BY ATTY. KENNETH REYES

SPOUSES during both before and during marriage may agree to change the character of any of their property – from separate property to community property, from community property to separate property, and from separate property of one spouse to separate property of the other.  When spouses agree to change the character of property, it is commonly referred to as “transmutation.”  Transmutations of real or personal property must be “in writing by an express declaration that is made, joined in, consented to, or accepted by the spouse whose interest is adversely affected.”  Family Code Sec. 852(a),(e); Estate of MacDonald (1990) 51 C3d 262, 267–268, 272 CR 153, 157.    Further, the writing must contain language which expressly states that the characterization of property is being changed.  Estate of MacDonald, supra, 51 C3d at 264, 272, 272 CR at 155, 160.

Often, spouses change the character of separate property to community property for estate planning purposes (i.e. to avoid probate and estate taxes upon one of the spouse’s death).  A typical transmutation for estate planning purposes is one which involves the transfer of property into a revocable living trust.   At first glance, the transmutation for estate planning purposes appears to be a good idea.  Typically, when the character of property is changed from separate to community property for estate planning purposes, the spouses are on good terms and the marriage is contemplated to last until the death of one of the spouses.  However, what happens if the spouses decide to divorce, and the underlying estate planning purpose of the transmutation no longer exists?  Does the character of the property revert to separate property?

The Court of Appeals entertained this issue recently in Marriage of Holtemann (2008) Cal.App.4th  (No. B203089.  Second Dist., Div. Six, 5/12/2008).  In Marriage of Holtemann, the spouses signed a transmutation agreement in which the husband agreed to change the character of his separate property to community property.  The transmutation agreement contained an express declaration by the husband that his separate property was to become community property.  Also, the transmutation agreement stated that the agreement was specifically made for the purpose of interpreting how the property would be disposed upon death of one of the spouses.  Shortly after the agreement was executed, the wife petitioned for divorce, and the husband maintained that the character of his separate property did not change to community property despite the transmutation agreement.  The husband reasoned that there was no express declaration as required by Family Code Sec.852 in that the agreement provided that the change in character of the property was for estate planning purposes only.  The Appellate Court disagreed with the husband, and ruled that the character of the property had been changed to community property.

The Appellate Court’s opinion in Marriage of Holtemann is further evidence of the necessity of competent representation when the issue of changing the character of property arises.  The change in the character of property often brings with it unintended consequences.   Accordingly, if you are married and are contemplating changing the character of your property for estate planning purposes, or for any other purpose, it is advised that you consult with an experienced attorney.

Darrick Tan is an attorney with the Law Offices of Kenneth U. Reyes, P.C.  Mr. Tan is a former Board of Governor with the Philippine American Bar Association.  A graduate of Southwestern University School of Law and UCLA, Mr. Tan has been admitted to practice in California and Nevada.  LAW OFFICES OF KENNETH U. REYES, P.C. is located at 3699 Wilshire Boulevard, Suite 700, Los Angeles, California 90010.  Telephone (213) 388-1611 or e-mail at This e-mail address is being protected from spambots. You need JavaScript enabled to view it . ■

BY ATTY. KENNETH REYES

WHEN the marital relationship sours to the point where one or both spouses believe that the marriage cannot be salvaged, three remedies are available to terminate or alter the marital status:  dissolution, nullity, and legal separation.

Under Family Code Sec. 2300, dissolution of marriage can be attained and the “single” status of spouses restored by 1) death of one of the spouses 2) a judgment of dissolution or 3) a judgment of nullity of marriage.

With a dissolution action, there is no issue as to whether a valid marriage exists.  The objective in a dissolution action is to terminate the marital status.  Conversely, with an action for nullity, the issue is whether or not the marital status ever existed (i.e. whether there was a valid marriage at all).  With regard to dissolution, community property is divided equally.  With an invalid marriage, although no community property rights exist per se, property acquired during the void or voidable marriage, which would have been community property if not for the impediment to a valid marriage, may be considered “quasi-community” property and divided under the same rules as community property.  One has an interest in “quasi-community” property only if a good faith belief that the marriage was valid existed. (Family Code Sec. 2251).

Alternatively, through legal separation, marital rights and financial responsibilities can be adjudicated without dissolving the marriage.  A judgment of legal separation does not terminate marital status.  Legal separation may be a viable alternative for persons who, for some reason or another, would like to continue marital status, but would like adjudication of financial issues with his or her spouse.  Typical reasons for choosing legal separation over dissolution include to retain eligibility for insurance benefits and to be in accordance with one’s religious beliefs.  Like dissolution, an action for legal separation conclusively determines each spouse’s property rights and financial responsibilities to each other, including determination of support and division of the community estate.  Once the judgment for legal separation is entered, the parties acquire no more community property and no obligations are imposed on either spouse except for those obligations as set forth in the judgment.  Unlike dissolution, the marriage bond remains intact and neither spouse can remarry until the existing marriage is dissolved either by death or judgment.

Residency requirements vary for dissolution, nullity, and legal separation.  The foregoing is merely an overview of the various options for terminating or altering marital status, and accordingly, it is advised that you consult with an experienced attorney to further explore which of the above options is best to pursue.

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Darrick Tan is an attorney with the Law Offices of Kenneth U. Reyes, P.C.  He is a former Board of Governor of the Philippine American Bar Association.  He is a graduate of Southwestern University School of Law and UCLA.  He has been admitted to practice in California and Nevada.  LAW OFFICES OF KENNETH U. REYES, P.C. is located at 3699 Wilshire Boulevard, Suite 700, Los Angeles, California 90010.  Telephone (213) 388-1611 or e-mail at This e-mail address is being protected from spambots. You need JavaScript enabled to view it . ■