Are We Married?

ISSUES THAT ARISE WHEN MARRIED COUPLES FILE

• INTRODUCTION: Need to know and understand the impact of being married or separated
  • Disso rate in California is 50%
  • Transitory nature of California population
  • Marital problems usually come with financial problems
  • Increase in real estate values last two years
  • An old problem (on 1982 bar exam)
  • Effects 3 areas: income, assets and exemptions
  • One of the biggest problems for Debtors, also of malpractice for their Attys.
• INCOME – 11 U.S.C. § 707 (b)
  • All community property income, and filing spouse’s separate property income, included in this analysis.
  • Community income defined, not after physical or legal separation
  • Alternatives
    1. Not file
    2. File Chapter 13
    3. File later, when marital status is resolved.
• PROPERTY OF THE ESTATE
  • Before commencing dissolution proceedings
    1. Per 11 U.S.C. § 541, all community property. Community property is all property acquired during marriage except by inheritance, gift or bequest.
    2. But most property is held as joint tenancy.
    3. In re Summers’ holding
    4. Summers’ reasoning.
    5. Summers’ presumption is rebuttable.
  • During dissolution proceedings/before final property division
    1. One spouse unsatisfied with proposed property division
    2. In re Mantle, 153 F.3d 1082 (9th Cir. 1998)
    3. Per 11 U.S.C. § 541, all community property.
  • After final property division
    1. Once the family court’s judgment is final, any division of property is res judicata as to a later filed bankruptcy. After division of property, community property ceases to exist. In re Keller, 185 B.R. 796, 800 (9th Cir. BAP 1995)
    2. Property division still subject to attack as fraudulent transfers. Mejia v.Reed (2003) 31 Cal. 4th 657.
  • Separate property
    1. Community property interest in non-filing spouse’s separate property
    2. Moore/Marsden analysis apportions
• EXEMPTIONS
  • Basic rule, one per marital unit (See C.C.P. Section 703.110). Sections 703 and 704 are mutually exclusive.
  • Need written consent of spouse to use 703 exemptions (See C.C.P. Section 703)
  • The Homestead
    1. Amount:$50,000, $75,000, $150,000
    2. Some exceptions:
       • $75,000, even if property is somewhere else (See In re Arrol, 170 F.3d934 (C.A.9 (Cal.), 1999)
       • $100,000, but see issue regarding separated spouses with no children; this amount may not be available (See C.C.P. § 704.730 and 704.710)
       • $175,000- over age 65, disabled, or over 55 making less than a specified sum, (See In re Goldman, 70 F.3d 1028 (C.A.9 (Cal.), 1995) , but what about gross or net income if self-employed?)