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Property transferred to non-filing spouse as sole and separate
Shannon:
Without seeing the documentation and getting the answers to lots of questions, if a third party left the house to the husband and H&W were not settlors of the trust, then the property was his separate property (SP) under CA law. Her quit claim at the time was meaningless as she had no interest in the property and therefore there could not be a fraudulent whatever we call it these days.
Typically, the reason for a quitclaim is that a lender wants a clear record that the borrower spouse has a 100% interest in the property to which their TD will attach. The use of a quit claim in this situation would indicate that H took out a loan secured by his SP house and that he was the sole borrower. Assuming that is correct and assuming the lender did not rely on W's income in making the loan, the loan would not have changed the character of any portion of the property.
Assuming no prenup, if there were loan payments made from CP (wages, salary, etc.) after acquisition a certain amount of community property (CP) interest would have been created by those payments to the extent of the decrease in principal. If the loan is a 30 year loan, one would expect to find a de minimis paydown of principal and therefore a de minimis CP interest.
As you can see, there are a lot of factors to be evaluated to determine if the there is any or enough meat on the bone in this fact pattern to get a trustee's antennae vibrating.
Nick: Beverly applies to an unequal division of CP on dissolution. The same principle was enunciated by the California Supremes (not to be confused with the Detroit Supremes) in Mejia v. Reed, where the Supremes agreed with the appellate court that "it is unlikely that the Legislature intended to grant married couples a one-time-only opportunity to defraud creditors by including the fraudulent transfer in an MSA." Neither would apply here.
If you have any questions or concerns, please contact me.
Pat
Patrick T. Green
Fitzgerald & Green, Attorneys at Law
1010 E. Union St. Ste. 206
Pasadena, CA 91106
Ph: 626-449-8433
Fax: 626-449-0565
Email: pat@fitzgreenlaw.com
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