Court Determined Whether Separate Property Has Been “Transmuted” to Community Property

my-last-cash-5-1138574-m.jpgThe California Family Code governs many aspects of divorce cases. The law guides courts and the parties throughout the process, setting forth legal requirements at every turn. It is necessary to understand the applicable laws, since the court’s ultimate decisions on matters such as spousal support, child support, and division of property can affect each party’s future financial status in very serious ways. It is also important to keep in mind that courts are often called upon to interpret the laws that are applicable to a divorce matter. To get a clear picture of how a court will view your case under the various state laws, it is important to contact a local family law attorney who has a great deal of experience handling divorce matters in San Diego.

Many divorce cases involve disputes over money and property. Since California is a “community property” state, spouses are likely to argue over what assets may be characterized as separate versus community property. Community assets will likely be divided evenly between the parties. A recent California divorce case addressed, among other things, the wife’s argument that the trial court improperly characterized and divided the couple’s property. She claimed that the court erred when it awarded her husband “reimbursements” under section 2640 of the Family Code.

Here, the couple married in 1974. The husband is a urologist with a private practice, and the wife is a registered nurse with a master’s degree in healthcare administration. Throughout their marriage, the couple acquired substantial assets, including multiple homes, other real estate and investments. In 2005, the couple created a Family Revocable Living Trust and also executed a Community Property Agreement, essentially stating that all property then owned or thereafter acquired (by either or both) was community property. Two years later, in February 2007, the husband filed a petition to dissolve the marriage.

The court entered an uncontested judgment of divorce in 2007 and later entered a partial judgment dividing certain assets based on the couple’s limited agreement. However, between February 2010 and March 2011, the trial court held a nine-day bench trial on the remaining issues and ultimately rendered a final judgment dividing the remainder of the property and denying the wife’s request for spousal support and attorney’s fees.

One of the wife’s main contentions on appeal is that the trial court awarded the husband reimbursements for the value of separate property investments that became community property under the couple’s agreement referenced above. Under section 2640, parties are entitled to reimbursements of separate property unless that party made a written waiver of the right to reimbursement or has signed something that has the same effect as a waiver. She claimed that the statute does not apply to the investments that her husband “transmuted” into community property. The court of appeals rejected her argument, pointing out that a transmutation agreement between spouses does not waive a contributing spouse’s rights under the statute, unless the agreement acknowledges those rights and waives them. Here, the court concluded that the parties’ community property agreement did neither.

While this is an unpublished opinion and parties may not cite to or rely on it in future cases, the court’s reasoning could certainly inform legal arguments in divorce matters going forward. Divorce cases are often fraught with many complicated financial issues. To protect their rights, parties facing a divorce are encouraged to contact an experienced family law attorney as early as possible in the proceedings.

Roy M. Doppelt has been representing parties involved in family law disputes for more than 20 years. Doppelt & Forney serves clients throughout Southern California, including San Diego, Encinitas, La Jolla, and Chula Vista. For a free consultation, contact Doppelt & Forney through our website, or give us a call toll-free at (800) ROY IS IT (769-4748).

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