Payments to the family residence post separation

Clients often ask if they can receive reimbursement for post-separation payments to the family residence. Maybe.

Reimbursement for post-separation payments by a spouse on a community mortgage is NOT governed by Family Code §2640.

Family Code 2640 provides reimbursement only for payments made with separate property during marriage.

Post-separation payments with separate property on community debts is governed by Epstein and those credits are NOT automatic.

Can the Court Enter Judgment After a Party Dies?

What happens if you are in the middle of your divorce process and your spouse dies?

If your proposed marital settlement agreement was signed by the everyone, and the judgment was submitted, and then your spouse dies before it is signed by the court- the court has the power to sign the proposed judgment, which, after all, the parties had intended that the agreement would be the judgment of the court, CCP §669.

However, if the judgment was not submitted, the Court will not enter your divorce as final.

Do you own rental property? Are you getting married?

It is important to get a premarital agreement in California if you own a real estate development business before marriage.

If you manage your properties during marriage, the profits may become in part community property entitling your spouse to some of the rental income or alternatively you could be imputed with a reasonable wage that the community should be entitled to based on the use of your time energy and effort towards the rental properties. If you previously worked in a business and now are only a passive investor, then your assets are protected but if you actively manage any properties then under Van Camp v Van Camp (1921) 53 CA 17 the court allocates to the community reasonable compensation for the efforts of providing spouse or RDP (if they had not already received such compensation). The balance of profits or increased values attributable to normal earnings on separate property investment will go towards separate property.

A prenuptial agreement can protect both parties from any potential disputes regarding division of assets after divorce and also help both parties understand their rights regarding ownership before entering into marriage. This helps avoid costly litigation down the road by providing clarity about who owns what prior to getting married. It also sets out how financial decisions should be made when it comes to investments done together during marriage which can save considerable time and money later down the line.

Getting an enforceable prenuptial agreement in California is essential for couples who intend on starting businesses together or have existing ones prior to entering into marital union since it provides legal protection for all involved parties regardless what happens afterwards!

Are community contributions to the improvement of Separate Property reimbursable?

Are community contributions to the improvement of Separate Property reimbursable?

Maybe.  In re Marriage of Wolfe (2001) and In re Marriage of Allen are instructive.  In Wolfe, the Court found that when community contributions are made to improvements to one spouse’s separate property, the community is entitled to reimbursement.    While we generally do not have many cases on this, the Court in Allen suggested that the Moore Marsden pro-tanto calculation that looks at contributions to the principal would be instructive in determining whether the community would have any value.

What if you refinance your community property house to make improvements on your spouse’s separate property home. In Bono vs. Clark, the court held that if the capital improvements funded by community contributed to an increase in value, than the community would be entitled to a pro tanto interest in the property.  If the improvements do not enhance the property’s value – then a spouses recovery would be limited to reimbursement of one-half of the community funds spent on improving the separate property.

Premarital Agreements In California

Are your client's getting married? Time to talk to them about considering a Premarital Agreement. Having a conversation about finances and assumptions about money is part of every relationship - even if talking about that feels taboo. The failure to communicate about money issues is a classic reason for divorce and a properly drafted collaborative Premarital Agreement is one way to avoid those communication breakdowns.

Here are some reasons why you would consider a Premarital Agreement in California:

1) Premarital Agreements are not always about protecting the wealthier spouse and their pre-marriage or inherited assets. When a spouse has significant inherited assets are assets acquired before marriage, there may be very little community property or shared assets created during marriage. Premarital Agreements often protect the spouse with less money and can ensure that choices like relocation, raising a family, and supporting your spouse during grad school are recognized the event of divorce. Planning for what happens to shared and separate resources if the marriage dissolves give clients the opportunity to agree on how they are going to spend and save money during marriage – and we as family lawyers like to think this reduces the likelihood of money being the main reason for divorce.  

2) There are some complicated rules in California about property that may not seem fair to everyone regarding employment equity (stock), business interests, and real property. For example, did you know that if you are employed before marriage, that your stock that is unvested as of the date of marriage has a partial community property component when it vests during marriage? If you want to maintain all of your pre-marriage employment equity as your separate property that needs to be agreed upon before you get married. For example, a Premarital Agreement can ensure that property acquired before marriage stays with that person, even if the default law says otherwise.  

3) California already has a default Premarital Agreement called the Family Code. If you like the laws of California, you can sign a document that provides for what will happen with your premarital property (separate property) and community property in a divorce, even if you move to another state.

Talking about money to your clients is hard - family lawyers can help with these conversations. If your client is getting married this year, consider recommending that they schedule a conversation with a family lawyer to learn more about Premarital Agreements.