If you are getting a divorce, you should know that all property owned by each spouse and by both spouses has to be characterized as nonmarital (separate) or marital property in an equitable distribution state and as separate or community property in a community property state. The courts then set apart the spouses' separate property and divide the marital or community property between the spouses. Sometimes, the character of property changes during the marriage by transmutation, and a correct classification must be made.
What Is Transmutation?
''Transmutation'' of property is the change of the character of property, either from separate to marital property or from marital to separate property. The intent to change the character of the property must be shown. Transmutation may be achieved by the following:
- Jointly titling the property in the names of both spouses
- Commingling separate and marital property
Property can be transmuted from separate to marital property or from marital to separate property in both equitable distribution states and community property states.
Equitable Distribution States
In equitable distribution states, the transmutation doctrine has been chiefly applied to situations when separate property becomes marital property. In order for transmutation to occur, the owning spouse must express his intention to contribute his separate property to the receiving spouse or to the marital estate. Transmutation can occur when:
- Separate property becomes so commingled as to be untraceable
- Separate property is used by the spouses in support of the marriage
- Property is titled jointly or otherwise used so as to show an intent by the spouses to make it marital property
Separate property can become marital property when:
- Marital funds are used to pay down the mortgage on a home which one spouse owned before marriage
- Separate property owned by one spouse is transferred into the names of both spouses
- A swimming pool is built at the marital home with inherited funds
Merely using nonmarital property to support the marriage, without an intent to make a gift, may be insufficient for transmutation to occur.
Community Property States
Transmutation also occurs in community property states. Spouses can transmute separate property into community property by:
- Agreement between the spouses
- One spouse making a unilateral gift of his or her separate property to the community or to the other spouse
- One spouse relinquishing his or her half interest in community property and converting it into the separate property of the other spouse
In some of the community property states, the agreement to transmute property has to be in writing.
Questions for Your Attorney
- When does transmutation of property occur?
- If I used some of my separate money for a down payment on our marital home, is a portion of my home my separate property?
- In a community property state, can my spouse and I make an agreement so that that some of our separate property becomes community property?
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