First Get the source of Asset CP SP or QSP

Second Presumptions? I.e. inheritance is presumed to be separate property.

Third Special classifications I.e. retirement pay is special and apportioned using the time rule
FourthAnswer the call

GENERAL PRESUMPTIONS
California is a community property state. All property, unless an agreement or statute provides
otherwise, acquired during the marriage while domiciled in California is community property
(CP). California presumes All property that was acquired before the marriage by inheritance,
gift, or bequest is separate property (SP).

Quasi Community property (QCP) is all property acquired which would have been community
property had it been acquired in California.

Quasi-Marital Property (QMP) is property acquired during a void or voidable marriage, which
would have been CP or QCP if the marriage was valid.

Here, H and W were married in California and assumingly lived there, thus, the California Family
Code applies.

>In 2000, Harry and Wanda, California residents, married.

>Wilma, a California resident, was employed as an accountant for many years. In 2011, Wilma
met Harry, also a California resident, who worked in a local store. Wilma and Harry married in
2012.
>Wendy and Hal are married and live in California.
>Herb and Wendy, residents of California, married in 2001.
>In 1997, Hank and Wanda, both domiciled in Illinois, a non-community property state, began
dating regularly. In February 2000, Hank and Wanda moved to California and became domiciled
here. By that time Wanda’s account contained $40,000. She used the $40,000 to buy a parcel
of land in Illinois and took title in her name alone.

MARRIAGE
END OF MARITAL ECONOMIC COMMUNITY14feb
The martial economic community begins with marriage and ends at separation. There is
permanent physical separation when there is actual physical separation and intent to end the
marriage.

Here, H & W INSERT FACT. The marriage ended on INSERT FACT.

Thus, we look at W & H’s rights to CP ending in INSERT FACt.

>In 2007, Harry and Wanda separated.

>Hank and Wendy have now decided to dissolve their marriage.
>In 2016, Wilma and Harry permanently separated, and Harry moved out of the townhouse and
stopped making mortgage payments. In 2018, Harry instituted dissolution proceedings.
>A year ago, Wendy told Hal that she would not tolerate his drinking any longer. She insisted
that he move out of the family home and not return until he completed an alcohol treatment
program. He moved out but did not obtain treatment. Last month, Hal went on a drinking spree,
started driving, and struck a pedestrian. When Wendy learned of the accident, she told Hal that
she wanted a divorce.
>In 2008, Herb and Wendy separated, and Wendy filed for dissolution of marriage.
>In 2000, their marriage was legally dissolved. For several months following the dissolution, Tim
and Anna attempted to reconcile but ultimately failed to do so.

MARVIN CONTRACT PRINCIPLES

When cohabitating, parties can contract to create a support obligation. The
court can divide property according to couple’s reasonable expectations during
cohabitation. California does not recognize Common Law marriage.

>In 2003, Wendy and Hank were engaged to be married. They discovered that the
$10,000 monthly income Wendy derived from a trust fund would terminate upon
her marriage or upon her reaching the age of 25, whichever came first. Therefore,
they decided to postpone their wedding until Wendy’s 25th birthday, in 2006, and
instead began to live together.
Also in 2003, Wendy and Hank agreed that Wendy would pursue a master’s
degree in education and that Hank would quit his job and stay home, taking care
of the household chores. Wendy opened a checking account in both of their
names, into which she deposited her $10,000 monthly trust income. Wendy used
funds in the checking account to pay living expenses for Hank and herself.
Wendy also used funds in the checking account to buy a new car. She put title to
the car in both of their names.

PUTATIVE SPOUSE
One or both parties believes in good faith that they are legally married, but a
mistake makes it illegal. Property will be distributed as quasi-marital property
which is the same as CP.

Here, Wife in good faith believed she was married to Husband since INSERT
FACThe told her he was single and they married in 1997.
Until she found out the truth in 2006, so she and H were putative spouses.

>In 1997, Hank and Wanda, both domiciled in Illinois, a non-community property
state, began dating regularly. Hank, an attorney, told Wanda that Illinois permits
common-law marriage. Hank knew this statement was false, but Wanda
reasonably believed him. In 1998, Wanda moved in with Hank and thought she was
validly married to [Link] January 2002, Wanda discovered that she never has been
validly married to Hank.
Thus, H and W are putative spouses and Quasi-marital property is implicated.
 CHARACTERIZATION

SEPARATE PROPERTY - Gift,inheritance,random purchase

Call: Upon dissolution of marriage, what are Wendy’s and Hank’s rights and liabilities with
respect to: 1. The car? Discuss.
The issue is whether the gift/inheritance is separate property.

Separate property is listed above. Gifts/Inheritance are presumed to be separate

property. Here, INSERT FACT. Even though he acquired it during marriage it was
a bequest, inheritance, and thus will be presumed as separate property.

> Harry was from a wealthy family and was the beneficiary of a large trust. After their marriage,
Harry received income from the trust on a monthly basis, and deposited it into a checking
account in his name alone. Harry remained unemployed throughout the marriage. Wanda began
working as a travel agent. She deposited her earnings into a savings account in her name
alone. In 2004, Harry purchased a cabin in the California mountains to use when he went skiing.
He paid the entire purchase price of the cabin from his checking account, and took title to the
cabin in his name alone. The condo and cabin have increased in value. The stock has lost
almost all of its value.

>In 2007, while married to Hank and residing in California, Wendy inherited $150,000. Wendy
used the money to purchase $50,000 worth of Chex Oil stock and a restaurant that cost
$100,000. In 2008, Hank inherited an unimproved lot in California worth $75,000. Hank and
Wendy obtained a construction loan from a bank for the purpose of building a rental house on
the lot.
>Wilma, a California resident, was employed as an accountant for many years. She retired in
2010 and received a pension. Wilma received part of the pension as a lump sum and the rest in
monthly installments deposited into an account in her name at Main Street Bank. She used the
lump sum as a down payment on a townhouse. The title to the townhouse and the mortgage are
in Wilma’s name. Wilma and Harry married in 2012.

>Wendy opened a checking account in both of their names, into which she deposited her
$10,000 monthly trust income. Wendy used funds in the checking account to pay living
expenses for Hank and herself. Wendy also used funds in the checking account to buy a new
car. She put title to the car in both of their names. In 2006, Wendy and Hank married.

>On Wendy’s birthday in 2002, Herb gave Wendy a drawing by a famous artist.
Herb paid for the drawing with $15,000 that his parents had given him. Wendy
hung the drawing in their bedroom. In 2008, Herb and Wendy separated, and
Wendy filed for dissolution of marriage. At that time, CoinCo was worth $150,000,
and the drawing was worth $30,000.
>In 2010, Hal inherited $10,000 and a condo from an uncle. Hal used the $10,000 as
a down payment on a $20,000 motorcycle, borrowing the $10,000 balance from
Lender who relied on Hal’s good credit(CP). Hal took title to the motorcycle in his
name alone.

EDUCATIONAL SCHOOL LOANS

Call: Is the community entitled to reimbursement for (b) The payments on the student loan?
Discuss. Does the community have an interest in (c) Husband’s law degree? Discuss.

Value of degrees are SP. Student loans are also SP. Community will be reimbursed only if the
earning substantially increased earnings.

>Husband and Wife agreed that Husband should go to law school after they had saved up
some money. In 2004 Husband became a partner in the firm. Husband’s partnership earnings
were substantial. He paid off his student loan using these earnings. Here, the community will
likely be reimbursed.
PERSONAL INJURY- Spouse got injured
Call: What are Wilma’s and Harry’s rights and liabilities, if any, with regard to: 3. The
personal injury settlement funds? Discuss.
-Upon dissolution of marriage, what are Wendy’s and Hank’s rights and liabilities with
respect to: The $30,000 in additional salary under the settlement? Discuss.

The issue is whether the community is awarded the tort damages.

personal injury arose during the marriage, the settlement award is community
property. After separation or divorce, personal injury awards go to the injured
spouse unless the interests of justice require otherwise.

Here, INSERT FACT. The spouse’s injury arose during/after the marriage because
INSERT FACT, thus the awards are CP/SP. The spouse may argue that it is unfair if
he does not share in the proceeds however there are no facts to suggest there
would be an injustice to them.

Thus the award will be SP/CP.

>Here, the medical expenses should take from Husband’s SP last since there were
sufficient community funds to draw from and some community funds were
specifically reserved for “emergencies”.

Thus, the medical expenses should take from the CP first then H’s SP.

>Wilma and Harry married in 2012. In 2014, Harry was injured when a driver, Dana,
negligently struck him with her car. In 2016, Wilma and Harry permanently
separated. In 2017, Harry settled his claim against Dana for $30,000. In 2018, Harry
instituted dissolution proceedings.
>In 2008, Wendy learned that her compensation was less than that of her male
counterparts and made a claim against the college. In 2009, Wendy separated
from Hank and filed an action for dissolution of marriage. Shortly afterwards, she
settled her claim against the college in return for additional salary in the amount
of $10,000 per year for the next three years. Here, Hank will likely argue that this is
past wages presumed to be community property and he will suffer injustice since
Wendy and Hank agreed that Wendy would pursue a master’s degree in
education and Hank would quit his job and stay home taking care of the
household chores.

TRANSMUTATION
Call: What are Herb’s and Wendy’s respective rights and liabilities in: 1. The drawing?
Discuss.
The issue is whether a valid transmutation occurred.

A transmutation is an agreement to change the character of an asset from

separate to community property or vice versa. In order to be valid it must be in
writing, and signed by the spouse whose interest is adversely affected.
Gifts are an exception when a spouse gives a personal gift that is not expensive.

Here, the spouse will argue that their gift of the INSERT FACT was not a valid gift
since there was no explicit writing stating the change in status from SP to CP. He
will also argue it was not signed by him. Further it was not a gift within the
exception because it had a substantial value making it expensive since INSERT
FACT.

Thus, the asset will likely be SP.

>Here, H knew W opened the savings account in her own name since he agreed
to a transmutation to her SP, but since they agreed that it would be used for
emergencies for presumingly both of them and there is no writing, there is no
transmutation.

>In 2003, Harry and Wanda purchased a vacation condo in Hawaii. They took title
in both their names, specifying that they were “joint tenants with the right of
survivorship.” Harry paid the entire purchase price from his checking account,
which contained only funds from the trust. Harry and Wanda orally agreed that
the condo belonged to Harry.
>On Wendy’s birthday in 2002, Herb gave Wendy a drawing by a famous artist.
Herb paid for the drawing with $15,000 that his parents had given him. Wendy
hung the drawing in their bedroom. In 2008, Herb and Wendy separated, and
Wendy filed for dissolution of marriage. At that time, CoinCo was worth $150,000,
and the drawing was worth $30,000.
>In 2013, Hank and Wendy separated. Hank told Wendy that the house was
henceforth her separate property and she said, “O.K.”
>Shortly after their arrival in California, Wanda inherited an expensive sculpture.
Hank bought a marble pedestal for their apartment and told Wanda it was “so we
can display our sculpture. They both frequently referred to the sculpture as our
collectors prize.

Thus, there is no transmutation of the savings account.

INTENT OF THE LENDER TEST

Call: What are Wendy’s and Hank’s respective rights in: The rental property? Discuss.
-The motorcycle? Discuss.

Debts incurred during marriage is classified according to the intent of the lender
test which is where the lender is looking for satisfaction of debt, either SP or CP.
Credit is considered CP

> In 2008, Hank inherited an unimproved lot in California worth $75,000. Hank and
Wendy obtained a construction loan from a bank for the purpose of building a
rental house on the lot. In making the loan, the bank relied upon the salaries (CP)
earned by both Hank and Wendy and, in addition, required that Wendy pledge
the Chex Oil stock(Cp). A rental house was constructed on the lot. The present
market value of the property, as improved, is $500,000.
>In 2010, Hal inherited $10,000 and a condo from an uncle. Hal used the $10,000 as
a down payment on a $20,000 motorcycle, borrowing the $10,000 balance from
Lender who relied on Hal’s good credit(CP). Hal took title to the motorcycle in his
name alone.

TRACING-(Exhaustion method) CHANGE CHARACTERIZATION

Call: What are Wilma’s and Harry’s rights and liabilities, if any, with regard to: 2. The
motorboat? Discuss.
The exhaustion method is used in commingled bank accounts to show the source of
funds. Exhaustion method requires showing the bank account left with a spouse’s SP is
supplying all of the monthly expenses. If successful, the source of those remaining funds
are SP.

Here, Wilma may use the exhaustion method because she used her bank account to pay
for household expenses. Further, while paying for those expenses, the Community
property funds were completely exhausted since the earning from her freelance job did
not cover all of the expenses and had to use the pension SP payments to cover the rest.
Since there were no Cp funds left after expenses were made, all that was left was Wilma’s
SP. Although they both used it, the boat was in her name alone. Thus, the motorboat is
Wilma’s Sp.
 PRESUMPTIONS

PRENUPTIAL AGREEMENT
Call: How should the estate be distributed? Discuss.
A prenuptial agreement must comply with SOF and may contract to almost
anything except if it’s illegal or waiving child support. Its enforceable unless the
party did not execute the agreement voluntarily or the agreement was
unconscionable.

Here, since the agreement that INSERT FACTH & W would live on H’s salary was
oral, it will not be enforceable. The agreement was not unconscionable since it
was unclear if INSERT FACTusing W’s earnings for emergencies designates it as
her SP because emergency funds benefits both spouses.

Thus, All of the property will still be deemed QMP.

Thus, there is a/no valid prenuptial agreement.

>Herb worked as an accountant. Wendy was an avid coin collector who hoped
someday to turn her hobby into a profitable business. Prior to marriage, they had
entered into a prenuptial agreement providing that each spouse’s wages would
be his or her separate property. In the dissolution proceeding, Wendy claims that
the prenuptial agreement is valid and Herb claims that it is not.

>In 2002, Tim and Beth married. Two days before the wedding, Beth executed a prenuptial
agreement waiving all rights to Tim’s estate. Beth was not represented by counsel when she
executed the prenuptial agreement. His estate consists of his share of a $400,000 house owned
with Beth as community property, plus $90,000 worth of separate property. Here, the source of
the funds used to purchase the house is CP. Upon death, Beth is entitled to Tim’s share of CP.
Thus, Beth will be entitled to the entire house under CP rules. Also, because of abatement, the
property will be distributed ⅓ to Beth as an omitted spouse.

TAKING TITLE IN JOINT FORM

Call: In the event of a dissolution, how should the court rule on Harry’s and Wanda’s
respective rights and liabilities with regard to: a. The condo in Hawaii? Discuss.

When spouses take title as joint tenants, it furthers the presumption that it is
Community Property. SP is reimbursed for DIP(Downpmt, Improvements, Pmt that
reduces principal).

Here, Husband and Wife took title as joint tenants, this further presumes the
house is Community property. However, Husband’s $20,000 of SP that he used to
add a room is likely an improvement since it improved the house in size and likely
value, so he will be entitled to reimbursement for this improvement. Further,
assuming the $50,000 payment paid down the principal since he paid it off then,
that too would be reimbursed to Husband’s SP. If any of the $50,000 paid off
interest or taxes, it would not be reimbursed.

Thus, the cabin is still Community property and Husband is reimbursed for
$70,000 remaining $80,000 split between Husband and Wife.

> In 2003, Harry and Wanda purchased a vacation condo in Hawaii. They took
title in both their names, specifying that they were “joint tenants with the right of
survivorship.” Harry paid the entire purchase price from his checking account,
which contained only funds from the trust. Harry and Wanda orally agreed that
the condo belonged to Harry. Here, Although he purchased the entire purchase
price, he can seek reimbursement for the payment for acquisition.

>In 2003, Wendy opened a checking account in both of their names, into which she deposited
her $10,000 monthly trust income. Wendy used funds in the checking account to pay living
expenses for Hank and herself. Wendy also used funds in the checking account to buy a new
car. She put title to the car in both of their names. In 2006, Wendy and Hank married. However,
this is before marriage so its rebutted.

TAKING TITLE IN ONE SPOUSE’S NAME-MarriedWomanSpPresump.

Before 1975, title in Wife’s name alone indicated it was her SP.

Here, savings account was acquired after 1975, so there is no Married Woman
Special Presumption that it is SP. Title in Wife’s name alone will not change Quasi
Marital Property to Separate Property.

Thus, there is no Married Woman Special Presumption.

>In 2006, Wanda received an e-mail advertisement inviting her to invest in stock in
a bioengineering company. She discussed the investment with Harry, who
thought it was too risky. Wanda nevertheless bought 200 shares of stock, using
$20,000 from her savings account to make the purchase. She put the stock in her
name alone.
> In 2004, Harry purchased a cabin in the California mountains to use when he
went skiing. He paid the entire purchase price of the cabin from his checking
account, and took title to the cabin in his name alone. The condo and cabin have
increased in value. The stock has lost almost all of its value.
>In 2013, Wilma and Harry bought a motorboat using funds from Wilma’s account.
Although they would both use the boat, title was taken in Wilma’s name.
>She paid for the building with funds saved from her earnings during her
marriage and took title in her name alone.
>They used Hanks earnings to cover living expenses. Wanda deposited all her
earnings in a savings account she opened and maintained in her name alone.
 ACTIONS

REIMBURSEMENTS D.I.P
What are Hank’s and Wendy’s rights, if any, as to the following:. c) The office building?
Discuss.
The issue is whether the community can be reimbursed for the payments.

SP is reimbursed for DIP. A party will be reimbursed for contributions that can be traced
from their SP to CP used for DIP down payments, improvements, and reducing the principal of
a loan.

Here, Husband and Wife took title as joint tenants, this further presumes the
house is Community property. However, Husband’s $20,000 of SP that he used to
add a room is likely an improvement since it improved the housein size and likely
value, so he will be entitled to reimbursement for this improvement. Further,
assuming the $50,000 payment paid down the principal since he paid it off then,
that too would be reimbursed to Husband’s SP. If any of the $50,000 paid off
interest or taxes, it would not be reimbursed.

Thus, the cabin is still Community property and Husband is reimbursed for
$70,000 remaining $80,000 split between Husband and Wife.

> In 2003, Harry and Wanda purchased a condo in Hawaii. Harry paid the entire
purchase price from his checking account, which contained only funds from the
trust. Harry and Wanda orally agreed that the condo belonged to Harry. Here,
Although he purchased the entire purchase price, he can seek reimbursement
for the payment for acquisition.
>Before marriage Wilma used the pension lump sum as a down payment on a
townhouse. The title to the townhouse and the mortgage are in Wilma’s name.
During their marriage, Wilma and Harry used funds from Harry’s account to pay
the mortgage on the townhouse in which they both lived. In 2016, Wilma and Harry
permanently separated, and Harry moved out of the townhouse and stopped
making mortgage payments.
>After the separation, Wendy’s income from the accounting practice tripled and
she remodeled the office building with her increased earnings. Without Hank’s
knowledge, she then sold the building to Bob, who did not know that she was
married.

CHARACTERIZATION: PEREIRA
Call: What are Wendy’s and Hank’s respective rights in: b. The restaurant? Discuss.
When CP labor is used to enhance the value of a SP business, must calculate the
CP interest in the appreciation of the business using Pereira. A court may invoke
Pereira if Seperate Property is possibly enhanced by community labor.

Here, since money for stock was inherited, it is separate property. But community
did not enhance the SP because the account that was managed by a financial
consultant not by the labor of Wife. So the community was not responsible for the
increase in the value and likely would not benefit at all.

Thus, wife’s SP so still goes to consultant.

>In 2007, while married to Hank and residing in California, Wendy inherited
$150,000. Wendy used the money to purchase $50,000 worth of Chex Oil stock and
a restaurant that cost $100,000. Hank managed the restaurant and, solely
through his own efforts, it prospered and is now worth $300,000.

Here, Although H’s labor grew the business, the initial investment was made with
Wendy’s separate property. It was only Hank’s efforts that prospered the business
from $100,000 to $300,000 over 4 years. As such, the community will be entitled to
the reasonable rate of return of the business.

Thus, Hank’s personal labor will be CP and Wendy will receive her portion of her
initial investment.
>Wendy was an avid coin collector who hoped someday to turn her hobby into a
profitable business. Prior to marriage, they had entered into a prenuptial agreement
providing that each spouse’s wages would be his or her separate property. In 2003,
Wendy opened CoinCo, a shop specializing in rare coins. She capitalized the business
with a $10,000 inheritance that she had received when her grandfather died. Wendy
worked at the shop alone every day. Over time, Wendy learned that she had acquired a
number of highly valuable coins. There was also a renewed interest in coin collecting due
to the discovery of several boxes of old coins found buried in the area. Although Wendy’s
services at the shop were worth $40,000 per year, she took an annual salary of $25,000.
She also paid $5,000 in household expenses from the business earnings each year. In
2008, Herb and Wendy separated. At that time, CoinCo was worth $150,000, and the
drawing was worth $30,000. She closed CoinCo while she was in the hospital, and the value
of the business fell to $100,000 by the time of trial.
Here, INSERT FACTcourts are likely to apply the Pereira formula. Wendy will get a
reasonable return on her SP investment of $10,000 for the six years she ran the business,
from 2003 until 2009. The business at the time of separation is $130,000 will be $60,000 as
SP of Wendy with the remaining $70,000 as CP.

>In 2012, Wendy purchased a small office building where she established her own
accounting practice. She paid for the building with funds saved from her earnings during
her marriage and took title in her name alone. After the separation, Wendy’s income from
the accounting practice tripled and she remodeled the office building with her increased
earnings.

VAN CAMP
Call: What are Wendy’s and Hank’s respective rights in: b. The restaurant? Discuss.
-What are Herb’s and Wendy’s respective rights and liabilities in: 2. CoinCo? Discuss.
This is used when the increase is due mainly to capital investment. Gives community a
reasonable salary for svs, less any family expenses already spent, wit the balance of the profits
from the growth of the business deemed SP of the owner-spouse.

Here, there are no actual figures to compute the calculation. As noted, the facts do however
indicate Hank managed the restaurant and the majority of the growth in the business was bc of
his own labor. Thus, the court will likely utilize the Pereira formula.

>In 2007, while married to Hank and residing in California, Wendy inherited
$150,000. Wendy used the money to purchase $50,000 worth of Chex Oil stock and
a restaurant that cost $100,000. Hank managed the restaurant and, solely
through his own efforts, it prospered and is now worth $300,000.

> Wendy was an avid coin collector who hoped someday to turn her hobby into a
profitable business. Prior to marriage, they had entered into a prenuptial agreement
providing that each spouse’s wages would be his or her separate property. In 2003,
Wendy opened CoinCo, a shop specializing in rare coins. She capitalized the business
with a $10,000 inheritance that she had received when her grandfather died. Wendy
worked at the shop alone every day. Customers appreciated her enthusiasm about coin
collecting and her ability to obtain special coins at reasonable prices. Over time, Wendy
learned that she had acquired a number of highly valuable coins. There was also a
renewed interest in coin collecting due to the discovery of several boxes of old coins
found buried in the area. Although Wendy’s services at the shop were worth $40,000 per
year, she took an annual salary of $25,000. She also paid $5,000 in household expenses
from the business earnings each year. In 2008, Herb and Wendy separated, and Wendy
filed for dissolution of marriage. At that time, CoinCo was worth $150,000, and the drawing
was worth $30,000. She closed CoinCo while she was in the hospital, and the value of the
business fell to $100,000 by the time of trial.
HERE, INSERT FACTWendy will argue for this approach since it gives her the best return
on her investment. The salary she earned while running CoinCo will be considered CP and
any expenses for household purposes will be deducted from that amount. Wendy’s
earning of $25,000 per year minus $5,000 in expenses will mean a CP interest in the
business of $120,000 minus what her svs were worth. This approach is not supported by
the facts as noted above.

>In 2012, Wendy purchased a small office building where she established her own
accounting practice. She paid for the building with funds saved from her earnings during
her marriage and took title in her name alone. After the separation, Wendy’s income from
the accounting practice tripled and she remodeled the office building with her increased
earnings.

CHILD SUPPORT PAYMENTS

The issue is whether H must reimburse the community for his child support
payments.

A right of reimbursement arises when separate property is used to satisfy a

community obligation or vice versa. The community is entitled reimbursement if
the spouses’ separate property is available but its not being paid towards that
obligation rather the community estate is paying it.

Here, H made monthly child support payments of $INSERT FACT. The facts
suggest that H did not save any money and the only SP property he had was the
$ INSERT FACT. So he did/not have enough funds to pay for the child support
payments, which means the community will/not be reimbursed.
However, when INSERT FACT, he did have money from INSERT FACT. Thus, H had
INSERT FACT per month available to pay the obligation of child support when he
received it in INSERT FACT. His separate property was available for INSERT FACT
years.

>Husband put his earnings in a savings account in his name alone. Wife
deposited her earnings into a joint checking account in both of their names,
which was used for their living expenses. Husband had a child support obligation
from a previous marriage. Every month, Husband paid his child support by check
from the joint checking account.
>In March 2000, a woman who claimed Hank was the father of her 6 year-old child
filed a paternity suit against Hank in California. In September 2000, the court
determined Hank was the childs father and ordered him to pay $800 per month
as child support. Hank has not paid the attorney who defended him in the
paternity case. Hank paid the ordered child support for three months from his
earnings but has paid nothing since.

Therefore, H will have to reimburse the community in the amount INSERT FACT.

GOODWILL OF A BUSINESS
Call: Does the community have an interest in (d) The goodwill in Husband’s law firm and, if
so, is the community bound by the firm’s valuation? Discuss.
Good will(IP) earned during marriage is CP. Market sales valuation is goodwill
valued at the price it would command if business was sold. While Capitalization
of past excess earning is the present value of a future stream of income that
goodwill generates.

>In 2004 Husband became a partner in the firm. Husband’s partnership earnings
were substantial. He paid off his student loan using these earnings. Although the
actual value of Husband’s share of the firm’s goodwill was substantially greater,
the partnership agreement provided that its value was $3,000 for purposes of
valuation as marital property in the event of a dissolution of a partner’s
marriage. In 2006, Husband and Wife filed for dissolution of marriage. HERE,
since H became a partner in the firm in 2004, during the marriage any goodwill
built up during marriage will be CP. The facts do not state the exact value.
Although H will argue his agreement states $3,000, that should be the goodwill, but it was
incurred all throughout the marriage so the community may have a different interest
depending on the courts determination. The communit is not bound to the firm’s
valuation because valuation of community business is to be done close to trial and
because H still works at the firm after marriage, W may request an earlier valuation

RESOLUTION OF DISPUTES

Personal Liability-Spouse injured someone

Call: 2. What property can Paul reach to satisfy his judgment against Wanda? Discuss.
-To satisfy her judgment, may Cathy reach the community property, Hank’s separate
property, and/or Wendy’s separate property? Discuss.

The issue is whether the spouse is liable for damages.

Generally, there is no vicarious liability for the other spouse’s torts. A married
person is not liable for any injury caused by the other spouse to someone, except
when the spouse is independently liable for the injury. The liability caused by one
spouse for personal injury is paid first from CP if the spouse was performing an
activity for the benefit of the community when the liability arose. If the CP is not
sufficient, the remainder is paid from the SP of the spouse incurring the liability.
If the liability its not for the benefit of the community, the liability is first satisfied
from the SP of the married person, and then from the CP.

>In 2005, Wanda commenced a secret romance with Oscar. During a rendezvous
with Oscar, Wanda negligently operated Oscar’s car, causing serious personal
injuries to Paul, another driver. In 2007, Harry and Wanda separated. Shortly
thereafter, as a result of the car accident, Paul obtained a money judgment
against Wanda.

>In 2011, Cathy, a customer at the restaurant, tripped and fell over a box
carelessly placed in the entryway by Hank. She obtained a judgment against
Hank for injuries suffered in the fall. Hank and Wendy have now decided to
dissolve their marriage.

>A year ago, Wendy told Hal that she would not tolerate his drinking any longer.
Last month, Hal went on a drinking spree, started driving, and struck a
pedestrian.

DEBTS BEFORE THE MARRIAGE/necessaries/during

Call: Upon dissolution of marriage, what are Wendy’s and Hank’s rights and liabilities with
respect to:The $50,000 owed to the casino? Discuss.
-Is Wendy’s interest in the family home subject to payment of Hal’s legal fees? Discuss.
-What are Herb’s and Wendy’s respective rights and liabilities in: 3. The hospital bill?
Discuss.
-Which of the property set forth in the facts can be reached to satisfy the obligations to
pay child support and the attorneys fees? Discuss.

The CP and debtor’s SP are liable for debts incurred during marriage, and
nondebtor’s SP if for necessaries.

Here, the medical expenses were incurred during the putative marriage, so the
community is liable and Wife’s SP. If the medical treatment were necessary for her
life, then Husband’s SP would be liable too.

Thus, CP and W’s SP are both liable.

>In 2005, Wanda commenced a secret romance with Oscar. During a rendezvous
with Oscar, Wanda negligently operated Oscar’s car, causing serious personal
injuries to Paul, another driver. In 2007, Harry and Wanda separated. Shortly
thereafter, as a result of the car accident, Paul obtained a money judgment
against Wanda.
>Unbeknownst to Wendy, Hank had run up a gambling debt to a casino during
their marriage. At the time of their separation, Hank owed the casino $50,000.
Here, because Wendy didn’t know she can assert Hank breached his fiduciary
duty and is solely liable for the gambling debt.
>When Wendy learned of the accident, she told Hal that she wanted a divorce.
Hal has consulted Lawyer about defending him in a civil action filed by the
pedestrian. He is currently unemployed. His only asset is his interest in the family
home, which he and Wendy purchased during their marriage. Lawyer offered to
represent Hal if Hal were to give him a promissory note, secured by a lien on the
family home, for his fees. Hal immediately accepted.
> In 2009, before trial of the dissolution proceeding, Wendy was disabled by a
serious illness and had to be hospitalized. She closed CoinCo while she was in the
hospital, and the value of the business fell to $100,000 by the time of trial. Her
hospital bill was not covered by health insurance. In the dissolution proceeding,
Wendy claims that the prenuptial agreement is valid and Herb claims that it is
not.
>Hank has not paid the attorney who defended him in the paternity case. Hank
paid the ordered child support for three months from his earnings but has paid
nothing since.

GIFT OF CP GIVEN TO A 3rd PARTY

Call: What are Wendy’s rights, if any, as to the antique mirror? Discuss.
A spouse may not gift a “substantial value” from the CP without the written
consent of the other spouse.
>In 2008, Hank and Wendy married. After their wedding, Wendy’s mother deeded
them a house as joint tenants. They moved into the house and used their
earnings to furnish it in a lavish style, including an antique mirror in the entryway.
One day, Hank gave the mirror to a friend who had admired it on a visit to the
house.
SELLS CP WITHOUT THE SPOUSE’S CONSENT
Hank is entitled to half of the proceeds because the selling of the office was CP.

>In 2012, Wendy purchased a small office building where she established her own
accounting practice. Without Hank’s knowledge, she then sold the building to Bob, who
did not know that she was married.

EQUAL MANAGEMENT AND CONTROL OF CP

Each spouse has equal ability to manage and control CP. However, there are
exceptions. For instance, a spouse may not breach fiduciary duty to the other
spouse by selling or encumbering personal property in the home or CP clothing
belonging to either spouse without consent.

>After their marriage, Wanda and Hal deposited their earnings into a joint bank
account they opened at Main Street Bank from which Wanda managed the
couple’s finances. Each month, Wanda also deposited some of her earnings into
an individual account she opened in her name at A1 Bank without telling Hal. Just
before the final hearing on the dissolution, Hal happened to discover Wanda’s
individual account, which contained $50,000.

BREACH OF FIDUCIARY DUTIES

Call: In the event of a dissolution, how should the court rule on Harry’s and Wanda’s
respective rights and liabilities with regard to: a. The condo in Hawaii? Discuss.
-Is Wendy’s interest in the family home subject to payment of Hal’s legal fees? Discuss.

sPOuses have a fiduciary duty to the other to act fair and reasonable to each
other. When one party gains an unfair advantage from a transaction it is
presumed there was undue influence which triggers the exception of equal
division.
Here, H only changed the tilte to the INSERT FACTcondo into a joint tenancy at
W’s insistence to avoid probate. H will argue that W coerced him to change the
character of the condo, by falsely representing why she really wanted to gain a
property interest to the condo.

>In 2003, Harry and Wanda purchased a vacation condo in Hawaii. They took title
in both their names, specifying that they were “joint tenants with the right of
survivorship.” Harry paid the entire purchase price from his checking account,
which contained only funds from the trust. Harry and Wanda orally agreed that
the condo belonged to Harry.
>Hal consulted Lawyer about defending him in a civil action. He is currently
unemployed. His only asset is his interest in the family home, which he and Wendy
purchased during their marriage. Hal accepted the terms of securing a lien on
the family home to pay for his fees.
>In 2012, Wendy purchased a small office building where she established her own
accounting practice. Without Hank’s knowledge, she then sold the building to Bob, who
did not know that she was married.

EQUAL DIVISION IN-KIND RULE

Call: What are Harry’s and Wanda’s rights and liabilities, if any, regarding: The rental property? Discuss.
Division in kind(asset not money) is not required when it requires co-managing
the property.
Here, equal division is not required because INSERT FACTthe rental property will
require future co-managing. The court will determine with discretion who is the
sole owner although they used CP funds, Wanda took title in her name alone and
may be awarded the rental property.
>In 2015, Harry discovered that Wanda used money from their joint account to
buy rental property and take title in her name alone.

SPECIAL PRESUMPTIONS: EMPLOYMENT PENSIONS-STOCK OPTIONS

Call: What are Wendy’s and Hank’s respective rights in: a. The Chex Oil stock? Discuss.
The issue is whether the stock options are community property.

A spouse’s earnings from labor during the marriage is Community Property. At

divorce or separation, the earnings remain CP.
However, stock options are partly separate and community property if they
exercisable after the marriage. To determine each spouses pro rata share,
courts use the time rule formula. The formula is a fraction of the difference in the
number of years married with the denominator being the number of years
worked.

Here, INSERT FACT, she can exercise the stock option INSERT FACT. The stock
options were her earnings from her labor during the marriage and therefore
community property. However, since the marriage ended in INSERT FACT, from
YEAR to YEAR these earnings would be W’s separate property. Therefore, to
calculate the fraction, W and H were married for INSERT FACT before separation,
and spouse worked for Company for INSERT FACT years till the time she
exercised her option.
Thus, Community property will get 1/1 out of the stock option profit. At divorce,
the 1/1 out of the profit will be divided equally between W & H.

Thus, W & H will share apportionately in the stock option profit.

>In 2006, Wanda received an e-mail advertisement inviting her to invest in stock in
a bioengineering company. She discussed the investment with Harry, who
thought it was too risky. Wanda nevertheless bought 200 shares of stock, using
$20,000 from her savings account to make the purchase. She put the stock in her
name alone.

Here, INSERT FACT thus, it will be characterized as Wendy’s separate property.

INSERT FACTspouses obtained a loan from a bank, this does not change the
character.
>In 2007, while married to Hank and residing in California, Wendy inherited
$150,000. Wendy used the money to purchase $50,000 worth of Chex Oil stock and
a restaurant that cost $100,000. In making the loan, the bank relied upon the
salaries earned by both Hank and Wendy and, in addition, required that Wendy
pledge the Chex Oil stock.

Thus, The Chex Oil Stock is Wendy’s Separate property for purposes of
distribution.

>Wilma, a California resident, was employed as an accountant for many years.

She retired in 2010 and received a pension. Wilma received part of the pension as
a lump sum and the rest in monthly installments deposited into an account in her
name at Main Street Bank. She used the lump sum as a down payment on a
townhouse. The title to the townhouse and the mortgage are in Wilma’s name.
Wilma and Harry married in 2012. Wilma did freelance accounting work and
deposited the pay from that work into her Main Street Bank account. They paid
all their household expenses from Wilma’s account. Wilma’s pay from her
accounting work did not cover all their expenses and her monthly pension
installments paid the rest of their expenses.
Here, INSERT FACT. The lump sum of the pension that was paid out and any
subsequent installments made into her account from 2010 until 2012 would be
considered SP because she acquired the pension funds prior to marriage, and
the funds intended to replace wages prior to marriage.
Thus, the pension initial lump sum and monthly installments would be considered
Wilma’s SP, and the townhouse down payment was paid with her SP.