Opinion ID: 1367112
Heading Depth: 1
Heading Rank: 3

Heading: Community Nature of Disputed Assets in Husband's Estate.

Text: (6a) The assets which the trial court found to be community property were a three-eighths interest in the family residence, [6] real property used in the family business, shares in the corporation carrying on that business, savings accounts, stocks, bonds and an automobile. Although Murphy owned the family corporation shares at the date of marriage, the trial court found upon substantial evidence that the shares had little if any significant value at that date and that their added value at the time of Murphy's death was derived from advances of community assets to the corporation and from Murphy's personal services for which he was not adequately compensated by the corporation. The other disputed assets were acquired by purchase during the marriage at times when adequate community funds were available for such acquisition. Murphy also had separate income during these times but there was no evidence from which that income could be directly traced to any of the assets in dispute. (7a) Property acquired by purchase during a marriage is presumed to be community property, and the burden is on the spouse asserting its separate character to overcome the presumption. ( Estate of Niccolls, 164 Cal. 368 [129 P. 278]; Thomasset v. Thomasset, 122 Cal. App.2d 116, 123 [264 P.2d 626].) ( See v. See (1966) 64 Cal.2d 778, 783 [51 Cal. Rptr. 888, 415 P.2d 776].) The mere fact that Murphy received substantial separate income concurrently with the receipt of substantial community income does not dispel the presumption. Generally speaking there are two methods of carrying the burden of showing property purchased during the marriage to be separate: (1) direct tracing to a separate property source or (2) proof that at the time of purchase all community income was exhausted by family expenses. ( In re Marriage of Mix (1975) 14 Cal.3d 604, 611-612 [122 Cal. Rptr. 79, 536 P.2d 479]; See v. See, supra, 64 Cal.2d at p. 783.) (6b) In the present case there was no proof by either method requiring the trial court to find any of the disputed assets to be other than community property. None of the separate income was directly traced into any particular bank account or other asset. (7b) Evidence which merely establishes the availability of separate funds on particular dates without also showing any disposition of the funds is not sufficient proof of tracing to overcome the presumption in favor of community property. (See In re Marriage of Mix, supra, 14 Cal.3d at pp. 613-614.) Moreover, the trial court found that Murphy's separate income had been commingled with community funds in checking and savings accounts in his own name and in the joint names of himself and his wife and that there were no records adequate to identify any particular portions of such commingled funds as derived from community or separate property sources. Under these circumstances the commingled accounts and any assets acquired with funds withdrawn from them were properly treated as community property. ( See v. See, supra, 64 Cal.2d at p. 783; Grolemund v. Cafferata (1941) 17 Cal.2d 679, 683 [111 P.2d 641]; Mason v. Mason (1960) 186 Cal. App.2d 209, 212 [8 Cal. Rptr. 784]; Pope v. Pope (1951) 102 Cal. App.2d 353, 366 [227 P.2d 867].) Family living expenses are relevant to the issue of the community or separate nature of property acquired during marriage because of the presumption that such expenses are paid out of community rather than separate funds ( Beam v. Bank of America (1971) 6 Cal.3d 12, 20 [98 Cal. Rptr. 137, 490 P.2d 257]; Estate of Neilson (1962) 57 Cal.2d 733, 742 [22 Cal. Rptr. 1, 371 P.2d 745]). Reliance upon such expenses to establish the separate nature of an asset purchased at any time during the marriage requires proof that at that time all community income was exhausted by family expenses. ( See v. See, supra, 64 Cal.2d at p. 783; italics supplied.) In the present case there was no proof of the amount of Murphy's and Royene's living expenses except evidence of general circumstances such as their living in a house that was fully paid for by 1943 and having no dependents except Murphy's son for seven years of his minority during which he attended military school for two years. Moreover, it could be inferred from the evidence that during each year of the marriage there was more than enough community income to cover the married couple's living expenses. The Murphy legatees contend that decisions placing the burden upon a spouse of establishing his or her ownership of separate property in a divorce or dissolution proceeding should not be fully applicable to the present probate proceeding where the prior deaths of both spouses precluded their testimony. It is true that in a dissolution proceeding testimony of the spouse claiming separate property may be crucial in overcoming the presumption that assets are community property. (See, e.g., In re Marriage of Mix, supra, 14 Cal.3d at p. 614.) However, the burden of establishing a spouse's separate interest in presumptive community property is not simply that of presenting proof at the time of litigation but also one of keeping adequate records. (8) The husband may protect his separate property by not commingling community and separate assets and income. Once he commingles, he assumes the burden of keeping records adequate to establish the balance of community income and expenditures at the time an asset is acquired with commingled property. ( See v. See, supra, 64 Cal.2d at p. 784; accord, White v. White (1938) 26 Cal. App.2d 524, 529 [79 P.2d 759].) Murphy had the opportunity during his lifetime to maintain records adequate for tracing the disposition of his separate income. His legatees are bound by the consequences of his declining to do so.