## Facts

- Marcia and Lawrence Aufmuth married in 1967; husband was in law school and wife worked as a teacher, later becoming a full-time homemaker after their first child’s birth.
- During marriage, the parties incurred a student loan to fund husband’s final year of law school; the balance at separation was $1,230.98.
- In 1971, the parties bought a residence for $66,500 with a $16,500 down payment traceable to wife’s separate property (a gift from her parents) and a $50,000 purchase-money loan signed by both spouses; title was taken in both names as community property.
- Mortgage payments and property costs after purchase were paid from community earnings; at trial the parties stipulated the residence was worth $125,000 with a $47,000 loan balance.
- In 1974, husband acquired a 5% stock interest in his law firm’s professional corporation by executing promissory notes totaling $16,300, subject to a repurchase agreement fixing price by formula.
- The parties separated in 1975 with two minor children; husband’s 1976 gross salary was $63,000 (net take-home $37,300) plus bonuses.
- The dissolution judgment apportioned the residence between wife’s separate interest and the community, treated the student loan as a community debt, declined to value husband’s legal education as property, valued the law-firm stock without goodwill as of trial, awarded wife $1,000/month spousal support without a termination date, and awarded $3,500 in attorney’s fees.

## Issues

1. Whether the wife’s separate-property down payment for a jointly titled residence retained its separate character or was transmuted into community property by taking title as community property.
2. How equity and appreciation in a residence acquired with mixed separate and community contributions should be apportioned between separate and community estates.
3. Whether a spouse’s professional education and degree constitute divisible property in marital dissolution, and how educational loans incurred during marriage should be allocated.
4. Whether the trial court erred in valuing a spouse’s interest in a professional corporation by excluding goodwill and using the date of trial rather than separation as the valuation date.
5. Whether the spousal support award and the absence of an automatic termination date, and the attorney’s fee award, were abuses of discretion.

## Decision

- The Court of Appeal affirmed the interlocutory dissolution judgment in full.
- The wife’s down payment remained her separate property; the residence was properly apportioned between her separate contribution and the community’s financed and paid-for portion using proportional allocation.
- Husband’s legal education was not property subject to valuation and division, but the educational loan incurred during marriage was properly treated as a community obligation.
- The trial court did not err by excluding goodwill in valuing husband’s law-firm stock interest and did not abuse its discretion by valuing the stock as of the trial date.
- The spousal support award of $1,000 per month and the decision not to impose an automatic termination date were within the trial court’s discretion.
- The $3,500 attorney’s fee award to wife was not an abuse of discretion.

## Legal Principles

- Property acquired during marriage is presumptively community property, but the presumption may be rebutted by tracing acquisition to a spouse’s separate property.
- A spouse’s separate property does not lose its character merely because it is used during marriage or changes form; absent proof of donative intent, contributing separate funds to acquire jointly titled property does not, by itself, establish a gift to the community.
- When an asset is acquired with both separate and community contributions, a court may allocate the parties’ interests proportionally, including allocation of appreciation attributable to each estate’s contribution.
- A professional education or degree is not divisible marital property for purposes of valuation and distribution in dissolution, even though debts incurred during marriage to obtain that education may be treated as community obligations.
- Valuation of a spouse’s interest in a closely held professional corporation may be guided by contractual buy-sell or repurchase provisions, and a court may exclude goodwill where inclusion would be speculative given the nature of the interest and governing agreements.
- Trial courts have broad discretion in selecting valuation dates for community assets and in setting spousal support and fee awards, reviewed for abuse of discretion.

## Conclusion

The court upheld a proportional approach to dividing a jointly titled residence purchased with a spouse’s traceable separate down payment and community financing, rejected treating a law degree as divisible property while assigning the related educational loan to the community, and affirmed the trial court’s discretionary determinations on stock valuation, spousal support, and attorney’s fees.


In re Marriage of Aufmuth, 89 Cal. App. 3d 446, 152 Cal. Rptr. 668 (Ct. App. 1st Dist. 1979)