Pereira And Van Camp Are The Two Primarily Recognized Formulas For Apportionment And The Pereira Formula Is Preferred
In Beam v. Bank of America (1971) 6 Cal.3d 12, cited by Patrick v. Alacer, the California Supreme Court described the methods of apportionment as follows: “Over the years our courts have evolved two quite distinct, alternative approaches to allocating earnings between separate and community income in such cases. One method of apportionment, first applied in Pereira v. Pereira (1909) 156 Cal. 1, 7 [103 P. 488] and commonly referred to as the Pereira approach, “is to allocate a fair return on the [husband's separate property] investment [as separate income] and to allocate any excess to the community property as arising from the husband’s efforts.” (Estate of Neilson (1962) 57 Cal.2d 733, 740 .) The alternative apportionment approach, which traces its derivation to Van Camp v. Van Camp (1921) 53 Cal. App. 17, 27-28 , is “to determine the reasonable value of the husband’s services . . . , allocate that amount as community property, and treat the balance as separate property attributable to the normal earnings of the [separate estate].” Beam v. Bank of America, supra, 6 Cal.3d at 18.
In choosing between these methods courts “. . . have endeavored to adopt that yardstick which is most appropriate and equitable in a particular situation . . . depending on whether the character of the capital investment in the separate property or the personal activity, ability, and capacity of the spouse is the chief contributing factor in the realization of income and profits.” Id. at 18. In Estate of Neilson (1962) 57 Cal.2d 733, 740, the California Supreme Court noted: “The usual method of apportionment is to allocate a fair return on the investment to the separate property and to allocate any excess to the community property as arising from the husband’s efforts. (Citations omitted.) ‘Only when the profits and accruals actually attributable to the separate property are proved to differ from [the usual interest rate for a well-secured investment] . . . is there reason to depart from this system.” Stated otherwise, “[t]he proceeds and increment in value are apportioned entirely to the husband’s separate estate only when they are attributable solely to the natural enhancement of the property (citations omitted) or when the husband expended only minimal effort and the wife introduced no evidence attributing a value to his services.” Id.
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