What Constitutes a Valid Written Transmutation Agreement

Both before and during marriage, spouses may agree to change the status of any or all of their property through a property transmutation (Fam C § 850), which is an interspousal transaction or agreement that works a change in the character of the property. However, for a legal transmutation of property to occur, statutory formalities must be met. Fam C § 852(a) provides that a transmutation of real or personal property is not valid unless it is made in writing by an express declaration that is made, joined in, consented to, or accepted by the spouse whose interest in the property is or may be adversely affected. 

A transmutation agreement that is executed in accordance with these formalities is the only lawful method to transmute the character of any property that is acquired during the marriage. (See Transmutation Article) 

What are the requirements for a valid written transmutation agreement?

For any property acquired after January 1, 1985 a valid transmutation agreement must be in writing and must include a clear expression of an intent to not only change the title to property but also to change its character, ‘“a “transmutation,” or an interspousal transaction changing the character of community or separate property (§ 850), “is not valid unless made in writing by an express declaration” approved by the adversely affected spouse.”’ (In re Marriage of Benson (2005) 36 Cal.4th 1096, 1100) A writing is not an “express declaration” unless it contains specific language which expressly states that a change in the characterization or ownership of the property is being made to another form. (Estate of MacDonald (1990) 51 Cal.3d 262, 264)  For example, while the term “transfer” generally refers to a change in ownership, in the marital context it does not necessarily refer to a change in the character of the property, “Transfer” is clearly not synonymous with “transmutation,” as is evident from the language of Fam C §§ 850 and 852. 

The California Supreme Court made it clear that the construction of section Family Code Section 852(a) precludes the use of “extrinsic evidence” to prove that a writing effected a transmutation. The Court explained that the Legislature, in enacting the requirements and abrogating prior case law, sought to increase certainty and honesty in marital property disputes, and to decrease the burden on the courts in resolving such matters. (In re Marriage of Benson (2005) 36 Cal.4th 1096, 1100, https://casetext.com/case/in-re-marriage-of-benson

A writing sufficient to satisfy the “express declaration” requirement might very well contain the words “transmutation,” “community property,” or “separate property,” but the written agreement is not required to include that specific language in order to be valid. For example, a writing signed by the adversely affected party would be sufficient evidence of a transmutation if it included language such as “I give to the account holder any interest I have in the funds deposited in this account.” (Estate of MacDonald (1990) 51 Cal.3d 262, 273, https://law.justia.com/cases/california/supreme-court/3d/51/262.html