California is a community property state meaning all marital property is equally owned by both spouses. However, this doesn’t mean everything has to be divided down the middle. Many assets and debts, like houses and student loans, cannot be divided equally unless they are paid off or sold for the proceeds.
For this reason, property division in a community property state is a matter of negotiating a fair division of the overall net-worth of the marital estate. The property being divided just needs to be divided equally, meaning if one spouse takes a large asset, the other may take multiple, smaller assets. When ownership is exchanged during property division or any other transaction, this is called transmutation. For example, if you have two community property cars in your name and your spouse will be taking one in the divorce, you can transmute this property by transferring ownership from the marital community to your spouse.
You can also transmute your separate property to your spouse as part of the divorce settlement. This can be done accidentally as well if you turn separate property into community property. This is called commingling and results in you transmuting your separate property to community property.
Transmutation is especially important in equitable distribution states. As opposed to community property states like California, equitable distribution states do not view all property acquired during the marriage as community property, subject to equal division upon divorce. Spouses in an equitable distribution state generally will be able to take the property legally in their name during the divorce.
For example, if they bought a car and put it in their name during the divorce, their spouse doesn’t necessarily have a right to half its value. Because this can sometimes result in grossly unfair division of assets in these states, property is often transmuted to balance out the division. In community property states like California, a spouse may decide to transmute separate or community property to their spouse to accommodate property trade-offs that result in an equal division of the net-worth of the marital community.
If you are in the Los Angeles or greater L.A. area and have questions about property division during divorce, Certified Family Law Specialist Mark H. Karney can help. Attorney Mark H. Karney and his skilled complex divorce litigation team can provide expert counsel to ensure you walk away with the all the property you are entitled to. Call our Los Angeles office at (310) 393-0236; email us at [email protected] or contact us through our online form today to schedule a free consultation.
- Transmutation Agreements (Wikipedia)