Transmutations

Question 1

What is a Transmutation?

Answer 1

Transmutation is the process of changing the character of property (e.g. from SP to CP, or vice versa, or one spouse’s SP to the other’s)

Question 2

How do you know what Transmutation statute to use?

Answer 2

Based on the time of the transmutation, NOT the date the property was acquired

Question 3

Transmutation PRE-1985

Answer 3

Property transmutation occurs when couple makes an agreement
- Agreements may be oral, implied, or written
-Spouse’s silence re title and registration is enough to transmute to SP
- Spouses statement that “everything is ours” is enough to transmute to CP
-

Question 4

Transmutation 1985 AND AFTER

Answer 4

Agreement/Transmutation is only valid if it:
1. Is in writing (oral or implied is not enough)

2. It has an express declaration evidencing that you are changing the character of the property, must be very specific
3. It’s signed by the adversely affected party

• Magic words (“I transfer” not enough, “I give my interest in this to SP” probably is)
• No extrinsic evidence allowed (e.g., “they told me this was ours”)
• No exception to writing requirement for partial performance
• Transmutation statute applies to inter-spousal AND third-party transactions (e.g., putting life insurance in one spouses name)

DOES NOT REQUIRE consideration

1985 Rule is NOT retroactive, it only applies to transmutations that occur 1/1/1985 or later

Question 5

What are the exceptions to Transmutation Statutes

Answer 5

1. Gifts Between Spouses
2. Commingling Exception
3. Statement in a Will or Trust

Question 6

Gifts Between Spouses

Answer 6

DOES NOT have to be by express declaration in writing for it to be recipient’s SP, even if bought with CP, if the gift is:

1. Clothing/jewelry, or other tangible article of personal nature
   NOT a car, snuff box, autographed baseball
2. Used solely or principally by the spouse to whom the gift is made
3. Is not substantial in value in taking into consideration the circumstances of the marriage (looking into standard of living, how much they spend) (Marriage of Steinberger)

Question 7

Commingling Exception

Answer 7

Mixing SP and CP in same account, apply commingling rules, not transmutation rules

Question 8

Statement in a Will or Trust about transmutation

Answer 8

Statements made in a will only affect transmutation at the person’s death (not admissible in divorce proceedings)
1. BUT effective in probate

Things like living trusts are admissible in divorce to show transmutation, they are effective when executed

Question 9

Summary / How to Approach Transmutation Questions

Answer 9

1. How is property characterized (CP presumption)?
2. Can it be rebutted (does it FIT, can we trace funds)?
3. Was there a valid transmutation?
   - Yes – characterize that way
   - No – do any exceptions apply?