Community Property

CA Bar - July 2025

Marital Economic Community

• whether an asset is characterized as community property or separate property depends in substantial part on when the asset was acquired – before or after the marital community was created 

• MEC begins with a valid marriage 

• MEC ends with a spouse’s permanent separation, or divorce, or a spouse’s conduct

Permanent Separation

• 1. One spouse expressly informs the other spouse that they intend to end the marriage; AND 

• 2. The spouse’s conduct is consistent with that intent 

• * as of 2017, living separate and apart is no longer needed for a permanent separation, applies retroactively 

Community Property

1. General Presumption - property during marriage is presumed to be CP 

2. Income of CP - rent, income, or profit earned from a CP asset remain CP 

3. Labor and Earnings of Spouse - labor, earnings, salary, and wages of a spouse are CP 

4. Property Acquired With Spouse - property acquiring using CP funds is presumed to remain CP 

Separate Property

1. General Presumption - separate property is all property acquired (1) before marriage, (2) after divorce or permanent separation, or (3) by gift or inheritance, whenever acquired, even during marriage 

2. Income of SP - rent, income, or profit earned from a SP asset remains SP 

Quasi-Community Property

• property acquired by married couple while living another state that would have been classified as CP if the parties were married and domiciled in CA at the time the property was acquired 

  • rule is triggered only upon the divorce or upon the death of the spouse holding title to property 

  • is treated the same as CP so apply same analysis 

• If only 1 spouse holds title to property, nontitled spouse holds only those rights provided by law in the couple’s prior domicile before marriage 

• During marriage, property that qualifies as QCP is governed by the laws of the other state 

equal division rule

• Upon divorce, the CP and QCP will be equally divided 50/50 split 

• Split is ½ of the community estate, not ½ of each community asset 

tracing

• To rebut a CP or SP presumption regarding an asset, a party can trace the source of the funds used to acquire the asset to claim a different classification of the asset 

• Why? → a change in the form of an asset doesn’t change the characterization  of the asset 

valid marriage

1. consent, 

2. sufficient age to consent: at least 18 years old, if under 18 – need court order & parental consent 

3. Formal legal procedures (eg: license, solemnization, and authentication)  

domestic partnerships

1. Intimate and committed relationship of mutual caring 

2. Members of the same sex, or members of opposite sex where one partner is over 62 years old and 

3. Registration under the CA Domestic Partner Rights and Responsibilities Act

common law marriage

1. CA has abolished this 

   1. Under Full Faith and Credit Clause - CA will recognize a valid common law marriage created in another jurisdiction

   2. Community property principles will apply to these marriages 

void marriage

• is invalid from its inceptions 

Grounds(1) Incest, (2) Bigamy - person remarries without divorcing prior spouse

voidable marriage

•  is valid and legal until declared void by the court 

  • Grounds (1) Underage, (2) Unsound mind, (3) Fraud sufficient to vitiate consent (eg; concealed sterility), (4) force or duress, (5) incurable physical incapacity, (6) bigamy exception - remarries after presumed death of prior spouse 

Quasi-Marital Property

property acquired by putative spouse during void/ voidable marriage that’d otherwise be CP or QCP 

• is divided equally, same as CP or QCP 

unmarried cohabitants

aren’t subject to CP principles, but do get some protection 

• Court will generally apply contract principles to divide the assets of unmarried cohabitants 

An express agreement between unmarried cohabitants (cohabitation contract) is enforceableunless the underlying consideration for the contract is sexual services

contractual agreements

• Spouses may remove themselves from CP system, whole/in part, by entering into contractual agreement before, during marriage 

• Permissible Content - alterations to property and ownership rights, as well as spousal support 

• Prohibited Content - an agreement may not impact child support nor promote divorce (can’t incentivize dissolution)

prenuptial agreements

a contract made before marriage, requirements since Jan 1986 

• (1) in writing, and (2) signed by both parties | enforceable without consideration 

• Prenups are covered by Sof, verbal agreements may still be enforced through promissory estoppel or detrimental reliance 

Enforcement

• burden on spouse seeking to enforce agreement to prove agreement wasn’t involuntary or unconscionable during execution 

Involuntary

type of enforcement —>

for the agreement to be involuntary, proponent spouse must show all following conditions are satisfied 

• Spouse against whom enforcement is sought was represented by independent legal counsel or waived their right to independent counsel in a separate writing 

• Must be a lapse of at least 7 days between receipt of the agreement & having to sign the agreement 

• If spouse was unrepresented by counsel, they were fully informed of the terms and basic effects of agreement 

• The agreement is not a product of duress, fraud, undue influence, or incapacity, and 

• Court may consider other relevant facts 

Unconscionable

type of enforcement —>

• if all the following apply, at the time of the agreement was executed 

  • Spouse lacked a full, fair, and reasonable disclosure of the property and obligations of the other spouse 

  • Spouse did not waive the disclosure in writing; AND 

  • Spouse didn’t have nor reasonably could’ve had adequate knowledge of other’s spouse’s property or obligations 

Spousal Support Provisions

type of enforcement —>

• not enforceable if:

  • Party against whom enforcement is sought wasn’t represented by independent counsel at the time of signing OR

  • At the time of enforcement, the provision is unconscionable

Transmutatations

agreement during marriage —<

• Spouses may agree during marriage to modify the ownership status of CP and/or SP 

  • Identify → a spouse makes a gift, or offers or agrees to change status of CP or SP 

• Writing requirement - as of 1985, must be in writing & contain an express declaration by adversely affected spouse that the characterization or ownership of the asset is being charged 

  • Exception - gift of personal property don’t need written transmutation if: 

    • Gift is between spouses, gift is tangible item of a personal nature for use principally by the donee spouse, and gift isn’t substantial in value considering the relative wealth of the couple 

separation agreement

in anticipation of divorce, spouses may enter into a separation agreement to resolve property issues 

• Spouses may also agree to resolve child custody, child support, and spousal support issues, but they may not limit the statutory obligations relating to child support nor divest the court of its jurisdiction 

• Separation agreements must be set aside in the following circumstances : 

  • Fraud that prevents a spouse from obtaining info or evidence that would be used to defend herself in a lawsuit 

  • Mistake 

  • Breach of fiduciary duty owed to the spouse OR 

  • Failure to disclosure all relevant financial info 

special community property presumption

• at legal separation of or divorce, all jointly-held property is presumed CP include: joint tenancy, tenancy in common, tenancy by the entirety 

  • Issue → facts showing a planned or pending legal separation or divorce & property w/ written title in both spouses names and one of the spouses made a SP contribution 

    • Right of reimbursement for SP contributions - spouse who makes SP contributions to jointly titled property can seek reimbursement for her contribution [before 1984 - SP contributions - gift to community] 

      • After 1984 - right to reimbursement for SP contribution without interest 

        • Includes -  principal payments, capital improvements, down payments 

        • Excludes -  maintenance, insurance, taxes, and interest 

    • Requirement to rebut the CP presumption - 

      • Before 1984 →  evidence of an oral or implied agreement was allowed 

      • As of 1984 → written evidence of intent to hold property as SP is required 

    • Effect of Down payment if CP presumption is rebutted - SP interest remains intact and acquires a pro rata interest in the property in the proportion of down payment bears to the purchase price 

Special Presumption of Title at Death

• form of ownership on title is presumed to be nature of ownership interests of spouses 

  • If property is titled in only 1 spouse’s name → property may be considered SP, if the source of the funds used to purchase the property was SP

  • Special presumption of title can be rebutted by clear and convincing evidence that both spouses didn’t intend to hold the property as stated in the title 

  • Issue → spouse died, property is titled in one or both spouse’s name 

Joint Tenancy

joint deed & how title is taken

• CA requires the word “joint tenancy” to create it 

  1. During marriage → each spouse holds ½ SP interest & can unilaterally convey their interest without spouse consent 

  2. Upon Separation or Divorce → JT is subject to special presumption, JT at divorce is CP & each spouse gets ½ share

  3. Upon Death → special presumption of title applies, surviving spouse takes title to entire property as surviving JT 

community property with right of survivorship

joint deed & how title is taken

1. married couples may hold title as CP w/ right of survivorship 

   1. Community property w/ right of survivorship must be expressly declared in the deed or title 

   2. During Marriage, upon Divorce - if it is a CP interest, but severable like a joint tenancy 

   3. Upon Death - surviving spouse takes title to the entire property by right of survivorship

tenants in common

joint deed & how title is taken

1. During Marriage - surviving spouse holds an SP interest proportionate to their share 

2. Upon divorce, or separation - interest of a tenant in common is subject to the special CP presumption 

3. Upon death - special presumption of title applies & deceased spouse’s interest passes by will or intestacy 

title in one spouse’s name

joint deed & how title is taken

• title in purchasing spouse’s name doesn’t rebut a CP Presumption

direct tracing

• SP proponent must show that the source of the fund used to purchase the asset came from the SP deposits, not the CP deposits, 2 elements:

  • (1) Sufficient SP funds were available at purchase time, AND (2) proponent intended to use SP funds to purchase asset 

indirect tracing

• proponent must prove CP funds in the account were exhausted at the time of purchase due to paying for family expenses; 2 presumptions apply 

  • Family expenses are presumed to be paid with CP funds first, then SP funds as needed

  • SP fund used to pay family expenses are presumed to be a gift to the community 

degrees and licenses

educational degrees and professional licenses acquired during marriage are NOT CP 

• Enhanced earning capacity of a degree/licensed spouse NOT subject to division 

• 1. Right of Reimbursement - community is entitled to reimbursement if:

  • (1) CP or QCP funds were used to pay for education or training AND (1) spouse’s earning capacity was substantially improved → Direct costs such as books & tuition may be reimbursed 

  • Living expenses – paid by CP, won’t be reimbursed, or if party waived right to reimbursement in writing 

• 2. Defense of the Educated Spouse - spouse who received the educated need not reimburse the community if:

  • Community substantially benefitted from the education 

  • CP was also used to pay for other spouse’s education OR

  •  education reduces need for spousal support at divorce 

• 3. Pre-Martial Education Loans - community is entitled to reimbursement if CP funds were used during marriage to repay loan for a degree or license obtained before marriage 

  • Upon divorce, any outstanding education loans are assigned to the incurring spouse 

injury before marriage

• division upon divorce —> tort recovery

•  PI proceeds are the SP of the victim spouse 

  • If, CP or non-victim spouse’s SP is used to pay for victim spouse’s injury related expenses, victim spouse must reimburse CP or SP of other spouse from victim spouse’s SP tort proceeds 

injury during marriage

• division upon divorce —>

• injury proceeds for a claim are CP 

  • Divorce → all proceeds are assigned to the injured spouse, UNLESS 

    • (1) Proceeds have been commingled w/ CP and are untraceable, (2) proceeds have been spent, or (3) justice requires awarding a portion to the non-injured spouse, but at least ½ proceeds must be assigned to injured spouse 

• PI proceeds from inter-spousal tort are the SP of the injured spouse

tort recovery

• Division Upon Divorce -  

  • Injury Before Marriage - PI proceeds are the SP of the victim spouse 

    • If, CP or non-victim spouse’s SP is used to pay for victim spouse’s injury related expenses, victim spouse must reimburse CP or SP of other spouse from victim spouse’s SP tort proceeds 

  • Injury During Marriage - injury proceeds for a claim are CP 

    • Divorce → all proceeds are assigned to the injured spouse, UNLESS 

      • (1) Proceeds have been commingled w/ CP and are untraceable, (2) proceeds have been spent, or (3) justice requires awarding a portion to the non-injured spouse, but at least ½ proceeds must be assigned to injured spouse 

    • PI proceeds from inter-spousal tort are the SP of the injured spouse

Division upon Death - tort proceed for PI are characterized as CP at the death of either spouse

Retirement benefits

accrue during marriage, both vested and unvested pensions are CP

• Allocation of the CP Share - 

  • Time Rule - if the retirement benefits are based upon the number of years employed & were partly earned (co-mingled) before marriage, courts apply this rule to determine SP and CP interests 

    • Determining CP interest →

      •  Numerator - # of yrs employed while married  | Denominator - # of yrs under the retirement plan

  • Federal Preemption - community doesn’t have an interest in the pension plan governed by ERISA 

    • Once the federal benefit is paid out, CP rules apply 

• Distribution Methods - if spouse isn’t eligible for benefits at the time of divorce, court will apply one of these methods:

  • Division in Kind - court will reserve jurisdiction to supervise payment upon retirement 

    • The “Time Rule ” will be applied to the known  benefit total in order to calculate the percentage paid to CP

  • Cash Out - if a present value can be ascertained, the nonparticipant spouse is awarded cash or assets equal to the value of their CP share of the benefits 

Time Rule

way of calculating retirement benefits; allocation of CP Share

•  if the retirement benefits are based upon the number of years employed & were partly earned (co-mingled) before marriage, courts apply this rule to determine SP and CP interests 

  • Determining CP interest →

    •  Numerator - # of yrs employed while married  | Denominator - # of yrs under the retirement plan

federal preemption

way of calculating retirement benefits; allocation of CP Share

• community doesn’t have an interest in the pension plan governed by ERISA 

  • Once the federal benefit is paid out, CP rules apply

division in kind

• way of calculating retirement benefits; allocation of CP Share

• court will reserve jurisdiction to supervise payment upon retirement 

  • The “Time Rule ” will be applied to the known  benefit total in order to calculate the percentage paid to CP

cash out

• way of calculating retirement benefits; allocation of CP Share

• if a present value can be ascertained, the nonparticipant spouse is awarded cash or assets equal to the value of their CP share of the benefits 

stock options

• Subject to Community Property - stock options awarded by an employer are a form of comp & will be CP to the extent they replace earnings during marriage, remain CP as long as they were accrued during marriage, even if they aren’t exercisable until after divorce

• Allocation of the CP Share - Hug or Nelson Formula

Hug Formula

courts apply to determine SP and CP interests

•  if stock options are granted to compensate an employee for past services (or attract new employee) then the court will calculate the amount of time between the date of hire (DOH) and date of separation (DOS)

  • DOH - DOS divided by the amount of time between date of hire (DOH) and date of options vesting (DOV) 

  • Result is the community property share of the stock options 

  • CP  = (DOH - DOS) / (DOH - DOV) = # of shares 

  • SP = # of shares - CP 

Disability Benefits

• Replacement analysis - characterize disability benefits, including worker’s comp benefits, by what they are intended to replace |  Earnings before marriage are CP, earnings after divorce/separation are SP 

  • If disability benefits taken in lieu of retirement benefits, they are treated as SP to the extent the payment is replacing a retirement benefit

Severance Pay

• - is paid upon termination of employment and is subject to a split of authority 

  • If the reason the employer awarded severance pay is a result of (or as a reward for) the labor during marriage, it’s CP

  • If it was paid to replace post-termination future earnings, severance paid during marriage is CP , but payments after divorce/separation are SP 

whole life

type of life insurance

• used as an investment vehicle & has a cash value 

  • Subject to pro rata apportionment based upon the PS/CP ratio of all premium payments 

  • Divorce → present cash value of the policy distributed according to the pro rata share 

  • Death → proceeds characterized and distributed according to the pro rata share 

  • A non-spouse beneficiary is limited the deceased spouse’s SP and ½ CP share

    • Surviving spouse (if not named beneficiary) gets other ½ of CP share 

term life policy

type of life insurance

• majority of courts hold a term life policy has no present cash value before death 

  • Upon death, characterize the policy based upon the source of funds (whether SP or CP) used to make the final  premium payment 

separate property business

• facts stating a spouses start a biz before or during marriage w/ SP funds & worked for that biz during marriage

• An SP biz that increases in value during marriage becomes a co-mingled asset subject to a CP share

  • The labor of a spouse during marriage for the benefit of the community is a CP asset

• Allocating → courts have discretion to apply one of 2 formulas in order to promote substantial justice between parties

Pereira Formula

applicable when the increase in value due largely to the time, skill, and labor of spouse, not outside market forces

• Eg: restaurants, clothing designer, personal care products - think P → personal care, effort, favors community 

• Favors the CP estate because the SP only gets an investment return on the initial value of the business 

• Allocating the SP and CP share of the biz under Pereira: 

  • SP = FMV (fair market value) of SP biz at time of marriage + (FMV of SP biz at time of marriage x Fair Rate of Return x # of years of marriage) 

  • CP = FMV at the time of divorce/separation - SP 

  • TIP - use 10% of fair rate of return

Van Camp Formula

typically used (1) increase in value due to the inherent value of the asset or investment, (2) increase is due to market forces, (3) spouse’s salary & other income (eg: bonuses, stock dividends, etc.) or family expenses traceable to the biz have already compensated the community for the spouse’s efforts → eg: apartment building, real estate, monopoly biz

• Favors the SP estate because the CP is merely reimbursed for the value of its labor 

• Step 1 Allocating the SP and CP share of the biz 

  • CP = (reasonable value of spouse’s services - annual family expenses) x # of years married 

  • SP = FMV at  the time of divorce - CP

• Step 2 If spouse was undercompensated, the court may award equitable apportionment to the CP estate 

  • equitable apportionment - goal is to determine whether CP estate has already received value of spouse’s service through salary received & family expenses 

  • Multiple valid ways to calculate equitable apportionment, but as long as family expense were drawn different from the biz, easiest method is to subtract total salary received from the Van Camp CP value of the biz  

reverse pereira formula

• CP = FMV at separation + (FMV at separation x 10% x separation years)

• SP = FMV of biz at divorce - CP

Avord if increase in value of biz due to spouse’s effort and labor after separation

Reverse Van Camp Formula

• SP = reasonable value of spouse’s services during separation - SP expenses paid during separation 

• CP = FMV of biz at divorce - SP 

• Favored if increase in value of business due to market conditions after separation 

Goodwill

• an intangible quality that includes the reputation and future business potential of a professional practice 

• value of a biz or a professional practice in excess of the value of its combined physical assets and labor 

• Biz subject to goodwill must be an entity, not merely a natural person 

• Division - if a spouse has developed a biz or professional practice during marriage, any goodwill in that biz or practice is a CP asset that is capable of equal division at divorce 

valuation

• often requires expert testimony, 2 common methods 

  • Market sales valuation OR capitalization of past excess earnings compared to typical peer businesses

during marriage

property acquired on credit, during this time:

• presumed to be CP

  • Test - what is the intent of the lender ?, did it primarily rely on SP or PC as security?

  • SP proponent can rebut CP presumption by demonstrating lender intended to primarily rely on SP assets as collateral when extending credit 

  • Some courts - heighten the test to “sole intent”of the lender to rely on SP 

  • Characterization applies to property at the time it was acquired

before marriage

property acquired on credit, during this time:

• presumed SP

• Rule - Pro Rata Apportionment - when an installment purchase is made before marriage (SP), but CP fund are used to pay down the debt during marriage, the CP estate acquires a pro rata interest in proportion to the amount of principal is reduced by CP payments 

• Payment towards interest, taxes, and insurance are excluded because they don’t add equitable interest to property 

• Rule also applies to property inherited during marriage (SP), then mortgage obtained & paid w/ CP payments during

capital improvements to real property

a permanent structural change or restoration that enhance the value of real property 

• Issue → spouse spends funds on improving property; should money spent be reimbursed, or does it create ownership interest

SP used to improve Spouse’s SP

• Capital Improvements to Real Property

• as of 2005, there is a statutory right to reimbursement absent a waiver of this right or a written transmutation 

SP used to improve CP

• Capital Improvements to Real Property

•  statutory right to reimbursement, if funds can be traced to a SP source, prior 1985 - gift presumed

CP used to improve SP

• Capital Improvements to Real Property

• a CP contribution doesn’t change the SP characterization of the property, 2 scenarios:

  • CP used by a spouse to improve own SP         |         CP used to improve the other spouse’s SP 

  • In either situation, CP estate has a right to the greater of the following:

    • The funds spent on improvement will be reimbursed, or a pro rata interest in the enhanced value of the SP

liability for debt

look for creditor in fact pattern seeking to recovery against CP or SP assets for repayment of a debt 

Timing - depends upon when it was incurred 

• Liability of the community for a debt ends upon the date of separation 

General Rules - community is liable for any debt incurred by either spouse before or during marriage, regardless of which spouse had control over community property and regardless of whether one or both spouses incurred the debt 

• Community has a right of reimbursement on divorce 

• SP of a married spouse is liable for any debt that spouse incurred before or during the marriage 

• But the other SP of a married spouse isn’t liable for any debt incurred by other spouse before or during marriage

debt incurred before marriage

• Liability - SP, debtor spouse, & CP liable for spouse’s debt incurred before marriage, including child, spousal support

• Exception- CA allows a non-debtor spouse to shield CP wages against recovery for the debtor for spouse’s pre-marital debts by placing their wages in a separate bank account to which debtor has no access, right to withdraw 

• Child & Support Payments - absent a written waiver, CP estate is entitled to reimbursement for payment made for child & spousal support, but only if SP of debtor spouse was available to pay debt at time of payment made 

debt incurred after marriage

• Liability - SP of debtor spouse and CP are liable for debts incurred during marriage 

  • SP of non-debtor spouse is not liable for debts of other spouse 

• Necessaries for life exception - non-debtor spouse’s SP liable - 

  • Each spouse personally liable (CP & SP) for debt incurred before separation for “necessaries of life”

    • (eg: food, clothing, shelter, medical expenses)

  • After the date of separation, personal liability (CP & SP) is limited to debts incurred for the common necessaries of life, (eg: expenses to sustain life) 

  • Right of reimbursement - absent a written waiver, non-debtor spouse who used SP funds to pay for any necessaries of life debt incurred by debtor spouse can be reimbursed if CP or SP of debtor spouse was available during payment 

• Upon divorce the non-debtor spouse is liable only if the courts assigns the debt to them 

debt allocation upon divorce

• Upon divorce → court will assign the debts and liabilities to the parties 

• Goal - ensure there is property available to meet the obligations of the spouses 

• Equal Division Rule - CP debts are divided equally; Exceptions - 

  • If the CP debts exceed CP assets, excess debts may be assigned in court’s discretion factoring in parties ability to pay 

  • Any outstanding education loans obtained before or during marriage are assigned to spouse to who took out loan 

  • Debt incurred during marriage, but not for benefit of the community, can be assigned to spouse who incurred debt

Tort Liability

if a spouse commits a tort during marriage, the SP of that spouse and CP is liable 

• Test - did the tort occur during an activity undertaken for the benefit of the community?

  • If yes → claim is paid first from CP and then from SP of tortfeasor spouse 

  • If no → claim is paid first from the SP of the tortfeasor spouse and then the CP 

fiduciary duty

• by nature of their confidential relationship, spouses owe each other a duty to act in the highest good faith and fair dealing in regard to management and control of the CP, including:

  • Duty to disclose all material facts & info relating to assets and debts of the community 

  • Duty to account and provide access to all records of assets & debts of community upon request 

  • Duty to obtain consent before making a gift of CP or transferring CP real property 

• To establish a breach of FD, spouse must show intentional misappropriation or grossly negligent or reckless conduct 

  • Mere incompetence or negligence isn’t actionable 

• Remedies – for breach and impairment of the non-consenting spouse’s ½ CP interest include:

  • (1) an accounting, (2) adding the spouse’s name to the title, (3) receiving a greater share of CP, (4) forfeiture of an asset if fraudulently concealed 

• Time Limitation - during marriage, there’s a 3 year stat of limit upon learning of breach of duty, or upon divorce or death of spouse 

equal management and control

both spouses have equal rights to manage & control CP, → buy/sell CP & incur CP Debt Exceptions

• Bank accounts in other spouse’s name - banking laws limit

• Gifts and transfers of CP personal property - spouse can’t gift to a 3P or sell property for less than reasonable value, unless spouse receives the written consent

  • Household Goods - written consent of other spouse required before spouse conveys, encumbers, or sells CP that’s used as family dwelling or that’s household furniture, furnishings, or family clothing 

  • Remedies - during marriage - non-consenting spouse may revoke the gift & sue to recover property 

    • Using equitable defenses such as ratification, estoppel, and waiver 

    • Upon divorce or donor death → non-consenting spouse may, but void the gift but recovery is limited to surviving spouse's ½ CP share 

• Community Business Assets - managing spouse in charge of CP biz has “primary” management and control over biz 

  • Prior written notice to other spouse required before a sale, lease, exchange, or encumbrance of all or substantially all of the personal property used in the biz 

  • Remedy - non-managing spouse may pursue a remedy for breach of FD (accounting, greater CP share, or forfeiture) if managing spouse caused a detrimental impact to the CP interest 

• Management & Control of CP Real Property - 

  • Both spouses must sign any instrument where community real property is sold, conveyed, encumbered, or leased for a period longer than 1 year 

    • Attorney’s Lien Exceptions - one spouse may encumber their interest in community real property as security for payment of atty’s fees for spouse’s annulment, divorce, or separation proceedings 

    • Titled in Name of One Spouse - if community real property is titled in the name of only 1 spouse, transfer to a bona fide purchaser (BFP) is presumed valid but is subject to recovery by the other spouse 

  • Remedies - 

    • During Marriage - nonconsenting spouse has 1 year to void a transfer (refund BFP), or may pursue a remedy for breach of the spouse’s fiduciary duty 

    • Upon divorce or death - recovery limited to the spouse’s ½ CP interest 

Nelson Formula

• stock options are granted to incentivize continued employment

  • CP = CP = (DOG - DOS) / (DOG - DOV) x # of shares

  • SP = = # of shares - CP

Hug Formula

•  grant to compensate the employee for past service or incentivize new employee 

  • CP = (DOH - DOS) / (DOH - DOV) x # of shares.

  • SP = # of shares - CP.