California is a CP state. All property acquired during the course of marriage is presumed to be community property.

All property
acquired before marriage or after separation is presumed to be separate property. In addition, any property acquired by gift,
devise, or bequest is presumed to be separate property; the rents, issues, and profits of SP, and property acquired in exchange
for SP; Increases to SP are generally SP and increases to CP are generally CP.

Refuting the CP presumption: 1) Simply titling the property in one person’s name alone is insufficient to determine if the
property is CP or SP; 2) To validly change the status of property during marriage, a transmutation must be made in writing and
consented to or accepted by the spouse whose interested is adversely affected; 3) the writing must state that a change in the
ownership of property is being made.
At divorce, the community assets are equally divided in kind, unless some special rule requires deviation from the equal
division requirement or the spourses agree otherwise; a spouse’s SP remains their SP at divorce.

Premarital agreement: may make such agreement specifying that after marriage each party’s earnings will remain their SP. To
be valid, the agreement must be 1) in writing; 2) have been entered into voluntarily, and 3) not be unconscionable.

Marital Economic Community: Begins as marriage and ends upon divorce, death of either party, or permanent physical
separation with no intent to rekindle the marriage

Debt incurred after the end of community: 1) When a spouse incurs debt during a marriage, all CP and the debtor’s SP are
liable for the debt; 2) the SP of the other spouse typically is not liable; 3) during marriage does not include period during which
the parties separated and apart before dissolution or legal separation.

Increase of value of SP business due to spouse’s effort: 1) To apportion between the SP component of a business and the CP
value added by a spouse’s labor during the marriage, courts have developed two different apportionment methods: the Van
Camp and the Pereira.

Van camp generally should be used when the character of the separate business is largely responsible for its growth or
productivity. Under this method, the community simply receives a reasonable salary in return for community labour. This is the
contribution to the community for the owning spouse’s laour, with the remaining value of the business remaining in the owning
spouse’s SP.
Initial capital x reasonable rate of return (%) x years of marriage) + principal = value of spouse’s separate property portion

value of business currently – value of business’ SP = value of business’ community property portion

Pereira generally should be used when management by the spouse was the primary case of the growth or productivity of the
initially separate business. Under this method, they receive the original principal value (OPV) of the business, plus an annual
rate of return calculated at 10% OPV, this is their SP. The value remaining will be CP.
(average annual manager’s services at the going market salary x years of marriage) – (average yearly family expenses paid
from business earnings x years of marriage) = value of business’ community property portion

Remainder is the spouse’s separate property portion

Tracing: 1) When SP funds are commingled with community funds, the owner of the separate funds may trace the SP funds
through either the exhausation method or through direct tracing. 2) Any available community funds are presumed to have been
used first to pay for family expensnes. Under exhaustion method, the SP proponent may show that at the time they purchased
the asset whose character is contested, the community funds in the account had already been exhausted by payment of family
expenses. Under direct tracing, the SP proponent may show that the asset was purchased there were sufficient separate funds
available, and they intended to use those separate funds to purchase the SP assets.

Reimbursement: The presumption that jointly titled property is CP at divorce can be overocme only by a collateral written
agreement or a statement in the documentary evidence of title that the property is “separate and not community property”. 1) if
jointly titled property is treated as CP, upon divorce any SP

Breach of Fiduciary Duty: 1) both spouse have a fiduciary duty to each other to act in good faith and fair dealing in the
management and control of CP; 2) the court may consider one spouse’s delibrate misappropriation of the other spouse’s
interest in property by making an award or offset against the wrong-doer’s one-half share of the remaining property; 3) During a
distribution, each party must disclose all assets and failure to do so could result in sanctions.

Anti-lucas Statue: jointly titled property purchased by a married couple after 1987 is presume community property at divorce.
Funds used from separate property to complete this purchase are to be reimburse to the paying party upon dissolution. Before
1987, Lucas Rule- separate property was presume gift to CP and not reimbursed.

Joint checking a/c: This is CP, and anything purchased from this a/c is CP.
PI award: won by either spouse while married will be considered CP. Upon dissolution, become SP of the injured spouse. Does
not apply when funds were comingled or where uninjured spouse suffers some form of economic hardship.

Creditor access to property- creditors may attack CP if the debt was incurred during the course of the marriage. Special rules,
apply to that were incurred befor marriage, where funds of a non-debtor that were not comingled may be untouchable and
where SP may be attacked to pay for necessities.

Assignment of debt- upon dissolution of marriage, the court is free to assign CP debt to either spouse based on their ability to
pay the debt.

Loans: In order to determin the character of a loan, the court will look to the intent of the lender. If based on income, the loan
will likely be CP, but if based on security consisting of SP assets, it may deemed SP.

Pensions: If a pension is earned during marriage, then it is CP. Can be paid as received or cased out and is computed by
taking the number of years required to vest, and proportionally dividing the net into CP.

Medical bills: medical bills will be paid from CP. If CP is depleted, SP of the affected spouse will be used to make payment,
which is entitled to reimbursement by the injured spouse.

Ed expense: If CP funds are used for edu expense, they will be reimbursed to CP because they personally enhance the
receiving spouse’s earning potential. However, if both spouses received CP funds for eduction, if the education was over 10
years ago (assumed the community benefited from the increased earning potential), and also if the receiving spouse will be
better suited post dissolution to pay for their own needs.

Stock option: Use either Nelson or Hugs Rule. Nelson- used when options are compensation for future performance and
retention, i.e years grant to divorce/ years grant to vest = CP. Hugs- used when options to attract people to the job and reward
past service- years from hire to divorce/ years hire to exercuse of options= cp.