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Community Property Henry and Wanda married in 1980 when both were students at State X University. State X is a non-community property state. Shortly after the marriage, Henry graduated and obtained employment with a State X engineering firm. Wanda gave birth to the couple’s only child, and Henry and Wanda agreed that Wanda would quit her job and remain home to care for the child. They bought a house in State X using their savings for the down payment and obtained a loan secured by a twenty-year mortgage for the balance of the purchase price. Mortgage payments were subsequently paid from Henry’s earnings. The title to the State X house was in Henry’s name alone. In 1990, Henry accepted a job offer from a California engineering firm. The couple moved to California with their child and rented out the State X house. In 1992, Wanda’s uncle died and left her an oil painting with an appraised value of $5,000 and a small cabin located on a lake in California. Wanda took the painting to the cabin and hung it over the fireplace. In 1993, after reading a book entitled “How to Avoid Probate,” Henry persuaded Wanda to execute and record a deed conveying the lake cabin to “Henry and Wanda, as joint tenants with right of survivorship.” Wanda did so, believing that the only effect of the conveyance would be to avoid probate. In 1995, after three years of study paid for out of Henry’s earnings, Wanda obtained a degree in podiatry and opened her own podiatry practice. Her practice became quite successful because of her enthusiasm, skill, and willingness to work long hours. Henry continued to work for the engineering firm. In 2002, Henry and Wanda separated and filed for dissolution of marriage. Wanda had the painting reappraised. The artist, now deceased, has become immensely popular, and the painting is now worth $50,000. Upon dissolution, what are Henry’s and Wanda’s respective rights in: 1. The lake cabin? Discuss. 2. The painting? Discuss. 3. The State X house? Discuss. 4. Wanda’s professional education and podiatry practice? Discuss. Answer according to California law. Answer 6 This answer provided by Master Essay Method, 800-449-6609, passthebar.com. Introduction: Quasi-Community Property H and W married in 1980 in State X, a non-community property state. Had they remained there, their dissolution would be governed by State X law. Instead, they moved to California in 1990. California is a community property state, which treats income and liabilities of spouses as community property. When a married couple moves to California, they become subject to community property law. Upon dissolution in California, property that was obtained by the couple after marriage but before moving to California is called quasi-community property and is distributed as if it were community property. I. The lake cabin A. Source: Wanda’s inheritance from her uncle — separate property. Wanda obtained the small cabin, located in California, as part of her inheritance when her uncle died in 1992, a couple of years after the couple became domiciled in California. This state will initially view the cabin as Wanda’s separate property. B. Actions: Wanda executes deed converting cabin to joint tenancy to avoid probate A year after Wanda inherited the cabin, Henry persuaded Wanda to execute and record a deed conveying the lake to “Henry and Wanda, as joint tenants with right of survivorship.” Wanda signed the deed believing that the only effect of the conveyance would be to avoid probate. Apparently she did not appreciate that the deed she signed would also have the effect of transmuting the lake cabin away from her separate property. The Lucas case held that taking title in joint and equal form is inconsistent with preservation of a separate interest; Wanda will be presumed to have made a gift of the lake cabin to the community. No facts indicate that Henry tried to defraud Wanda out of her separate property interest in the cabin. Rather, it is evident that Wanda voluntarily changed the form of title to the property in order to save it from the possibility of passing through probate. Plus, this change was made about nine years before the couple decided to dissolve their marriage. C. Conclusion The cabin will be treated as community property because title was held by the couple as joint tenants. II. The painting A. Source: Wanda’s inheritance from her uncle — separate property. The oil painting was another part of Wanda’s inheritance from her uncle’s will in 1992. It was appraised at $5,000. As mentioned above, California views items obtained by will as the separate property of the inheriting spouse. B. Actions Wanda took the painting and hung it in the small cabin in 1992 after she inherited these items. At the time of dissolution in 2002, the painting was worth $50,000 because the artist, now deceased, had become immensely popular. No facts are present that would change the separate property status of the painting. Neither the increase in the painting’s value nor the fact that Wanda executed the deed changing the title of the real property to a joint tenancy will have the effect of transmuting the painting to community property. C. Conclusion The painting is Wanda’s separate property. III. The State X house A. Source: Wages of Henry; title in Henry’s name alone Henry and Wanda bought the State X house after they were married in 1980, using their savings for the down payment and making mortgage payments out of Henry’s earnings with the State X engineering firm. Title to the State X house is in Henry’s name alone. The couple lived in the State X home until they moved to California in 1990 so Henry could take the engineering job in this state. Up until this move, the house was Henry’s separate property. The 20-year mortgage on the State X house was paid off a couple of years before Henry and Wanda decided to dissolve their marriage. B. Actions: move to California Henry and Wanda’s marriage became domiciled in California when the couple moved here. The couple rented out the house. At the time the marriage became domiciled in California, both it and the rental income from the property would be deemed quasi-community property. The California divorce court has the power to distribute all quasi-community property out of state realty, even though title is in Henry’s name only. C. Conclusion The State X house is quasi-community property. Upon dissolution, the court will either divide the marital estate in such a manner as to allow Henry to retain fee simple ownership in the State X house or require Henry to execute whatever conveyances are required to divide the property. IV. Wanda’s professional education and podiatry practice A. Source: Henry’s community property earnings paid for the education. Wanda obtained a degree in podiatry in 1995, after three years of study. Her education was paid for out of Henry’s earnings as an engineer in California. Wanda’s earning capacity was substantially enhanced by this education. All earnings of either marital partner are community property in California. Wanda’s podiatry practice will be deemed a community property asset. B. Actions Wanda brought skill, enthusiasm and a willingness to work long hours to her practice, which thrived as a result. All of Wanda’s labor is community property. Of course, this also is true of the labor Henry expended in his engineering job. C. Conclusions 1. The community is entitled to reimbursement for Wanda’s education. After 10 years, the community is deemed to have been reimbursed for the education costs of either partner. In this case, Henry and Wanda separated and filed for dissolution of marriage after only about seven years from Wanda’s graduation in 1995. Accordingly, the community is entitled to reimbursement for the costs of Wanda’s education if the court finds it is in the interests of justice. 2. The podiatry practice is community property. As discussed above, Wanda’s podiatry practice is a community property asset because it was started during marriage and financed with community property money. She will be allowed to retain ownership of her practice since it has succeeded due to her efforts. Henry will be allowed a set off in other property, or he will be required to take a note from Wanda and accept payments to compensate him for his interest.

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