COMMUNITY PROPERTY OUTLINE
About this outline: This is an outline from a Community Property course at a top law school.
Use this Outline as a study aid for a Community Property course or as a guide to learning Community
Basic Principles of Community Property
Separate Property (SP)
o =Property owned by either spouse before or after the marriage
o =property acquired during marriage by gift, will, or inheritance.
ï‚· Community Property (CP)
o All assets acquired during marriage are PRESUMPTIVELY community property.
ï‚§ Absent an agreement or title stating that property was taken in another form, the
presumption is that it is CP
ï‚· Termination of the Economic Community (Marriage)
ï‚§ Permanent Physical Separation
ï‚§ Intent Not to Resume Marital Relations (just one spouse)
ï‚· Intent= factual question. Look at the facts.
o For community property not divided on divorce, the court retains continuing jurisdiction
o All CP must be divided equally: 50-50, unless there is a property settlement agreement.
ï‚§ Disparity in earning power can only be considered as to Alimony.
o General Rule: Each and every CP asset (and liability) must be Divided Equally.
ï‚§ Economic Circumstances Exception
ï‚· If economic circumstances warrant awarding certain assets WHOLLY TO
ONE SPOUSE (and each spouse ends up with 50% of all CP in terms of
total economic value.
ï‚· Examples: Family Residence; Shares of a Closely-Held Corp; Pension
ï‚§ Statutory Exceptions
ï‚· = when one spouse ends up with more than 50% in total value.
ï‚· Examples: (1) Misappropriation of CP by one spouse; (2) Educational
Debts; (3) One spouse incurred tort liability not based on activity for
benefit of community; (4) Personal injury award is given to injured
spouse; (5) negative community- CP liabilities exceed CP assets- relative
ability of spouses to pay the debt is considered (to protect creditors).
ï‚· GIFTS: Lifetime & Testamentary gifts of CP
o RULE: neither spouse can make a gift of community property without the other spouseâ€™s
ï‚§ Remedy= non-gift-giving spouse can SET GIFT ASIDE in its entirety Or can
take equal offsetting CP assets to recover her Â½ CP.
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ï‚§If spouse didnâ€™t learn of gift until after spouseâ€™s death; can set gift aside as to her
o RULE: Each spouse has the power of testamentary disposition over all of his or her SP,
but over only one-half of the CP.
o Using $20k of CP, W buys a US Saving Bond in the name of W, pay on the death to C.â€
H cannot recover because Federal Law trumps Cal CP law.
ï‚· Acquisitions on Credit During the Marriage
o RULE: funds borrowed during marriage, and goods purchased on credit during marriage
are Presumptively CP.
ï‚§ HOWEVER, borrowed funds are classified according to Intent of the Lender.
(where lender was looking in satisfaction of the debtâ€”subjective intent).
ï‚§ Where lender relied on General Reputation & Standing in the community=CP*
o Subsequent actions of the parties in paying off the mortgage loan may change the
character of the asset under the buy-in rule.
ï‚· Fiduciary Duty
o Spouses are subject to fiduciary duties that arise from their confidential relationship,
imposing a duty of the highest good faith and fair dealing with each other. If one spouse
gains an advantage from a transaction, a presumption of UNDUE INFLUENCE arises,
and that spouse has the burden of proof to show that he did not breach.
o A Grossly Negligent or Reckless Investment of CP is a breach of spouseâ€™s fiduciary duty
Altering the Character of Property
ï‚· =Transmutation Agreement
o Whneby agreement during the marriage the character of an asset is changed from CP to
SP, or SP to CP, or from one spouseâ€™s SP to other spouseâ€™s SP.
o Can be a gift.
o **No consideration is required.
ï‚· Premarital Agreements
o Must be in WRITING, SIGNED by BOTH parties.
ï‚§ (1) where oral agreement is executedâ€”fully performed. (but marriage alone is
ï‚§ (2) estoppel based on detrimental reliance.
o What can they Agree to?
ï‚§ (1) that each partyâ€™s salary and wages are their own SP; (2) that neither will claim
a family allowance in otherâ€™s estate; (3) disposition of property on separation,
divorce, or death; (4) disposition of life insurance policies; (5) spousal support
o What can they NOT Agree to?
ï‚§ Limiting Child Support Payments
ï‚§ Not Signed Voluntarily (independent counsel; 7 days to sign; if not represented,
fully informed in writing.)
ï‚§ Unconscionability: if unconscionable (1) when made AND (2) no reasonable
disclosure or adequate knowledge of other partyâ€™s property or financial