Determining and Transmuting the Character of Property Under California Law

California is a community property state, which means that any property acquired by either spouse during a marriage is considered to be owned by each party equally. Either spouse can identify property as separate, though, and it will remain their sole property if they divorce. Certain actions can transmute or modify separate property into community property, though, and anyone with separate property must take care not to take actions that will impair their rights. In 2015, a California appellate court issued a ruling explaining how and when the character of a property is defined and how to determine if transmutation occurred. If you or your spouse own separate property and you are contemplating ending your marriage, it is prudent to speak to a seasoned California divorce attorney about your rights.

Facts of the Case

Reportedly, the husband purchased a home prior to his marriage. By the time the couple married in 1993, the husband had paid off the mortgage. He also had a retirement account that he contributed to prior to getting married, which he stopped paying into at the time of the marriage. The couple lived in the home but after a few years decided to move to a town called Westlake. The husband retained the separate home, however. He made the down payment for the Westlake home from the separate retirement account and took out a mortgage loan in his name only. The loan application stated that the title to the house would be in the husband’s name, and the deed stated it was granted to him and his sole and separate property.

It is alleged that the husband sold his separate home and used the mortgage proceeds to pay for the Westlake home. The wife filed for divorce twelve years later. A prime point of contention was whether the Westlake home was community or separate property or a combination of the two. The court ultimately ruled that it was community property, and the husband appealed.

Key Legal Takeaways

The appellate court ultimately reversed in part and upheld the lower court ruling in part. The court explained that whether a property is separate or community is determined at the time, it is acquired. Thus, property obtained prior to a marriage is separate and property obtained after is community, unless it can be traced to a separate property source, accumulated or earned while the spouses live separate and apart, or acquired by gift or bequest.

A party that argued property is separate can rely on any evidence that is credible, which includes tracing the property to a separate source. If property is bought with separate funds, it remains separate, even if the owner marries or uses the property during the marriage of if the property changes identity or form. A spouse can agree to change the character of property via an express declaration, though. To do so, the adversely impacted spouse must sign a document stating the character of a property has been changed. In the subject case, any agreement regarding the nature of the property was oral. Thus, the court found that the husband retained his separate interest in the property equal to the contribution of his separate assets.

Speak to a Dedicated Divorce Attorney in California

While people can retain separate property throughout their marriages, if they are not careful, their actions may change the character of the property from separate to community. If you intend to end your marriage and you or your spouse have separate assets, you should speak with a California divorce attorney to assess your options. Ethan M. Weisinger is a dedicated California divorce attorney skilled at navigating the complexities of property division, and if you engage his services, he will work tirelessly on your behalf.  You can contact Mr. Weisinger at 925-258-2020 or via the form online to set up a meeting.

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