Professor H. Chang
2. You have 2 hours and 30 minutes to complete this exam.
3. There are 2 essay questions each worth 50 points and 1 short answer bonus question worth 5 points. The suggested time for each essay question is 1 hour and 10 minutes. However, you may allocate your time as you wish.
4. All events take place in California unless otherwise stated.
5. Conclusions without explanation or analysis will not receive any credit.
6. Put your exam number on all used bluebooks. Return all materials at the end of the exam.
GOOD LUCK!!! Have a great summer!!!
Community Property Final Exam-Question One (50 points)-One Hour+-Spring 2001
All events take place in California unless otherwise stated.
Herman met Ariel during the summer of love in San Francisco. They pronounced themselves "married" during a Grateful Dead concert in the park. In 1969, Herman inherited $100,000 from his grandmother. He and Ariel use $50,000 to buy a house in the Haight Ashbury neighborhood of San Francisco. Title to the house is in Herman and Ariel's names as joint tenants. Herman uses the remaining $50,000 to start a business in fortified herbal teas called "HerBe Teas". Herman also begins paying premiums on a life insurance policy for $1 million. The sole beneficiary under the policy is his daughter Dora.
In 1972, Herman begins a relationship with his office manager Bonnie. To assuage his feelings of guilt, he tells Ariel that she can continue to live in the Haight Ashbury house with their daughter Dora. Bonnie quits HerBe Teas and marries Herman in 1974. Later that year, Herman and Bonnie buy a house in Napa Valley for $500,000, with a down payment of $100,000 paid by Herman. They take title as "Herman and Bonnie, as equal tenants in common." As a wedding gift, Herman gives Bonnie a red convertible Ferrari. Title to the car is in Bonnie's name only. Herman continues to draw an annual salary of $100,000 as CEO of HerBe Teas.
In 1980, while in Las Vegas, Bonnie wins $10,000 playing blackjack. She uses the winnings to buy a Jackson Pollock painting. Title to the painting is in Bonnie's name only. When the painting is stolen in 1985, the home insurance policy paid for its loss. Herman had paid for all of the home insurance premiums with his income form HerBe Teas. Bonnie uses the $10,000 insurance monies to buy MicroSoft stock. Title to the stock is in Bonnie's name only.
In 1985, Herman opens a Los Angeles office for HerBe Teas and begins commuting between Southern and Northern California. When he meets Claire, he tells her that his marriage to Bonnie is over and that he and Claire should be together. Herman and Claire get "married" in 1986. Herman buys a house in Palos Verdes for $1 million. Title is taken as, "Herman and Claire, as, husband and wife."
In 1987, while on vacation in Hawaii, Herman buys a beachfront condo for $250,000. Title is in Herman's name only. In 1990, Herman is accidentally poisoned while taste testing a new drink for HerBe Teas. The sole beneficiary under Herman's will is his daughter Dora.
What are the rights of Ariel, Bonnie, Claire and Dora in his estate?
Community Property Final Exam- Question Two (50 points)-One Hour-Spring 2001
All events take place in California unless otherwise stated.
While in business school, Wendy developed designs for edible lingerie made of fruit gels. In 1982, 'Wendy borrowed $25,000 from her parents to start a business called, "Candy Pants". In 1983, Wendy married Harry, one of the models for "Candy Pants". They bought a home in Sausalito for $500,000, taking title as "Wendy 90 percent and Harry 10 percent, tenants in common." Wendy paid the $100,000 down payment from her trust fund. At the close of escrow, Wendy tells Harry, "Don't worry. This house belongs to both us."
Harry has high aspirations and manages to get admitted to Golden Gate Law School in 1984. Concerned about the high cost of tuition and of burdening Wendy, Harry obtains a student loan for $50,000. Wendy continues work at Candy Pants as its CEO and chief designer. She pays herself an annual salary of $100,000. 1985 was a particularly successful year so Wendy pays herself a bonus of $25,000. She uses $25,000 as a down payment on a condo in VaiI, Colorado, taking title in her own name. Wendy pays for all mortgage payments from her salary at Candy Pants.
After graduating from law school in 1987, Harry begins work at Pine, Gas and Energy as an environmental lawyer. Harry earns an annual salary of $50,000 plus a generous retirement plan that will fully vest in 10 years. In 1988, Harry publishes a tell-all book about Wendy entitled, "Inside the Candy Pants". Harry is paid $150,000 in royalties. Wendy is very upset and Harry seeks solace with GiGi another PG&E employee. Harry moves out of the house and in with Gigi. Harry uses $50,000 from his royalties to buy a Lake Tahoe cabin for GiGi. Title to the cabin is in GiGi's name only.
In 2000, PG&E discovers that Harry has embezzled $4.3 million which has contributed to the current financial woes of PG&E. PG&E sues Harry and recovers a judgment against him for $2 million. All of Harry's employment benefits are terminated. At a fundraiser for PG&E, Wendy assaults GiGi with an ice pick resulting in permanent facial scarring. GiGi sues Wendy and recovers a judgment for $50,000.
Wendy files for dissolution. How should the following property be divided:
(1) The Sausalito home now worth $1 million; (2) Harry's law school loan; (3) Candy Pants now worth $3 million; (4) The condo in Vail, Colorado; and, (5) The Lake Tahoe cabin.
What assets can PG&E and GiGi reach to satisfy their judgments?