July 15 Q4 Community Property

QUESTION 4

In 2008, Henry and Wendy married in California. Neither had saved any money before
marriage. At the time of the marriage, Henry had a monthly child support obligation of
$1,000, which was deducted from his salary, for a child from a prior relationship.

In 2010, Wendy accepted a job at Company. At that time, she was told that if she
performed well, she would receive stock options in the near future.

In 2011, Henry inherited $100,000. He used $25,000 to buy a necklace that he gave to
Wendy as a holiday present. He used the remaining $75,000 to buy a municipal bond
that paid him $300 per month.

In 2012, Wendy was granted stock options by Company, which would become
exercisable in 2014, in part because she had been a very effective employee. Later in
2012, Wendy was injured in a car accident and made a claim against the person
responsible.

In 2013, Henry and Wendy permanently separated and Henry moved away.

In 2014, Wendy settled her accident claim for $30,000. Later in 2014, Wendy exercised
her stock options and earned a profit of $80,000.

In 2015, Wendy filed for dissolution.

1. What are Wendy’s and Henry’s respective rights regarding:

a. The necklace? Discuss.

b. The car accident settlement proceeds? Discuss.

c. The stock option profits? Discuss.

2. Should Henry be required to reimburse the community for his child support
payments and, if so, in what amount? Discuss.

Answer according to California law.

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