SEPARATION, TRANSMUTATION OF PROPERTY IN CALIFORNIA MARRIAGE

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Separate property in regards to marriage in California is covered under Family Code § 771.  It states that:  “The earnings and accumulations of a spouse and the minor living with, or in the custody of, the spouse, while living separate and apart from the other spouse are the separate property of the spouse.”

This period can include any time after initial separation but before reconciliation.  There is nothing in the statute to indicate that any property earned during a period when the parties were living ‘separate and apart’ should be characterized as community property.  Additionally, section 771 does not prohibit multiple separation dates when characterizing a community’s property.

If parties possess the intent to separate and end their marriage, California law dictates that any property acquired thereafter by a spouse is his or her separate property.  However, the law is clear in stating that behavior alone cannot transmute property.

California case law dictates that the character of property as separate or community is fixed as of the time it is acquired.  The character cannot be altered unless by some means recognized by law, judicial decree, or the parties’ agreement.  This is what transmutation is all about.

If it is community property when acquired, it remains so throughout the marriage unless the spouses agree to change its nature or the spouse charged with its management makes a gift of it to the other.  Moreover, separate property does not change its character automatically as a result of marriage, or use during marriage.

California has strict requirements as to what is required to transmute property.  It cannot be done by conduct alone.

Family Code § 852 imposes certain requirements on marital transmutations, including that a transmutation “is not valid unless made in writing by an express declaration that is made, joined in, consented to, or accepted by the spouse whose interest in the property is adversely affected.”  Furthermore, section 852 states the requirements for a valid transmutation in California.  A change in character is not valid unless made in writing by an express declaration that is “made, joined in, consented to, or accepted by the spouse whose interest in the property is adversely affected.”

7 DAY REQUIREMENT OF FAMILY CODE §1615(c)(2) NOT APPLICABLE TO PARTY REPRESENTED FROM OUTSET

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An important case came down last year that helped to further define California family law regarding premarital agreements.  In the case of Marriage of Cadwell-Faso & Faso (2011) 191 CA4th 945, 119 CR3d 813, the California Courts of Appeal determined the requirement of Family Code §1615(c)(2) that a party against whom enforcement of a premarital agreement is sought have at least 7 calendar days “between the time that the party was first presented with the agreement and advised to seek independent legal counsel and the time the agreement was signed” does not apply when that party was represented by counsel from the outset of the transaction.

The facts of Cadwell-Faso were as follows:  Before their marriage, a couple entered into a premarital agreement.  Husband’s attorney prepared the initial draft of the agreement, presented it to the prospective wife and advised her to seek independent counsel.

Prospective wife hired an attorney, who, over the course of several months, prepared five draft addenda.  The 5th addendum was faxed to prospective husband, who transmitted it to his attorney 3 days later.  Three days after that the parties met with his attorney and signed the agreement, after final working changes were made.  They married two days later, separated four months after that.

In later marital dissolution proceedings, Husband moved to set aside the premarital agreement, which imposed both spousal support and property obligations.  He claimed that he signed the agreement without the benefit of the statutory time period of Family Code §1615(c)(2), which requires “seven calendar days between the time that [the] party was first presented with the agreement and advised to seek independent legal counsel and the time the agreement was signed.”

COURT HAS DISCRETION RE DIVIDING COMMUNITY RETIREMENT PLANS

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Retirement plans and the community benefits to be derived therefrom are covered under California Family Code §2610.  According to the code, with some exceptions, in a dissolution action the court shall make “whatever orders are necessary or appropriate” to ensure that each party receives the party’s full community property share in any retirement plan, whether public or private, including all survivor and death benefits.  This might include the court ordering one party to elect a survivor benefit annuity or other similar election for the benefit of the other party, as specified by the court, in any case in which a retirement plan provides for such an election, “provided that no court shall order a retirement plan to provide increased benefits determined on the basis of actuarial value.”

INCURRING DEBT MANDATORY WITH BREACH OF FIDUCIARY DUTY

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An important California family law decision was handed down earlier this year dealing with breach of fiduciary duty in a dissolution.  In the case, a California appellate court has ruled that the trial court erred by refusing to award attorney’s fees to husband under Family Code §1101(g) for wife’s violation of her fiduciary duty, because such an award is mandatory under that statute.

In re Marriage of Fossum, 192 Cal.App.4th 336 (2011) the facts indicate wife had incurred a $24,000 credit card debt prior to separation without the knowledge or consent of husband.  This was a no-no because the law clearly states that in California dissolution actions, debts incurred without the consent of the other spouse may be assigned to the party incurring the debt.

FOOL FOR A CLIENT IN FAMILY LAW

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Only a fool would represent himself in Family Law Court.  Just ask Robert N. Greenberg.  He’s the attorney/Appellant who represented himself in a case recently Certified For Publication by the Second Appellate District out of Santa Barbara, California.  In Marriage of Greenberg, B226064, April 28, 2011, Greenberg (husband) appealed an order awarding $2,800 in attorneys fees and sanctions to his former spouse.  It seems Mr. Greenberg had stubbornly failed to honor a 2008 judgment dividing community property with the Missus, and he was not about to let her get away with it.  The trial court wasn’t about to let Mr. Greenberg get away with that, so it sanctioned him per Family Code § 271, and then Mr. Greenberg filed his appeal.  And that’s when his problems really started.

You see, the Second Appellate District didn’t really appreciate Mr. Greenberg’s attitude.  It determined that Mr. Greenberg “lacked objectivity” in his exercise of the appeal process, which they considered an exercise in frivolity.  The court iterated that “any reasonable attorney would have advised (Mr. Greenberg) not to pursue his appeal.”  To make sure the message got across, the court not only affirmed the judgment order awarding $2,800 fees and sanctions, it awarded to the wife costs on appeal.  That was probably about a $10,000 tab, and as if to add insult to injury – and to help pay the ultimate fool’s price – the Second Appellate Court ordered the clerk of the court to send a copy of the court’s opinion to the State Bar for review.  Hmmm.  Poor Mr. Greenberg.  So much for out-of-control emotions against the ex – and representing oneself in Family Law Court, even if you are an attorney.

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