Changing Separate Property Into Community Property

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What Is Community Property?

Community property is any property that is acquired during marriage and is owned by both spouses. Separate property is property that is not owned by both spouses, but only by one spouse individually. There are nine states that recognize community property law: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin.

Can I Change Separate Property into Community Property

For a variety of reasons, spouses may want to change the status or ownership of their separate or community property. Commonly, re-characterizing property is done for convenience or beneficial tax purposes. There are generally two ways to change the status of property.

What Is a Prenuptial Agreement?

A prenuptial agreement, put simply, is a contract entered into before marriage where a couple specifies how they will divide their property, debts, income and expenses. While many associate these agreements with how property will be treated in the event of the death of a spouse or divorce, they can also cover a range of other issues, such as how property will be classified during marriage.

What Is a Transmutation?

A transmutation is an agreement made between spouses that changes the character of the property. Transmutations can change separate property into community property or vice versa. The requirements for a transmutation will vary from state to state, but they are typically quite liberal. Requirements generally include:

1) Intent
There must be some clear intent to change the status of the property. In some states, this intent can be expressed through an oral agreement, while other states require a written agreement. In states requiring a written agreement, it may be done by:

2) Comingling
Even in the absence of an agreement, separate property may be transmuted if it is mixed with community property in a way that makes it impossible to determine what is separate and what is community property. 

What Is Community Property? 

Currently, nine states follow a community property doctrine. Under this system, property acquired as a result of the energy and skill of either the husband or wife during marriage is presumed to be community property. Property owned before marriage or acquired by either spouse as a result of a gift or inheritance is typically separate property.

Do I Need Family Lawyer?

Changing the character of property is often quite difficult, particularly where a writing is required. An experienced family lawyer can help you draft a legally enforceable transmutation or prenuptial agreement. A family law attorney can also explain to you your rights under the laws of your area.

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Last Modified: 12-08-2015 03:26 PM PST

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