Week 8 - Marital Property

What are the three major legal issues with Marital Property?

1. Management and control of property during the marriage;

2. Property rights when the marriage terminates by divorce;

3. Property rights of a surviving spouse when the marriage terminates by the death of one partner.

What does a decision to hold property in tenancy by the entirety entail?

It entails that the property is owned jointly by both spouses, where neither spouse can sell or transfer their interest without the other's consent, and specifies an indestructible survivorship right

Under US v. Craft, what did the Court state about if a tenancy by entirety in which property belonged to the marital unit as a whole could still be attached with a federal tax lien?

Facts:
D owed the IRS in unpaid taxes, He and his wife owned a house in as tenants by the entirety.
The IRS filed a lien on all of D’s property, including the house. The Crafts then signed a quitclaim deed transferring D’s interest to wife for $1. When Sandra tried to sell the house, the IRS said the lien still applied and took half the sale proceeds into escrow. Sandra sued to get her full share.

Rule of Law:
Federal tax liens attach to any substantial property rights a taxpayer has under state law (use, income, exclusion, survivorship, etc.), regardless of state labels or fictions saying there is “no separate interest” for tenancy by the entirety. State exemptions for private creditors do not bind the federal government.

What is tenancy by the entirety?

A form of joint property ownership by married couples where each spouse has an equal, undivided interest, and includes a right of survivorship.

What is the difference between tenancy by the entirety and joint tenancy?

The key difference is that in tenancy by the entirety, both spouses must act together for any transfer, while in joint tenancy, one owner can transfer their interest without consent from the other. Additionally, tenancy by the entirety provides greater protection from claims by creditors.

What do most states protect from creditors?

Main home (homestead), basic personal items, tools of trade

What does federal law protect from creditors?

Social security benefits, pension payments

What does bankruptcy stop once filed?

creditors from collection, and the law often protects some of the debtor’s property.

What does tenancy by the entirety allow (to a certain extent)?

declare your property “exempt” when the state recognizes the form

Some states presume for married couples..

tenancy by the entirety, others presume tenancy in common

Why did the court hold that the deed created a tenancy by the entirety, even though the deed said joint tenants in Pattelli v. Bell? What did the court say was needed to create the joint tenant among all parties?

because the phrase “and Barbara Bell, his wife” showed intent for the couple to own together as spouses, court said clear language (“as joint tenants among all of said individuals”) would have been needed to create a three‑way joint tenancy.

In states that allow tenancy by the entirety for personal property, what do courts look for to determine intent?

signatures and forms

What did the Court create in Beal Bank v. Almand & Assocs. in regards to a joint bank account?

created a presumption of a tenancy by the entireties (may or may not be applicable to all personal property)

Under traditional Anglo-American common law, a surviving spouse was entitled to

legal life estate owned by deceased during marriage

What is a dower?

surviving wife’s estate

What is a curtesy?

surviving husband’s estate

What have most states replaced dower and curtesy with?

elective or forced share specified by statute

What is a forced share?

A legal right allowing a surviving spouse to claim a portion of the deceased spouse's estate, regardless of the provisions made in the will.

What is an elective?

Share allowing a spouse to claim a portion of the estate.

Even if the will gives less than the set percentage by the state…

surviving spouse has a right to a set percentage (usually one‑third or one‑half)

Forced share treats…

real property and personal property the same, but does not apply to property the spouse gave away before death (like gifts during life)

What was the issue with traditional force share laws?

only look at probate assets (property that goes through the will). Many people have non‑probate assets such as life insurance, retirement accounts, and joint‑tenancy property

How did the Uniform Probate Code fix the problems with traditional force share laws?

using an “augmented estate”, which includes many non‑probate assets. The survivor then gets a percentage of this bigger estate, and the percentage goes up the longer the marriage lasted. For marriages of 15 years or more, the survivor gets 50% of the augmented estate.

Can prenuptial agreements modify/waive forced share rights?

Yes, can modify or waive as long as the agreement follows state law and basic fairness rules

What are the two major reforms of divorce law?

No-fault divorce and equitable division of property

Traditional divorce law required..

husband or wife to establish “grounds” for divorce

What is the no-fault reform?

A legal procedure allowing couples to divorce without proving wrongdoing, general finding such as “irreconcilable differences” or “marital discord.”

Traditionally, how was property divided in divorce (separate title system)?

divided by decided who owned what, confirmed based on title, documentation

What three property groups were created in traditional divorce law ?

things owned solely by husband; second, things owned solely by wife; and third, things they owned together (assets in this category divided)

When the separate title system appeared inequitable….

alimony system was proposed to address financial disparities between spouses, ensuring that lower-earning spouses received fair compensation after divorce.

What is the justification for alimony?

recipient’s need; it is not that the recipient “owns” a right to collect money because the payor left the marriage with greater wealth or earning potential

What two types of property did the equitable division of property create?

“separate property” or “marital property.”

What is separate property?

Separate property consists of property acquired by a spouse prior to the marriage and gifts (including inheritances and devises) made specifically to that spouse during the marriage.

What is marital property?

Everything else, including income earned by either spouse during the marriage

How do courts typically divide separate property?

give each spouse all of that person’s separate property

How do courts divide martial property?

some states, a 50-50 split is favored, other states, courts commonly consider various factors, including need, length of the marriage, and contributions by each spouse

Why was the spouse possibly eligible for reimbursement for his support of his wife’s degree in Guy v. Guy, and why was the degree not considered marital property?

Facts:
P and D were married and separated. During the marriage, D went to school and earned a nursing degree, while P worked and largely paid the couple’s expenses, including much of her school‑related costs. Court treated it as a marital asset, D argued that the degree is not property, that the $35,000 amount cannot be reimbursed as lump‑sum alimony.

Key takeaway:
A spouse cannot “own” half of the other spouse’s degree or negotiate its market value in divorce, but the spouse who pays for school can ask for money back for those real expenses, if the marriage ends and the shared benefit never materializes. The court must look at actual costs, not guess at the value of the degree.