Can a Married Couple Change the Nature of an Asset from Community Property to Sole and Separate, or Vice Versa?

Answer: Sure. Intentionally changing the nature of a marital asset is common. For example, one spouse may quit-claim a house to the other for some reason. This written agreement evidences the spouses' intent that the asset be sole and separate property from that point on. Likewise, one spouse could change a sole and separate house to community property by an opposite change in title, to community property. The family court would see that as a “gift” to the community. Many parties also use antenuptial (prenuptial) and postnuptial agreements to alter community property principles. On a different note, it is also possible to make the marital property change unintentionally. This occurs in the case of commingling. Commingling occurs during a marriage when separate assets and community assets become hopelessly mixed such that the family court, during divorce proceedings, cannot tell the difference. This frequently occurs with bank accounts. The burden of tracing the separate asset during a divorce falls on the spouse claiming a sole and separate interest. When an asset changes its nature, the process is called “transmutation.”

Wilcox & Wilcox, P.C.
Trent Wilcox
For the Firm

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