1. You have two (2) hours to complete this exam.

2. This is a closed book exam.

3. This exam consists of one (1) essay question.

4. Please write your responses in the blue books provided. Please write clearly. Write on every other line and every other page to permit instructor comments.

5. Write your exam number on your exam envelope. Put your student exam # at the top of this page, each page of questions, and each blue book. Do not use your name, student ID number or Social Security Number on any exam materials.

6. At the conclusion of the exam, return all exam materials to the exam envelope and submit it to the proctor. Do not seal the envelope. Students who do not return all exam materials at the end of the exam may not be graded.

GOOD LUCK!

Wanda, a forty-five year old nurse, had been conducting a clandestine affair with her son’s roommate, Hal. When Hal and her son graduated college in June 1998, Wanda decided it was time to make their relationship public. Hal and Wanda started living together. Then, in January 1999, at the joking suggestion of her tax accountant, Wanda formally proposed to Hal.

He surprised both of them by accepting. They decided to elope to Reno. As they stood in line for the marriage license, Wanda handed Hal a piece of paper to sign. It said, in its entirety:

“We agree that we are kindred spirits. We do not believe in societal or governmental regulation of our lives. Even though we are getting married, we are doing so solely to reduce Wanda’s income taxes. We do not intend to legally share any of our property as husband and wife.”

They had a twenty-four hour honeymoon at Circus Circus before returning home to San Francisco. Unable to find a job since graduation, Hal applied to law school and was accepted. He started in August 1999 and graduated May 2002.

Hal started out as a sole practitioner and made a name for himself right away as an environmental lawyer. He was so grateful to his law school for the fine training he received that he donated $10,000 of a $100,000 fee to the Environmental Justice Clinic.

Now, at the ripe age of twenty-eight, Hal has decided that his relationship with Wanda no longer serves his needs. He feels a little guilty about it because Wanda was just injured in a fall at Safeway and will be unable to work for at least six months. But Hal feels an obligation to Wanda and plans to help her out with the medical bills and any helpers she may require.

At your request, Hal prepared the following summary of their respective assets:

1. Wanda’s house – awarded to Wanda by the divorce court at the conclusion of her first marriage in 1990. Wanda was fond of bragging that she and her former husband bought it for $100,000 in 1980. It is now worth $1,000,000.

2. Wanda’s defined contribution pension plan at the hospital – her employer matches Wanda’s contributions up to 5% of her salary. The plan is now worth $500,000.

3. Wanda’s stock portfolio – it was worth $200,000 when they married but, given the dot.com bust, it is now worth only $20,000. No withdrawals were made during marriage.

Hal has no assets. But he does have $125,000 of student loans ($50,000 for college and $75,000 for law school).

Advise Hal about the relevant community property principles that govern his situation. If you need any additional factual information, please specify what else you would like to know and how it would affect your answer.

END OF EXAM