interest to
the extent it reduces principal debt (not
interest, insurance, tax).
2. Principal debt reduction with
CP/Purchase price
J. CP Funds Used to Pay Support
Payments from Previous Marriage –
must reimburse current CP.
K. Transfer and Encumbrance – no spouse
may transfer or encumber their ½ interest
in CP.
1. Exception: Family law attorney's real
property lien
V. STATUTORY PRESUMPTIONS?
A. Community Presumption – all assets
acquired during marriage are
presumptively CP.
B. Married Woman's Special
Presumption
1. Pre-1975 presumption:
Pre-1975, title is Leads to
taking using CP: Presumption
that Property is:
In W's name alone W's SP
In W & H's name ½ W's SP & ½ CP
but not in JT form (TIC); upon
or “Husband & divorce
Wife” or “Mr. & W = 3/4
Mrs.” H = 1/4
In W's name + W and X are TIC
some 3P, X (presumption
applies)
a. Irrebuttable presumption: if BFP
purchases property in reliance on
Ws' title
b. Rebuttable presumption: as
between H & W (by showing no
intent to gift; no consent)
2. On or After January 1, 1975: MWSP
does not apply (although an inference
of gift may be made)
C. Jointly Held Property Presumption
(Title lists both spouse’s name; N/A to
joint bank acct)
1. Death of a Spouse [Lucas]: If title is
held in joint and equal form, there is a
presumption that any SP used to
acquire an asset was a gift, and
deceased spouse has no SP interest and
 COMMUNITY PROPERTY
no reimbursement claim, unless agmt c. 2+ child/issues = 1/3
proves contrary intent. 2. Testate – Each spouse is entitled to
2. Divorce or Legal Separation [Anti- dispose of all of their SP, and ½ of their
Lucas] CP
a. Note: Title doc required for Anti- a. Widow's Election Will: If deceased
Lucas. spouse tried to give away more than
b. Post-1984 Contributions of SP to his ½ CP in the will, surviving
acquire or improve CP is entitled to spouse may take:
reimbursement w/out interest for i. Under the will – allow the
contributions to DIP (Down- devise, and rest of will remains
payments, Improvements, Principal valid; or
payments on mortgage) ii. Against the will – not allow
c. Ownership: property acquired the devise and claim her ½ CP,
during marriage in joint & equal but relinquish all testamentary
form presumed CP absent express gifts in her favor.
statement in deed/instrument or 3. QCP
written agmt b/t parties that ppty is a. Acquiring spouse has testamentary
SP power over ½ CP, other ½ goes to
D. Fiduciary Duty Presumption (Conf. survivor
Relationship) b. Non-acquiring spouse has no
1. Presumption of undue influence if one testamentary power if he dies first –
spouse gains an advantage from a it all goes to acquiring spouse.
transaction with the other.
2. Grossly negligent/reckless investment
of CP is breach of spouse's fiduciary
duty to the other.
VI. MANAGEMENT AND CONTROL OF
CP DURING MARRIAGE?
A. General rule – Equal Management
Powers: each spouse has equal
management and control over CP, except
as below.
B. CP Personal Property – neither spouse
may make a gift without the other's
consent. Remedy: void and recover gift;
or ½ gift from donor or donee's estate.
C. CP Real Property – Joinder of both
spouses required.
1. BFP w/out notice of marriage: voidable
for 1 year
2. BFP w/notice of marriage: voidable
anytime
D. CP Business – CP; managing spouse can
act alone, but must give written notice to
other spouse for sale, lease or
encumbrance of substantially all business
property.
E. Debts [Q-CP = CP for Spousal K
debts] (creditor rts)
1. CP: can be reached for either S's
premarital & marital debts
a. Exception: earnings of non-debtor
spouse cannot be reached for
premarital debts if held in separate
account, no right to withdraw, and
not commingled w/CP
2. SP: non-debtor's SP cannot be reached
for satisfaction of debts, unless for
medical expenses (based on duty to
support, which continues until divorce);
non-debtor has right to reimbursement
for child support if debtor-spouse has
SP & didn’t use it
3. After Divorce: creditor may not reach
CP awarded to non-debtor spouse
unless court assigned the debt.
VII. DISPOSITION/DIVISION?
A. Distribution upon Divorce – Equal
Division Rule
1. Equal Division Rule: absent property
settlement agreement, each community
asset (and liability) must be divided
equally.
2. Exception: Economic Circumstances
(adjust CP accordingly to reach 50/50)
a. Family residence is awarded to
parent with custody [loss of home
would uproot kids]
b. Closely held corp. is awarded to
owner.
c. Pension is awarded to pensioner.
3. Exception: Statutory (one spouse ends
up with more than 50%)
a. Spouse misappropriated CP
b. Educational debts stay with
educated spouse
c. Personal injury award goes to
injured spouse, unless interest of
justice require otherwise
d. Tort liability incurred by 1 spouse
NOT based on activity for the
benefit of the community
e. "Negative Community" – if CP
liabilities exceed CP assets, each
spouse's relative ability to pay is
considered.
B. Distribution upon Death
1. Intestate – Survivor inherits ½ CP
(other ½ is already theirs) + Portion of
SP (depending on who else is surviving)
a. No heirs = 100%
b. 1 child/issue, parents/issue = 1/2