Transmutation Agreement
(Recharacterization of Personal Property) (CA)

Summary

This template is an agreement that may be used to transmute separate property to community property or community property to separate property in California. This template includes practical guidance, drafting notes, and alternate clauses. Marital property agreements are often prepared to clarify the status of property before it is transferred to a revocable living trust or held in connection with the preparation of a will. This is especially important for property held in joint tenancy, because difficult issues can arise as to whether the property is truly joint tenancy property (which is a form of joint ownership of separate property) or community property. See California Wills & Trusts § 3.04. When an estate contains both separate property and community property, and there are children from prior marriages, an agreement characterizing the spouses' assets as separate or community can help prevent subsequent disputes between the surviving spouse and the children of the deceased spouse over what property is included in the estate of the deceased spouse. Careful discussion with clients is vitally important to explain the consequences of the transmutation of the character of property in the areas of liability for debt between the parties, management in case of disability, treatment in the case of divorce, and upon death. The spouses should be advised that they each have the right to separate legal representation and review by independent counsel prior to executing the agreement, and you should carefully document such disclosure and explanation in writing. Furthermore, the spouses should be advised that the general rules applicable to fiduciary relationships between persons with whom occupy confidential relationships with each other are applicable. This template assumes that specified items of property will be recharacterized as the community property of the parties, the separate property of the first spouse, and the separate property of the second spouse. For related templates, see Transmutation Agreement (CA), Characterization of Trust Assets (Community or Separate Property) (CA), Community Property Agreement (CA), and Postnuptial Agreement (CA). For more information about transmutation agreements, see California Wills and Trusts § 61.05.