What’s Yours is Mine? Transmutation in Estate Planning

Married couples often don’t give much thought to the characterization of their property as community or separate. In general, community property is all real or personal property acquired by a married person during the marriage. Separate property is all property owned by the person before the marriage, all property acquired by the person after marriage by gift, bequest or devise, and the rents and profits from the person’s separate property.

Transmutation is an interspousal agreement or transfer, with or without consideration, that changes the characterization of property. Transmutation can accomplish any of the following: 1) transmute community property to separate property of either spouse, 2) transmute separate property of either spouse to community property or 3) transmute separate property of one spouse to separate property of the other spouse.

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