California Family Code § 850: Transmutation of Property Between Spouses

Plain-Language Summary

California Family Code § 850 allows married persons (spouses) to change the ownership classification of their property between them, a process known as a “transmutation.” In simple terms, spouses can agree to convert community property into one spouse’s separate property, convert one spouse’s separate property into community property, or even convert one spouse’s separate property into the separate property of the other spouse. These changes can be made with or without consideration, meaning no money or compensation is required – one spouse can essentially make a gift of property to the other or to the marital community.

Transmutations are subject to important safeguards and requirements. First, California law (specifically, Family Code § 852) requires that any transmutation be made in writing with an “express declaration” of the change, signed or accepted by the spouse whose interest is adversely affected. In other words, a verbal agreement or casual conversation is not enough – the spouses must put the agreement in a clear written document (such as an interspousal transfer deed or postnuptial agreement) explicitly stating the intent to change the property’s status. (There is a narrow exception for gifts between spouses of personal items, like clothing or jewelry, that are used solely by the recipient spouse and are not substantial in value given the couple’s circumstances – such small gifts can be valid without a formal writing.) Additionally, Family Code § 851 provides that transmutations are subject to laws against fraud, meaning a spouse cannot transmute property in a way that defrauds creditors or others. Furthermore, because spouses owe each other a duty of honest and fair dealing (a fiduciary duty), any transaction where one spouse gains an advantage (for example, a transmutation that greatly benefits one spouse) may be closely scrutinized by courts for undue influence. In practice, as long as the proper formalities are observed – clear written documentation and voluntary, informed consent – a transmutation is a legally effective way for spouses to rearrange the ownership of their assets between them.

Real-World Examples

Converting Separate Property to Community Property: Jane owned a house by herself before marriage (it was her separate property). After marrying John, she decides she wants the house to be owned by both of them as a couple. Jane and John sign a written agreement (and record a deed) stating that the house is now community property. This is a transmutation under Section 850 – Jane’s separate property home has been converted into a community asset that both spouses own equally.
Converting Community Property to Separate Property (Gift to Spouse): Mike and Anna, while married, jointly own a car as community property. Mike wants to gift the car entirely to Anna for her birthday so that it will be her sole property. To do this, Mike signs a simple written statement (an interspousal transfer form) declaring that he is transferring his interest in the car to Anna as her separate property. Once properly executed, the car becomes Anna’s separate property. (If Mike had simply told Anna “the car is yours now” without a written document, the law would not recognize that as a valid transmutation.)
Transferring One Spouse’s Separate Property to the Other Spouse: Laura inherited investment stocks from her parents, which are her separate property. She decides to transfer half of these stocks to her husband, David, to be his separate property as a gift. Laura executes a written agreement clearly stating that a specified number of shares are transferred to David as his separate property, and David accepts it. This transaction transmutes that portion of Laura’s separate property into David’s separate property. Without such a clear written agreement, if Laura had just put the stocks in an account under David’s name, it might not be considered a valid transmutation.

Published Case Law on § 850

Estate of MacDonald (1990) 51 Cal.3d 262 – A California Supreme Court case that laid the groundwork for transmutation law. The Court held that a spouse’s attempt to change the character of property must include an explicit, unambiguous statement of intent to do so. In this case, a wife signed a document changing the beneficiary of her insurance policy to her husband, but the document did not explicitly say she was giving up her community property interest in the policy. The Court ruled that without an express declaration of intent to transmute, the change was not valid. This principle was later codified in Family Code § 852’s writing requirement.
In re Marriage of Benson (2005) 36 Cal.4th 1096 – The California Supreme Court strictly enforced the transmutation requirements, ruling that if a transmutation does not meet the statutory formalities (such as the written express declaration), it is invalid – no matter what the spouses may have intended informally. In Benson, one spouse argued for an oral or implied agreement to transmute property (or asked the court to apply an estoppel because she relied on the other spouse’s promise), but the Supreme Court refused to create any exceptions to the clear writing rule. The Court emphasized that allowing unwritten or unclear transmutations would undermine the certainty the statute was designed to create.
In re Marriage of Valli (2014) 58 Cal.4th 1396 – In this case, the California Supreme Court considered a life insurance policy that a husband purchased with community funds but titled in his wife’s name alone during the marriage. The wife argued that titling the policy in her name made it her separate property. The Supreme Court disagreed, holding that even though the policy was in the wife’s name, it remained community property because the couple had not executed a valid written transmutation agreement. This decision made it clear that the special transmutation rules (Family Code §§ 850–852) override any general “form of title” presumptions between spouses. Simply putting an asset in one spouse’s name is not enough – the formal requirements for transmutation must be met for the property’s character to change.
In re Marriage of Begian (2018) 31 Cal.App.5th 506 – A California Court of Appeal case illustrating the importance of clear language in transmutation documents. In Begian, a husband and wife (along with a third party) signed a “Trust Transfer Deed” to transfer real estate, and the deed stated it was “for no consideration” and was a gift. The wife claimed this deed transmuted the husband’s interest to her as her separate property. However, the Court found the deed’s language ambiguous – it wasn’t clear whether the husband intended to give up his ownership or merely place the property in trust. Because the deed did not contain an express, unequivocal declaration that the husband’s share was being transferred to the wife’s separate property, it failed to meet the requirements of Family Code § 852 and was not a valid transmutation.
In re Marriage of Kushesh & Kushesh-Kaviani (2018) 27 Cal.App.5th 449 – Another Court of Appeal case, but with a different outcome from Begian. In Kushesh, during a brief marriage the spouses purchased a home, and the title was taken in the wife’s name “as her sole and separate property.” The husband also signed a grant deed explicitly acknowledging that the property was the wife’s separate property. The court held that this deed met the “express declaration” requirement – the language clearly stated the character of the property as the wife’s separate property, and it was signed by the spouse whose interest was affected (the husband). Therefore, this was a valid transmutation of the property to the wife’s separate property. This case contrasts with Begian and shows that when the written language is clear and unambiguous (for example, using the phrase “sole and separate property” and having the transferor spouse sign it), the transmutation will be upheld by the courts.

Full Text of California Family Code § 850

California Family Code § 850 provides as follows:

Subject to Sections 851 to 853, inclusive, married persons may by agreement or transfer, with or without consideration, do any of the following:

(a) Transmute community property to separate property of either spouse.
(b) Transmute separate property of either spouse to community property.
(c) Transmute separate property of one spouse to separate property of the other spouse.

Enacted by Stats. 1992, Ch. 162, Sec. 10, operative Jan. 1, 1994.

This content is provided for general informational purposes only and is not legal advice. Laws and their interpretations can change, and how the law applies to your specific situation may vary. For advice regarding your own circumstances, consult a qualified attorney.

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