During a marriage, there are two categories of property. Separate property refers to the assets and property that each spouse individually owned before marriage, while marital property includes assets and income acquired during the marriage, typically subject to division upon divorce or dissolution unless otherwise legally protected.
Transmutation of separate property refers to the conversion of property classified as separate into marital property through actions or agreements during the marriage. Transmutation can occur in any of the following ways.
Joint agreement
If both spouses agree to treat separate property as marital property, either explicitly through a written agreement or implicitly through their conduct, such as using separate funds to improve marital property or vice versa, the separate property can be transmuted into marital property. This transformation can affect how the property is divided in the event of divorce or how it is treated in estate planning and inheritance scenarios.
Change in title
A spouse may also decide to change the title of separate property to include the other spouse’s name, effectively converting it into marital property. This change in title can occur through actions like adding the spouse’s name to a deed or bank account that originally held separate property funds. Such actions demonstrate an intention to treat the property as jointly owned marital property, which can impact its division in divorce proceedings or its distribution upon the death of a spouse.
Unintentional commingling
Sometimes separate property may be inadvertently commingled with marital assets, such as depositing inheritance funds into a joint bank account used for household expenses. This mingling of funds can lead to challenges in distinguishing between separate and marital property. Courts may consider factors such as the intent behind the commingling and whether efforts were made to maintain the separate nature of the assets. This unintentional commingling could result in the transmutation of separate property into marital property, affecting its division in divorce proceedings or inheritance disputes.
Legal guidance can play a crucial part in helping understand the implications of transmutation of separate property.