Subject outline

Community Property

10 core rule statements, organized the way the California Bar tests them.

• Community Property Presumption

  Property acquired by either spouse during marriage while domiciled in California is presumptively community property.

  Elements / Factors

  1. 1Acquisition during a valid marriage.
  2. 2California domicile at acquisition.
  3. 3No applicable separate-property source or agreement.

  Exceptions / Limitations

  • •Property owned before marriage and property acquired by gift, devise, or descent are separate.
  • •Earnings and accumulations after the date of separation are separate.

  California distinction

  • Each spouse owns a present, existing, equal one-half interest in community property.

• Characterization - Time and Source

  Property is characterized when the right to it is acquired, and character generally follows the source of acquisition funds.

  Elements / Factors

  1. 1Identify when the enforceable right arose.
  2. 2Identify the source of each contribution.
  3. 3Apply title presumptions, agreements, tracing, and reimbursement statutes.

  Exceptions / Limitations

  • •Later payment or title transfer does not necessarily alter inception character.
  • •Commingling does not itself transmute property if separate funds can be traced.

• Transmutation

  A post-1984 transmutation requires a writing containing an express declaration of the change in ownership or characterization and consent by the adversely affected spouse.

  Elements / Factors

  1. 1Writing.
  2. 2Express declaration that ownership or character is being changed.
  3. 3Made, joined in, consented to, or accepted by the adversely affected spouse.

  Exceptions / Limitations

  • •Gifts of tangible personal property of a personal nature, not substantial in value considering the marriage, are excepted.
  • •A transmutation remains subject to fiduciary duties and defenses such as undue influence.

  California distinction

  • California Family Code section 852 imposes the express-declaration rule.

• Marital Fiduciary Duties

  Spouses owe each other duties of highest good faith and fair dealing in management and control of community assets.

  Elements / Factors

  1. 1Full disclosure of material facts and information.
  2. 2Equal access to books and records.
  3. 3No unfair advantage, concealment, misappropriation, or impairment of the other spouse’s interest.

  Exceptions / Limitations

  • •Consent or informed agreement may authorize conduct otherwise prohibited.
  • •Enhanced remedies may apply for oppressive, fraudulent, or malicious breach.

  California distinction

  • California Family Code sections 721 and 1100 impose partner-like fiduciary duties.

• Community Labor on Separate Business

  When community labor increases the value of a separate-property business, the court allocates the increase between separate capital and community effort.

  Elements / Factors

  1. 1Identify the separate business and marriage-period increase.
  2. 2Determine whether growth resulted mainly from personal efforts or capital/external forces.
  3. 3Apply the allocation method producing substantial justice.

  Exceptions / Limitations

  • •Pereira: reasonable return to separate capital; excess growth to community when labor drove growth.
  • •Van Camp: reasonable value of community services less family compensation; remainder separate when capital or market forces drove growth.

  California distinction

  • California courts choose or combine Pereira and Van Camp to achieve a reasonable allocation.

• Commingled Accounts and Tracing

  The spouse claiming separate property from a commingled account bears the burden of tracing.

  Elements / Factors

  1. 1Separate funds were available.
  2. 2Records identify the separate source and disposition.
  3. 3The method reliably shows the separate funds were used for the acquisition.

  Exceptions / Limitations

  • •Direct tracing requires records plus intent to use separate funds.
  • •Family-expense tracing presumes community funds were spent first on family expenses; remaining funds may be separate if the account history supports it.

• Separate-Property Contribution Reimbursement

  At dissolution, a spouse may receive statutory reimbursement for qualifying separate-property contributions to acquisition of community property, without interest or appreciation.

  Elements / Factors

  1. 1Separate-property source.
  2. 2Contribution to down payment, improvement, or principal reduction within the statute.
  3. 3Adequate tracing.
  4. 4No valid written waiver and no proven gift.

  Exceptions / Limitations

  • •Interest, taxes, insurance, and maintenance ordinarily are excluded.
  • •Character remains community despite the reimbursement right.

  California distinction

  • California Family Code section 2640 governs this reimbursement.

• Management and Transfer

  Spouses generally have equal management and control of community personal property, but special transactions require joinder or consent.

  Elements / Factors

  1. 1Ordinary management may be exercised by either spouse.
  2. 2Both spouses generally must join in a transfer or encumbrance of community real property.
  3. 3Specified gifts and dispositions of household goods require written consent.

  Exceptions / Limitations

  • •A nonconsenting spouse may void or set aside unauthorized transactions subject to statutory limits and bona fide purchaser rules.

• Debt Liability

  The community estate is generally liable for debts incurred by either spouse before or during marriage, while separate property is generally liable for its owner’s debts.

  Elements / Factors

  1. 1Characterize the debt and timing.
  2. 2Identify property against which enforcement is sought.
  3. 3Apply necessaries, tort, support, and earnings-account rules.

  Exceptions / Limitations

  • •Separate earnings held in a qualifying account may be protected from the other spouse’s premarital debts.
  • •A spouse may have personal liability for necessaries of life.

• Division at Dissolution

  The court generally divides the net community estate equally.

  Elements / Factors

  1. 1Characterize assets and debts.
  2. 2Value assets as near trial as practicable unless an exception applies.
  3. 3Apply reimbursements and offsets.
  4. 4Divide equally in kind or by substantially equal allocation.

  Exceptions / Limitations

  • •Statutory exceptions include educational debts, tort liabilities, negative estate, deliberately misappropriated assets, and agreements.