Family Law – Fall 2001, U of Iowa – Prof. Estin

I.       Marital and Cohabitation Agreements

A.    Premarital Agreements

1.                  Early on, couples could not contract around divorce laws.

2.                  No-fault divorce laws treated marriage as K.

3.                  Antenuptial agreements often treated like K, but with special rules. (Fletcher)

4.                  Three-part test for enforceability of a antenuptial agreement (Fletcher):

a)                 Entered into freely without fraud, duress, coercion, or overreaching

(1)                “overreaching” – on party outwits or cheats the other “by artifice or cunning, or by exploiting a significant disparity in understanding of the nature of the transaction.

b)                 Full disclosure, or full knowledge and understanding of the nature, value, and extent of the prospective spouse’s property

(1)                Need not be exact, just “full and fair”

c)                 If the terms do not promote or encourage divorce or profiteering by divorce.

5.                  If assets are distributed disproportionally upon death, burden of proving full disclosure of assets falls on party asserting validity (Fletcher – this condition met where spouse had full opportunity to review agreement and refused chance to have her own counsel review it). This is justified because:

a)                 Parties stand in fiduciary relationship;

b)                 Statutory rights to distribution are presumptive and agreement negates them;

6.                  Burden of proving fraud, duress, coercion, or overreaching remains with challenger of agreement (Fletcher).

7.                  If agreement gives one party disproportionate amount of assets upon distribution, financially disadvantaged party must have meaningful opportunity to consult with counsel (id.).

a)                 If agreement is presented right before wedding ceremony, presumption of overreaching exists if postponement of wedding would cause significant hardship.

8.                  Dead Man’s statute may make it difficult to make a claim against the estate of deceased spouse.

9.                  Antenuptial agreements are subject to the statute of frauds, meaning promises made in contemplation of marriage must be in writing.

10.             ERISA requires that waiver of rights meeting that statute’s requirements, prenuptial is not enough.

11.             Inheritance rights not waived if agreement does not include necessary language, e.g., “in the event of death of ___.”

12.             Parties should have disclosure of each other’s financial status as well as full nature of statutory rights that they are forgoing. (Simeone)

13.             Lack of actual understanding of assets and statutory rights, once disclosed, does not invalidate agreement.  Each party is responsible to him or herself. (Id.).

14.             Court might refuse to review reasonableness of terms, since parties entered marriage depending on enforcement (Simeone). 

15.             If disclosure was not given, a material representation in the inducement may be argued (id.)

16.             If full disclosure is recited in agreement, presumption is in favor of proponent (Id.).  Presumption can be rebutted by clear and convincing evidence.

17.             See UPAA (CB 34).  See IC 596.8; 596.5(2)

18.             Common law is that K imposes general or unlimited restraint on marriage it is invalid, but restraints will be upheld if reasonable and limited. (CB 34).

19.             Courts generally unwilling to enforce agreements that regulate matters taking place during marriage (CB 35).

20.             Elements of a good agreement:

a)                 Disclosure

b)                 Timing – get it done before wedding if possible

c)                 Default support provision

d)                 Separate counsel for both partners

e)                 Careful drafting – beware of ambiguity, tax and probate laws, dead man’s statues

21.             Parties to an antenuptial agreement are in fiduciary relationship, so they must act in good faith, with a high degree of fairness and disclosure of all circumstances which bear materially on the antenuptial agreement. (Newman)

22.             Whether agreement is valid or not must be determined by examining the time at which it was executed, not the time of enforcement (id.).

23.             Once appropriate tests are met, parties are free of make any arrangment, including full waiver of rights to each other’s property (id.).

24.             Maintance provisions, as opposed to property provisions, might lose validity with changing circumstances, and become voidable for unconscionability, even if made in good faith at time of execution (Id.).

a)                 Unconscionabiltiy would exist where one spouse is left without ability to meet reasonable needs.

25.             Drafter of agreement should use choice-of-law clause.

B.     Cohabitation Agreements

1.                  In absence of an express K, courts should look to whether conduct of parties demonstrates an implied K, agreement of partnership/joint venture, or some other tacit understanding (Marvin)

2.                  Quantum meruit, resulting or constructive trusts may be used when warranted by facts of case. (id.)

3.                  Nonmarital partners may contract to share property (id.)  Such agreements fail only to extent they rest upon consideration of sexual services (id.).

4.                  De facto family relationship will not be treated as de jure (id.)

5.                  No reason to presume services are rendered as a gift; better to presume consideration is involved. (id.)

6.                  Parties lawful expectations should be fulfilled through available remedies (id.)

7.                  No statutory schemes address cohabiting couples.

8.                  In NY, express agreements b/t unmarried persons living together are enforceable provided that illicit sexual relations are not part of the consideration involved. (Morone).

9.                  K can be found to exist even if services are of a type more likely to result from personal bond and if periodic payments were not made (id.).  However, if services are of such a type, and there is no express K, an implied K will not result where services appear to have been rendered gratuitously (id.).

10.              Any agreement for support between unmarried adults should or must be in writing (Posik).  Some states have a statute of frauds requiring this.

11.             Mere fact of cohabitation does not establish a fiduciary relationship.

II.     Marriage

A.    Marital & Individual Privacy

1.                  A constitutional right to privacy protects the rights of individuals and married couples alike to use contraception for purposes of reproductive control (Griswold, Eisenstadt)

a)                 This right, though not specifically enumerated in the Bill of Rights, is within the “penumbra” of privacy rights not specifically mentioned.

b)                 This right is a substantive due process right subject to strict scrutiny analysis.

c)                 Treating unmarried differently from married violated EP.

d)                 Scope of marital privacy remains unrefined

2.                  Reasonable regulations that do not significantly interfere with decisions to marry are permissible (Zablocki dictum)

3.                  Ban on contraception per se impermissible under Eisenstadt, but if primary justification is public health or deterring premarital sex, ban might be upheld.

4.                  There is no right to purely sexual privacy (bowers – sodomy ban upheld).

a)                 Dissent called for spatial and decisional privacy

b)                 Court personnel has changed since decision rendered; 2 maj remain, one dissenter.

c)                 Many states protect sexual privacy to a greater extent than Supreme Court

5.                  In order to determine whether a right is fundamental, it must be implicit in the concept of ordered liberty, deeply rooted in the nation’s history and tradition. (id.)

6.                  Same-sex couples lack access to the institution of marriage, so they cannot claim the same rights and obligations

B.     Formal and Informal Marriage

1.                  A “ceremonial marriage” is a wedding or marriage performed by a religious or civil authority with the usual or customary ceremony or formalities. (Staudenmeyer)

2.                  A number of jurisdictions recognize “common law marriage,” entered into without ceremony.  Requirments (id.):

a)                 Exchange of words in present tense with intent that legal relationship of marriage be created between W and H.

(1)                No specific form of words required

b)                 Some states require couple to hold themselves out as married

3.                  Judicial policy favors validation of marriage wherever possible (e.g. Litchfield – marriage record not filed, marriage valid nonetheless).  Party expectations support validation.

4.                  Marriage may be proven by direct or circumstantial evidence.

5.                  The doctrine of “necessaries” requires spouse to provide partner with the necessities of life, and to contract debts pertaining thereto (see id.).

6.                  Marriage license required for cermonial marriage, i.e. IC 595.3.  Purposes of license requirement:

a)                 Public record/notice

b)                 Protection against bigamy

c)                 Make sure of age

d)                 Prevent fools from rushing in

7.                  Iowa allows exceptions to solemnization requirement under IC 595.17, 595.11

8.                  Iowa recognized foreign marriages pursuant to 595.20

a)                 Whether recognition of this sort is required has not been addressed by Supreme Court

9.                  Marriage that is valid in state or country where it’s celebrated is valid in [i.e. Virginia] (lex loci contractus), unless repugnant to public policy. (Farah)

10.             A marriage that is invalid where celebrated is invalid everywhere (id. – marriage by proxy invalid in England, so VA won’t recognize it)

a)                 Validity of marriage by proxy is determined by construction of statutes governing and obtaining the license and performance of the ceremony.

b)                 Remember that common law marriage concept might provide rescue

11.             Restatement presents different rule than lex loci:  “validity determined by local law of the state which, with respect to the particular issue, has the most significant relationship to the spouses and the marriage.”  Factors:

a)                 The needs of the interstate and international systems

b)                 The relevant policies of the forum

c)                 The relevant policies underlying the particular field of law

d)                 Certainty, predictability, and uniformity of result

e)                 Ease in the determination and application of the law to be applied.

12.             Burden to prove marriage is on party alleging it, and in the case of a claim of common law marriage when parties are able to testify regarding  exchange of words, the burden is especially heavy – “great scrutiny” will be applied (Staudenmeyer). 

a)                 However, in absence of availability of testimony regarding the exchange of words required, rebuttable presumption in favor of marriage resides if party can prove:

(1)                Constant cohabitation

(2)                Broad and general reputation of marriage

b)                 When facing testimony regarding exchange of words, party alleging marriage can still introduce evidence of cohabitation and reputation, but this alone will be insufficient to carry burden of proving marriage.

13.             Even states that don’t permit common law marriage might recognize common law marriages contracted in other states (i.e. Renshaw)

a)                 States with strong policy against common law marriage won’t recognize the marriage if the couple was in a non-common-law-marriage state at the time the marriage was allegedly contracted.

14.             Common law marriage is one tool for exercising validation policy.

15.             Federal laws rely on state laws to delineate marital status and other family relationships.

16.             Putative marriage exists where an impediment make the marriage void or voidable and one or both parties are ignorant of the impediment (and has/have thus acted in good faith).

a)                 Innocent party entitled to rights incident to marriage

b)                 No cohabitation requirement

C.    Annulment and restrictions on marriage

1.                  Marriage not permitted in any state if either party has prior marriage that has not been terminated by death or divorce.  A person may have but a single spouse at a time.

2.                  Marriage not permitted if parties are related within given degree of blood or marriage (varies from state to state).

3.                  Voidable, but not void, marriage exists where:

a)                 One party is a minor

b)                 Party lacks capacity to consent or consummate the marriage

c)                 Consent induced by fraud or duress or as jest or dare

4.                  Proceedings for annulment may be brought in case of void or voidable marriage.

5.                  Second or subsequent marriage is very strongly presumed to be valid.  Party asserting invalidity has burden of proof (Chandler):

a)                 Party must show that every reasonable possibility of validity is negatived

b)                 Evidence against validity must be clear, strong, and satisfactory and so persuasive as to leave room for no reasonable doubt.  Must be better than proof from which “mere inferences” may be drawn.

6.                  Other presumptions flowing from fact that marriage is proved include (CB 128):

a)                 Marriage was contracted in good faith

b)                 Marriage was performed by person having authority

c)                 Parties had capacity to marry

7.                  If impediment to marriage is removed, previously invalid marriage might become a valid common-law marriage if both parties were genuinely ignorant of impediment

8.                  Rationales for preferring to uphold subsequent marriage (Dolan – no reason not to give old lady death benefits):

a)                 Upholding legitimacy

b)                 Allowing de facto spouse to participate in estate

c)                 Validation

9.                  People presumed not to have knowingly committed bigamy(id.), considering criminal penalties and illegitimacy.

10.             Even if second marriage is not criminally bigamous, it is not necessarily valid (CB 132).

11.             Validity of marriage generally determined by law of place where it is celebrated (May’s Estate).  Exceptions include:

a)                 Cases within prohibition of positive law

b)                 Cases involving polygamy

c)                 Cases involving incest in a degree generally regarded as in prohibition of natural law

12.             If legislature fails to proscribe certain marriages that violate positive law but are valid where contracted, validity will be upheld (id. – uncle married niece validly under RI law, recognized in NY).

a)                 Marriage Evasion Act achieves opposite result by voiding incestuous marriages even if valid where contracted.

13.             Arguments against incest include genetic sanctity and preservation of family relationships.

14.             Laws setting different marriage ages for men and women probably violate the equal protection clause.

15.             Duress usually a ground for annulment that makes marriage voidable but not void.

16.             Historically, anulment was limited for cases involving frauds that went to the “essentials” of the marriage (Reynolds – undisclosed pregnancy by outside party voids marriage).

17.             Court of equity can annul fruadulent marriage, if defendant has commited fraud of extreme nature going to an essential of the marriage (materiality test) (V.J.S.; Haake)

a)                 What is an “essential” is determined subjectively on a case-by-case basis, since what’s essential to one person differs from what’s essential to another (i.e., commitment never to have children).

b)                 Fraud should be proven by clear and convincing evidence.

c)                 Test whether fraud induced consent (would P have not married D but for fraudulent representation)

d)                 Test whether essential purpose for marrying is defeated (i.e. desire to live with good, law-abiding man)

18.             See IC 595.2, 595.19, 595.20, 548.29, 598.32

a)                 Innocent party can annul marriage yet get divorce remedies

19.             Annulment might be preferred over divorce for financial, religious, or reputational purposes

20.             Anullment typically results in declaration that marriage never existed, since it was void ab initio or is nullified retroactively.

a)                 Most states have passed laws preserving legitimacy of children to the marriage

21.             Religious annulment and divorce do not count for civil purposes.

D.    Same Sex marriage

1.                  Baker v. Vermont held, under the Vermont constitution, that the rights and benefits of marriage must flow to everyone because government institutions exist for all citizens.  The opinion did not decide whether marriage itself can be denied to same-sex couples.  Considerations analyzed were

a)                 Significance of benefits and protections of challenged law

b)                 Whether ommissions of members of the commuinty from the benefits and protections of the challenged law promote the government’s stated goals; and

c)                 Whether the classification is significantly underinclusive or overinclusive

2.                  Defense of Marriage Act, passed by Congress, defines marriage as “a legal union between one man and one woman as husband and wife,” and protects states from having to recognize same sex marriages contracted in other states.  FF&C issue has not been tested.

III.  Nonmarital Children

A.    Legitimacy

1.                  At common law, illegitimate children were “filius nullius” – Children of no one.

2.                  Legitimate children (parents married when born or conceived) automatically receive all rights, benefits, protections flowing from parent-child relationship

a)                 Support

b)                 Inheritance

c)                 Public benefits (i.e. worker’s comp.)

d)                 Right to sue for wrongful death

3.                  Chief disability of illegitimacy was lack of inheritance rights.

4.                  Illegitimate children are “persons” entitled to equal protection (Levy).

5.                  Inviduous discrimination against illegitimates cannot be permitted (child has no control or responsibility over status) (e.g. id. – illegitimate children may file wrongful death suit for loss of mother, no reason to let torfeasor go free).

6.                  State courts might interpret statutes regarding “children” as only covering legitimates (see id.).

7.                  Some laws discriminating against illegitimates remain constitutional (Labine – inheritance law requiring proof or acknowledgment of paternity within two years of upheld as rationally related to an important government objective of administrative convenience, and child could be protected from discrimination by father).

8.                  Classifications based on illegitimacy are subject to intermediate scrutiny that is not “toothless.” (Trimble)  Must be substantially related to permissible state interests. (Lalli – avoiding fradulent assertions of paternity in adminstration of estates a permissible end)

9.                  Law that gives illegitimate no chance of avoiding discrimination is likely to be struck (Trimble – Illinois statute that requires intermarriage of parents for inheritance rights too broad, violates EP).

10.             See UPC 2-114 (CB 271); Uniform Parentage Act (CB 1079).

11.             Certain rights flow from being a child’s parent (Michael H.):

a)                 Child’s care

b)                 Right to child’s services and earnings

c)                 Right to direct child’s activities

d)                 Right to decide regarding control, education, and health of child

e)                 Right and duty to prepare child for additional obligations (i.e. good citizenship)

12.             The right to rear one’s biological child is not a “fundamental liberty” rooted in traditions and conscious (id. – W has affair, has child by paramour, paramour has no constitutional right to participate in the child’s life).

13.             Traditional marital family is constitutionally protected.  At common law, a child born to a married couple was presumed legitimate, and could not be declared otherwise without independent proof that H was incapable of reproduction or had no access to W during relevant period.  Policies were to avoid illegitimating children and to promote familial harmony. (id.)

a)                 Lord Manfield’s Rule was that mother could not testify as to non-access. Abolished in some states

14.             States might individually decide to give natural father of child born to extant marriage some parental rights, but can prefer marital father to exclusion of natural father (id.)

a)                 Dissent in michael H. argues that if biological plus social link can be shown, natural father should have constitutional rights

15.             Some states might equitable estop marital father from disavowing parentage if he has raised child or assert parentage on his behalf if he is innocent.

a)                 UPA focuses on best interests of child

16.             If child is foreign-born, and mother is not U.S. citizen, then father who is U.S. citizen must formally recognize child if child is to have U.S. citizenship

IV. Marital Relationship

A.    Contract, Property, and Tort

1.                  At common law, H and W were considered one, and the principal of spousal unity prevented them from suing or contracting with each other.  This principal has widely been rejected today.

a)                 Interspousal immunity seen as a way of preventing collusion;

b)                 divorce was seen as adequate remedy.

2.                  Contracts b/t H and W were seen as introducing unwelcome elements into the marital relationship, such as separation of interests (Romeo)

3.                  If common law rule is given any bite, it may only be applied after analyzing the asserted justification of marital harmony against the circumstances of the case (Romeo – worker’s compensation benefits to W does not harm marriage, H is dead, policy against interspousal contracts makes no sense)

4.                  Duty to support spouse runs to both parties.

a)                 Creditors rely on necessities doctrine to collect on spouse’s debts from the other

5.                  Spouses have option of not testifying against partner.

a)                 FRE allows one spouse to prevent introduction of confidential communications

6.                  Community property estates and common law marital estates look similar upon division.  Key difference is that under common law, property interests are inchoate until marriage ends, whereas community interests vest througout marriage in community property scheme.

7.                  Common law property rules (e.g. curtesy) were evaded by using “wife’s separate estate in equity.”

8.                  Denying forum to address wrongs might actually harm marital relationship (Schleuter)

9.                  Recovery in tort is separate property of injured spouse and does not add to marital estate (id.)

10.             Community is not necessarily divided evenly upon divorce.  Court must divide in “just and right” manner, taking into consideration the rights of the parties as well as any children of the marriage. (id.)

11.             A fraud upon the community may affect division, but does not give rise to separate tort action (id. – H defrauded estate, could not be sued for punitive damages, but only a judgment for recovery of lost community)

a)                 Sufficiently outrageous conduct might give rise to a tort claim

12.             Consortium can include society, companionship, and sexual relations, but does no longer include earnings and services.  Either spouse can sue third party for loss of consortium. (Diaz)(in 48 states).

a)                 Some states require that consortium claim be joined with claims of other spouse

b)                 Cohabitants cannot claim consortium

13.             Negligent conduct can result in loss of consortium that is actionable (id.).

14.             Alienation of affections is a cause of action with the following elements (can be brought even after couple has separated, can include loss of financial support)(available in 9 states):

a)                 Some wrongful conduct by D with P’s spouse

(1)                Could be mere counseling

b)                 Loss of affection of P’s spouse

c)                 Causal relation b/t D’s conduct and the loss (intent requirment on D’s part)

15.             Action for criminal conversation only requires proof that D had intercourse with P’s spouse.

B.     Family Violence

1.                  Expert testimony on battered-women’s syndrome may be admissible to establish honesty and reasonability of belief that D was in imminent danger. (Cusseaux)

2.                  A cause of action may be available for battered women’s syndrome. Tort is treated as continuous.  Elements (id.)

a)                 Involvement in marriage or marital-like relationship

b)                 Physical or psychological abuse perpetrated by the dominant partner over an extended period of time

c)                 Aforestated abuse has caused recurring physical or psychological injury over course of relationship

d)                 Past or present inability to take any action to improve or alter situation unilaterally.

3.                  Burden of proof for a protective order varies from state-to-state (e.g. Felton, requiring preponderance of evidence

4.                  Options for domestic violence victim may include:

a)                 Civil protection order

b)                 No contact order

c)                 Criminal complaint

d)                 Divorce/custody suit

V.   Divorce

A.    Grounds for Divorce

1.                  When client enters, discussion should begin with no-fault divorce rule, process, court appearances.  Things to explain include:

a)                 property division

b)                 alimony/maintenance

c)                 custody/child support

2.                  at common law, party had to be free of fault to bring an action of divorce against spouse.  Mutual consent was not allowed.

3.                  UMDA represents original “no fault” divorce rule (CB 681):

a)                 marriage must be “irretrievably broken” – parties have lived apart for one hundered and eighty days preceding suit or there is serious marital discord adversely affecting their attitude towards marriage

b)                 if one party denies marriage is irretrievably broken, court may consider all relevant factors, and can continue case and order a conciliation conference.

c)                 33 states have such a rule. See I.C. 598.17

4.                  Period of separation due to marital difficulties is strong indicia of irretrievable breakdown. (Derochers)

5.                  Whether differences are irreconcilable depends on subjective state of mind of parties.  Only one spouse needs to demonstrate an unwillingness to continue relationship. (id.)(Hagerty – W willing to go on but H would rather be an alcoholic)

6.                  Chief concern is whether a meaningful marriage exists or can be rehabilitated (Hagerty).  This could be shown by acknowledgement of both parties or by evidence presented by only one party. (id.)

7.                  Continuance is favored over denial where proof of breakdown is doubtful, and dissolution should be granted if reconciliation fails (id.)

8.                  Modern statutory test is whether marriage is for all intents and purposes ended, regardless of cause or fault (id).

9.                  Traditional grounds for divorce included:

a)                 desertion: voluntary separation of one spouse from the other, with intent not to resume marital cohabitation, without consent of the other spouse, and without justification

(1)                also exists constructively if conduct is such as to force other spouse to leave home

b)                 cruelty

(1)                should be a course of conduct, not a single act unless particularly extreme

(2)                must have effect on P’s health

(3)                is determined subjectively through traits of victim

c)                 incompatibility: conflicts in personality and disposition so deep as to make continuing a normal relationship impossible, as parties can no longer live in harmony.

10.             Traditional defenses to divorce included:

a)                 collusion – agreement b/t parties that one of them will not defend suit or will appear to have committed an offense to the marriage

b)                 connivance – plaintiff consents to commission of marital offense

c)                 condonation – resumption or continuance of marital cohabitation so as to imply forgiveness

d)                 recrimination – plaintiff has committed a marital offense (in effect, this cancels defendant’s offense)

B.     Divorce jurisdiction

1.                  Jurisdictional rules vary for each of the three categories of divorce action (property, alimony, children)

2.                  Domicile over one party is sufficient to grant a divorce binding on other states, when done with constructive service on absent spouse (Williams I).

a)                 if state finds that domicile did not exist in other state, recognition not required (Williams II)

3.                  Party who appears in proceeding cannot thereafter challenge domicile (Sherrer).

4.                  After time, a former spouse may be estopped from challenging the validity of a divorce.

5.                  The more genuine the domicile, the stronger the validity of ex parte divorce (e.g. party moves to state, gets job, ect.)

6.                  For child support action, PJ depends on reas. Notice to D and sufficient connection b/t D and forum state to make it fair to require defense in the forum (Kulko – H had little contact w/ forum himself, so no PJ)

a)                 Look to “quality and nature” of D’s activities in the state

b)                 Look for “affiliating circumstances”

7.                  Unilateral activity by relatives of D cannot establish minimum contacts needed to adhere to traditional notions of fair play and substantial justice.  D must somehow purposefully avail himself of the privilege of conducting activities within the state. (id.)

8.                  UIFSA permits P to file support claim in her state that can be transferred for adjucication in D’s state.  It also permits jurisdiction on the following grounds:

a)                 D has resided w/ child in state

b)                 D resided in  state an provided prenatal expenses or support for child

c)                 Child resides in state as a result of D’s actions

9.                  Litigation over child custody requires PJ.

a)                 Mere presence of property in the state is not enough. (Shaffer)

10.             Participation in proceeding without objecting to jurisdiction constitutes waiver, however any litigation on the jurisdictional issue is binding on D.

11.             Judgment rendered w/o PJ may be challenged under Due Process clause.

12.             Service of process within state is sufficient basis for PJ, even w/o min. contacts.

13.             Legal incidences of marriage can survive ex parte divorce (Estin – NV divorce does not relieve H of NY support obligation’ Vanderbilt – even though no support judgment existed prior to divorce, NV cannot eliminate marital right to bring an action for support)

a)                 Maintanance is akin to property right, so ex parte state lacks jurisdiction over it if it has no contacts with absent spouse.

b)                 Divorce is thus “divisible” – parties treated as married for some purposes and divorced for others

14.             Federal courts abstain from domestic relations cases, even where diversity exists.

15.             So, ways to get jurisdiction can be summed up as follows:

a)                 Personal service in state

b)                 Consent

c)                 Quasi in rem

d)                 Long-arm

e)                 Litigate in spouse’s home state

C.    Property Division

1.                  Property must first be classified as marital or separate.  See UMDA (CB 744)

a)                 Marital – all property acquired during marriage except that acquired by gift, devise, or descent; or excluded by agreement of the parties

(1)                When parties are separated and living apart, earnings are separate property even in community property system (Short)

b)                 In community property states, both spouses share interest at moment property is acquired

(1)                But presumption that property is within community is rebuttable (Short)

c)                 “transmutation” is term to describe the changing of assets from separate to marital or vice-versa

d)                 Commingling can cause property to lose separate status.  Tracing can avoid this result

e)                 Wedding gifts can be separate property if intended to be for one spouse only

2.                  Much discretion is to given to the trial judge, but he must provide clear reasons for findings and rulings (DeCastro)

3.                  Marriage viewed as a partnership, in which both parties  contribute to the development of the marital estate (id.)

4.                  Most cases result in equal division; some states require so. 

a)                 Liabilities divided as well

5.                  Most states make no connection b/t grounds for divorce and financial remedies.

6.                  Stock options are to be divided according to the time rule:

a)                 Numerator is amount of time b/t commencement of employment and date when parties separated

b)                 Denominator is amount of time between commencement of employment and date when each option is first exercisable;

c)                 This fraction is multiplied by the number of shares which can be purchased on the date when the option is first exercisable

d)                 Unvested options granted during marriage for present services are acquired when granted, but unvested options granted for future services are acquired over time.

(1)                As for options that vest after separation, only the first one is subject to division, since it results partly from community effort.

(2)                So for last year of marriage, divide married months by 12, then multiply the result by the value of the options for the year.

7.                  Property has to be valued for time received and time of divorce

8.                  Some states distinguish between active and passive increases in value when figuring out how to divide appreciation (e.g. Middendorf – stockyard appreciation due to H’s efforts, so part of appreciation belongs to marital estate)

a)                 This is standard rule for community property states – only active increases count for community

b)                 “source of funds rule” requires appreciation to be divided into two categories for marital and separate, based on percentage of appreciation attributed to active and passive contributions, respectively

9.                  Once divorced, financial affairs of parties should be separated from each other, so parties can move on (Bowen)

10.             If asset cannot be readily valued on market (i.e. close corporation stock)

a)                 To value a business, capitalize earnings by dividing annual return by rate of return

(1)                Buy-sell agreement could be considered, but only if it takes present circumtances into account (i.e. book value basis not good enough).

(2)                Good will must be incorporated

b)                 Court should base opinion on factors supported in record, demonstrated market reliability, or general acceptance.

c)                 Some assets could be divided “in kind” by literally splitting them down the middle (e.g. baseball card collection)

11.             Deferred compensation, such as pension benefits, are deferred compensation acquired during marriage, and thus subject to division.  Three possible methods of division (Kelm):

a)                 Net present value – immediate distribution; offset against other marital property

b)                 Deferred distribution – time rule formula applied when benefits are received (how ????)

(1)                Denominator should be variable in case payor spouse dies or works past retirement age

c)                 Reserve juridiction – court waits until benefits are actually received then makes division

12.             “marital foundation” theory, not adopted by all states, attributes enhancements in pension benefits occurring after divorce as a result of marital activity and requires that enhancements be treated as community if distribution is deferred (id.). ???

13.             Social security benefits are separate property.

14.             Disability payments could be viewed as substitute for wages and therefor separate property.

15.             Goodwill of business enterprise is marital property, but goodwill of individual is not divisible since it only represents future earning capacity (Yoon – surgeon’s personal skills separate from business). 

a)                 To value personal goodwill, compare net income to industry standard ratio of compensation to gross receipts

b)                 Some courts don’t make this distinction and hold all goodwill is marital property

16.             Academic degree is not divisible property, but maintenance may be awarded with view to contributions of spouse to attainment of degree (Olar).

a)                 Uncertain future course of action by degree holder makes valuation difficult

b)                  spouse’s contribution to education could be taken into consideration in property division

c)                 “reimbursement” can be made

D.    Spousal Support

1.                  Maintanence should only be awarded if dependent spouse can demonstrate inability to support self. Continuing support interferes with “clean break.”  Factors (Olar, see also Larouque, UMDA):

a)                 Financial resources

b)                 Time needed to acquire education or training sufficient to find appropriate employment;

(1)                Economic circumstances and reasonable expectations established during marriage determine what is “appropriate”

c)                 Standard of living established during marriage

d)                 Duration of marriage

e)                 Age and condition

f)                   Ability to meet needs.

g)                 Relative earning power.

2.                  Unlike property, maintainance is nondischargable, modifiable, tax deductible to payor, and terminates on death or remarriage

3.                  When little property has accumulated during marriage, maintanence may be only way to achieve equity.

4.                  Maintenance has two objectives:

a)                 Support – allow spouse to receive money in accordance with needs and earning capacity of parties

(1)                Pre-divorce standards should be preserved, but both spouses have to bear cost of additional household

(2)                Spouse should not be expected to sell marital property for self-support

b)                 Fairness – ensure fair and equitable financial arrangment between parties

5.                  Equal division of total income marks starting point for analysis (Laroque).

6.                  See I.C. 598.21

7.                  Some states will consider marital misconduct when factoring alimony awards.

8.                  Limited-term support can be awarded for rehabilitative purposes

9.                  Payor spouse may be required to pay attorney fees to allow dependent spouse to obtain alimony order.

10.             Changing circumstances can permit modification of alimony order.

11.             Contractual maintenance can be a compromise to litigation, but parties should be careful of unforseen circumstances (e.g. disability of payor)

a)                 Such agreements are a way of avoiding discord and courts should favor upholding them when fair, voluntary and knowledgably entered into (Konzelman- agreement that support ends upon cohabitation upheld)

b)                 Each party should have separate counsel

c)                 Judicial review and approval must be had

d)                 Court can oversee agreement to mitigate abuses (i.e. spying)

E.     Divorce Tax and Bankruptcy Issues (CB 834-39)

1.