COMMUNITY PROPERTY FINAL EXAM SUMMER 1999- PROF. CHANG

INSTRUCTIONS:

2. You have 2 hours and 10 minutes to complete three questions. There are two - 1 hour essay questions and one - 10 minute short answer question. The time for each question is suggested only. You may allocate your time as you wish.

3. Please remember to write your exam number on all blue books. Return the exam question with all blue books when you are done.

4. GOOD LUCK! ! !

QUESTION ONE-ONE HOUR (50 POINTS)

All events take place in California unless otherwise stated.

In 1974; Wendy met Harry at the casino while playing blackjack. Wendy was impressed with Harry's hands as he shuffled the deck. Wendy wins $10,000 and marries Harry in the same night! Wendy and Harry buy a house in San Francisco for $50,000 using Wendy's $10,000 winnings as a down payment. Title to the house is in Wendy's name only. All mortgage payments are paid form Harry's salary as a card dealer.

While Wendy studies statistics to hone her gambling skills, Harry finds work as a hind model. Harry's hands are a hot commodity. In 1975, Seiko signs Harry to a modeling contract for $250,000 a year. Harry and Wendy sell the San Francisco house and use the $20,000 sale proceeds as a down payment on a $100,000 house in Ross. Title to the house is taken as joint tenants with right of survivorship. Harry pays for all mortgage payments from his modeling money. Unbeknownst to Wendy, Harry gives his mother a quitclaim deed transferring his interest in the house to her.

In 1980, Wendy inherits $20,000 from her aunt. She uses $10,000 from the inheritance to install a lap pool at the Ross house. She gambles the other $10,000 and ends up winning $20,000. Using her winnings, Wendy buys AT&T stock in her name only.

In 1981, Harry's hands are accidentally burned by a defective waffle iron. Harry's lawsuit against the manufacturer is settled for $500,000. Harry uses the settlement to open a seafood restaurant called Harry's Grill. Harry pays himself an annual salary of $25,000 as the manager. Harry also buys a life insurance policy.

Wendy's gambling takes her frequently to Las Vegas. In 1985, she sells the AT&T stock and uses the $50,000 sale proceeds to buy a condo in Las Vegas in her name only. She tells Harry, "I am leading my own life but it's too expensive to get a divorce. We might as well stay married." Harry files for dissolution in 1986.

What are the respective rights of the parties in the following property:

1. The Ross house now worth $500,000;
2. The Las Vegas condo;
3. Harry's Grill; and
4. The life insurance policy.

QUESTION TWO-ONE HOUR (50 POINTS)

All events take place in California unless otherwise stated.

Henry met Alice in the summer of love in San Francisco. They lived together in the Haight district and told their friends they were married under the common law. In 1972, Henry's parents offer him $25,000 to open a coffee bar in exchange for his promise to cut his dred locks. Henry agrees and opens "Has Beans" in Berkeley.

In 1975, Henry opens another Has Beans in Sacramento. When Bonnie walks in for a latte, it is love at first sight. Henry and Bonnie legally marry in 1980. Henry continues to operate Has Beans as its CEO and pays himself an annual salary of $100,000. They buy a house in El Dorado Hills for $500,000 cash taking title as, "Henry and Bonnie as husband and wife."

In 1980, Henry sells Has Beans for $500,000 and uses the proceeds to buy a winery in Napa Valley. Title to the winery is taken in Henry's name only. Henry manages the winery and pays himself an annual salary of $100,000. Henry spends at least two weeks each month at the winery. When Henry meets Claudia, he tells her that Bonnie is dead. Henry and Claudia get "married" in 1982. Henry buys Claudia a $10,000 diamond tiara as a wedding gift and says, "From now on, what's mine is yours." Henry's gift and statement are videotaped.

In 1987, Bonnie's grandmother dies leaving Bonnie 100 acres in Texas. Title to the Texas land is in Bonnie's name only. Bonnie sells the mineral rights for $500,000 and deposits the monies into a joint bank account.

In 1990, Henry assaults another winemaker. Walter sues Henry and obtains a judgment against Henry for $15,000. In 1992, Henry accidentally drowns in a barrel of crushed cabernet grapes. Henry dies intestate.

(1) How should Henry's estate be divided?


(2) What assets can Walter reach to satisfy his judgment?

QUESTION THREE-TEN MINUTES (BONUS 5 POINTS)