Transmutation

A change in the character of separate property into community property through the legal process of transmutation

The most common way property gets transmuted is when both spouses, upon marriage, open a joint checking and savings account. From these joint accounts, all family assets are acquired. Home and cars get purchased, a vacation home gets built, and a pool is added to the backyard.

The Effect of Comingling Assets Into A Joint Account

Example of Transmutation:

One spouse unilaterally decided to purchase a helicopter from their joint savings account. Even though only one spouse has the license and ability to fly it. According to the law, that helicopter will most likely be deemed community property. It matters not that one spouse saved the money to buy that helicopter for many years before the marriage. Once the spouse deposited the money from his separate account into their joint account to purchase the helicopter, the law will presume that both parties intended that property be community property.

Drafting a premarital agreement, also called a prenuptial agreement, can be an effective way to avoid the transmutation of separate property into community property. However, be aware that comingling assets into joint accounts may override a prenuptial agreement if the court determines the post-prenuptial intent of comingling the property represented the current true state of the spouse’s intentions to share their property.