Changing the Character of Property

property division lawyer

Changing the Character of Property

The parties in In re Marriage of Barneson argued about whether or not a written document satisfied the rules for transferring separate property. While the parties were married, the husband transferred stock to his wife. When the divorce was filed, he claimed that they were not transferred to her separate property.

During the marriage husband instructed his broker to “transfer” stocks that he owned into his wife’s name. In order to facilitate the transfer, husband filed a bond power which stated, “For value received, the undersigned does hereby sell, assign, and transfer unto,” and the wife’s name was written on the document and signed by the husband. The broker issued the stock to the wife in c/o of the husband’s name. Dividends were reported to the Internal Revenue Service under husband’s name. In the divorce proceeding, the husband argued that the transfer of the stock did not constitute a transmutation of the property from his separate property to his wife’s separate property. After an order dissolving the marriage had been issued, the husband passed away before any property issues had been determined.

The husband’s estate moved forward with the divorce proceedings and the trial judge held that the transfer of the stocks from husband’s name to wife’s name was valid and constituted a valid transmutation. The husband’s estate filed an appeal.

The First Appellate District Court discussed the language required to the transfer property from one spouse to the other spouse during marriage and noted that Family Code section 852 requires a writing to change the character of property from the separate property of one spouse to the separate property of the other spouse. The court stated that any time a gift or contract is made during marriage, the fiduciary duty of parties must be maintained and the presumption is that any transfer which is made was induced by undue influence.

The court held that in this divorce proceeding, a transmutation of property from the husband’s name to the wife’s name did not occur because the word “transfer” does not transfer the ownership of the property from one spouse to the other. In order to trigger the statute, the language must be precise and demonstrate an unambiguous change in ownership. It must be clear from the document itself that the spouse intended to transmute the property.

During a divorce it is upon the party that benefitted from the transaction to prove that the transaction was voluntary and not the result of undue influence.

If you need a divorce attorney in the Orange County area to address move away issues or custody in the dissolution of a marriage or any other divorce matter such as legal separation, annulment, child custody, spousal support and/or property division, contact our law office located in Laguna Hills at (949) 716-2102. Conveniently located off of the 5 and 405 freeway at Lake Forest.

Please note that the posting of this information does not constitute legal advice for a divorce in California. Facts and circumstances of the dissolution proceedings may alter the required action and analysis in any given family law case. This blog does not establish a family law attorney-client relationship.

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