In re Marriage of Cooper

California Court of Appeal, Third Appellate District (Sacramento) · 2016 · Family Law

Family LawCommunity PropertyProperty CharacterizationReimbursementWatts chargesEpstein creditssection 2581section 2640

Facts

During marriage, the parties opened four investment accounts in joint title, although the wife presented testimony and account records indicating the funds came from her premarital account and proceeds from sale of her separate-property residence. The parties also bought an Elk Grove house during marriage in joint title, and the wife testified the approximately $40,656 down payment came from her separate-property savings, but no specific writing or account record traced that payment. After legal separation in June 2004, the wife lived exclusively in the house until trial, paid taxes, insurance, maintenance, and repairs, and the husband later pursued a separate dissolution action in Hawaii from 2005 until mid-2011 before the California case resumed. The trial court credited the wife on all disputed points except that the appellate court reviewed whether the evidence and governing presumptions supported those rulings.

Issue

Whether jointly titled investment accounts acquired during marriage could be characterized as the wife's separate property based solely on tracing evidence, whether the wife sufficiently traced the down payment on the marital residence to separate property, and whether the trial court properly denied Watts charges while awarding Epstein credits for the wife's postseparation exclusive use and upkeep of the residence.

Rule

Property acquired during marriage in joint title is presumed community property under Family Code section 2581, and that presumption may be rebutted only by a clear statement in the title document or other documentary evidence of title showing separate-property status, or by a written agreement; tracing alone or oral testimony is insufficient to overcome the presumption. Even if joint title makes the asset community property, a spouse is entitled under section 2640 to reimbursement for separate-property contributions traced to a separate-property source absent a written waiver. Direct tracing of a separate-property contribution requires specific written records showing the source of funds. Watts charges and Epstein credits are equitable matters committed to the trial court's discretion.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

During marriage, Elena Ruiz opened a brokerage account in San Diego titled in joint tenancy with her spouse, Marcus Flynn. At dissolution, Elena produced statements showing every dollar deposited into the account came from a condominium she had owned before marriage, but she offered no deed language, account title document, or written agreement stating the account would remain her separate property.

How should the court characterize the brokerage account?

Explanation. Under the majority rule, property acquired during marriage in joint title is presumed community property under Family Code section 2581. That presumption may be rebutted only by a clear statement in the title document or other documentary evidence of title, or by a written agreement. Elena's tracing evidence may support reimbursement, but it cannot change characterization from community to separate without the required writing.