Cases

Husband, GMSR’s client, entered the marriage with $16 million in separate property investments. The couple spent the first six years of the marriage living primarily off Husband’s separate property, acting as philanthropists and incurring annual community-property deficits of between $250,000 and $500,000. In the meantime, Husband invested in various commercial property limited partnerships. Wife claimed that that these were community property. She relied on the presumption that property acquired during marriage is community property, arguing that Husband could not rebut that presumption unless he could directly trace the funds to his separate property, which he could not in all instances, or indisputably show that at any particular moment in time the community, in fact, had no funds to its name.

On appeal, GMSR argued that Husband could, as the trial court found, rely on a broader view of the so-called “exhaustion method” by raising a more-likely-than-not reasonable inference that, because the couple’s community expenses vastly exceeded their community income for each of the marriage’s first six years, the community had no funds available to invest during those years and Husband therefore must have used separate property to make his investments then. The Court of Appeal agreed, holding that Husband’s evidence of yearly, substantial community-property deficits sufficed to establish a separate-property investment by the .

Case Briefs

• California Court of Appeal Opinion - View Document