Transmutation…What You Need to Know

The general rule is that property takes its form at the time it is acquired. However, property can change from community to separate and vise versa. During a marriage the character of property can change – either by agreement or transfer. The law calls this transmutation. The most common transmutation is when the separate property of one spouse becomes community property. Transmutation can occur when a spouse’s separate property is commingled (mixed or combined) with community property in such a way as to lose its separate character. For example, if a spouse deposits his/her separate funds into a marital account, those funds become commingled. Commingling into a community asset creates a presumption in the law that the commingled money or property is now community property. This presumption can be overcome if the separate property is still clearly identifiable or can be traced to a separate property source. If the commingling happened long ago, often such tracing is difficult and expensive to do. Commingling and other acts and conduct can give rise to transmutation. Understanding transmutation can assist you in protecting your assets. We see this most commonly when one party wishes to protect an asset from transmutation that has family or sentimental value. For example, if a husband inherits a ranch and then the wife argues it is transmuted the husband may want to take bold steps to ensure that it remains in the family. The law in this area and the creation of the evidence for this is generally complex. When you are faced with family law issues contact the experts at Justice Legal Group.

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