In every divorce, both parties are concerned about the property they will get and the debt they will be assigned. The threshold issue in the division of property is how it is characterized: community or separate. To read more about community and separate property, please see our earlier blog here.
The importance of property characterization cannot be overstated. If property is truly held separately by one spouse, the other spouse has no right to part of the property. And if property is owned by both partners as community property, each has a right to his or her interest. Transmutation of property allows spouses to change the characterization of property ownership; it can therefore be a critical issue in every divorce.
Merriam-Webster defines “transmute” as “to completely change the form, appearance, or nature of . . . something.” When property is transmuted, its character is completely changed in one of the following three ways:
- From community property to separate property;
- From separate property to community property; or
- From one spouse’s separate property to the other spouse’s separate property.
By law, California spouses have the authority to transmute both real and personal property in these three ways, provided the following requirements are met:
- The agreement must be in writing; and
- The “spouse whose interest in the property is adversely affected” must expressly declare that she makes, joins in, consents to, or accepts the transmutation.
Exceptions are narrow. The first is that third parties are not bound by spousal transmutation of real property unless the third party either has notice or the transmutation is recorded at the courthouse. The second exception is that transmutation is not required for gifts between spouses of personal items as long as the gifts are “not substantial in value taking into account the circumstances of the marriage.” To illustrate, most clothing and costume jewelry would qualify as gifts and therefore the separate property of the recipient. Conversely, expensive jewelry may or may not be considered “substantial,” depending on the circumstances of the marriage.Transmutation can be a powerful force in California divorces. If you are involved in or are contemplating a California divorce and transmutation of property is a concern, you should work with an experienced family lawyer to protect your interests. The attorneys at the Law Offices of Judy L. Burger have extensive experience in divorce, including property division issues such as transmutation. Make the call today to learn how our attorneys can fight for you: (415) 293-8314.