INSTRUCTIONS:

1. This exam is closed book.

2. You have 2 hours and 15 minutes to complete 3 questions.

3. There are 2 - one hour essay questions each worth 50 points.  There is also one - 10 minute short answer bonus question worth 5 points.  The time for each question is suggested only.  You may allocate your time as you wish.

5. GOOD LUCK!!

Question One - 50 Points (One Hour)

All events take place in California unless otherwise stated.

In 1969, Harry graduates from Southern Texas law school and decides to live with Wendy as husband and wife.  They tell their parents and friends that they are married under the common law of Texas.  Harry's parents give them 10 acres of Texas land as a wedding gift.  The land is in Harry's name only.

After Harry tries to pass the Texas bar exam for ht tenth time, they decide to try their luck in the golden state.  In the summer of 1974, Harry and Wendy move to San Francisco and buy a Victorian in Cole Valley for $250,000.  Wendy uses $100,000 from her trust fund as a down payment on the house.  Title is taken as tenants in common.  At the close of escrow, Wendy asks "Are you sure that my trust fund money will always be mine?"  To clam Wendy's doubts, Harry writes on a note, "I, Harry, waive any interest in Wendy's trust fund."  Harry pays for all mortgage payments with his salary as a paralegal.

While Harry studies for the bar exam, Wendy continues to paint and sculpt.  When the museum of modern art decides to exhibit some of Wendy's work, Wendy is an overnight success.  An original Wendy sculpture made in 1965 is sold for $80,000.  Wendy uses the $80,000 to buy stock in a start up company called IBM.  The stock is in her name only.

In 1985, Wendy sells the stock for $100,000.  She uses $50,000 of the sale proceeds to re-model the Victorian.  Wendy and Harry also re-finance the property and title is transferred into Wendy and Harry's names as joint tenants with right of survivorship.  Wendy uses the remaining balance of $50,000 to buy a sailboat in her name only.  Insurance premiums for the boat are paid by Harry's new law firm.  Harry opens his law firm using $10,000 from their joint savings account. 

In 1990, the sailboat is destroyed by a dock fire.  The insurance proceeds are used to buy stock in a new television cable company called the People's Choice TV.  The stock is in Wendy's name only.

In 1992, Harry moves into an apartment and continues to draw a salary of $100,000.  Later that year, Harry files a class action lawsuit on behalf of women with silicone breast implants.  In 1984, Wendy files for dissolution.  What are the respective rights of the parties in the following property?

1. The Texas land;

2. The San Francisco Victorian house now worth $1 million

3. The People's Choice TV stock now worth $2 million; and;

4. Harry's law firm

Question Two - 50 points (One hour)

All events take place in California unless otherwise noted

In 1990, Matilda gives her son Howard $10,000 so he can start his own business in developing an internet web browser.  Howard's business "Yippee" is soon booming.  Howard meets Ana in a chat room and they decide to finally meet in person for coffee.  Howard and Ana marry in 1992.  Later that year, "Yippee" goes public and Howard's "Yippee" stock is worth $20 million.  All "Yippee" stock is in Howard's name.  Howard continues to operate "Yippee" as its CEO.

After Howard and Ana's daughter is born in 1993, they decide to sell Howard's condo for $500,000.  They buy a house in Belvedere for $3 million cash using the $500,000 condo sale proceeds and monies from the sale of "Yippee" stock.  Title to the house is taken as, "Howard and Ana, as husband and wife."  Howard tells Ana, "If something happens to either of us, the house will belong to the other."  Unbeknownst to Ana, Howard gives Matilda a deed to the Belvedere house transferring a 50% interest to Matilda.  Howard tells Matilda not to record the deed but Matilda records it anyway.

In 1995, Howard buys a condo in New York where he frequently spends time with Bea.  Howard tells Bea that Ana won't give him a divorce but that he and Bea can still live together as a common law husband and wife.  Title to the New york condo is take as "Howard and Bea, as husband and wife."  Howard also buys a vintage clothing store in Greenwich Village for $100,000 and places title in Bea's name only.

Concerned about Howard's time in New York, Ana decides she needs financial security.  Ana takes out a life insurance policy insuring Howard's life for $5 million.  The premiums are paid from Howard and Ana's joint bank account.  All deposits into the account are from "Yippee" stock dividends.  Ana names their daughter as the beneficiary.

In 1997, Howard is slain by unknown assassins and dies intestate.

How should the following property in Howard's estate be divided?

1. "Yippee" stock;

2. The Belvedere house;

3. The New York condo;

4. The vintage clothing store; and,

5. The life insurance proceeds.

Question Three - 5 Bonus Points (10 minutes)

What is the classification of a personal injury settlement at death?