It’s that magical time of year, with hearts everywhere, flower shops overflowing with beckoning bouquets and chocolate boxes stacked sky high: Lovers rejoice! Valentine’s Day is approaching! Certainly, love is in the air, but before you and your beloved present each other with gifts, it is worth thinking about the legal implications, property-wise, when married folks exchange gifts.
If you receive an expensive gift on Valentine’s Day 2015, do you get to keep that gift if you divorce in 2017? Maybe it seems too cynical to even discuss gifts between spouses, especially in relation to this deeply sentimental and romantic holiday. Unfortunately, these gifts between spouses can become major sticking points in the event of divorce. Sure, if you’re a little on the stingy side and are going to give your spouse a card with a discount department store gift certificate, you are unlikely to have any problems with this gift at divorce. Well, other than the fact that you are more likely to end up in a divorce if you’re gifting gift cards for Valentine’s Day! The fact is, California is a community property state and expensive gifts between spouses can become rather complicated.
Here’s how it works:
California law defines community property as any asset acquired or income earned by a married person while living with his/her spouse. Separate property is anything acquired by a spouse before the marriage or after the parties separate as well as during the marriage by devise, gift, or bequest. At divorce, the community estate must be divided evenly, unless there is a prenuptial agreement or other written agreement requiring the property to be divided accordingly. While this doesn’t mean that you need to saw the sofa in half, it does mean that each party needs to receive an equal portion of the total community.
Back to Valentine’s Day: Say your very generous spouse surprises you with a brand new shiny red car with a giant bow wrapped around the roof. Filled with bliss, you drive it around for the next year until one day, tragically, your spouse serves you with divorce papers. As you start to divide the community property, where does the car fall? Will you get to keep the car? Will you have to pay your spouse for half the car? As you might expect, it will likely depend how the car was paid for and whether there was an instrument showing the car was intended to be “transmuted” to separate property belonging solely to you.
Despite how it sounds, “transmutation” is not a class at Hogwarts, even if in a way, it is legally magical. Transmutation, if done according to the California Family Code, changes the nature of ownership of property in a marriage. It can change community property to separate property, separate property to community property, or change one spouse’s separate property to the other’s separate property. Turning back to your shiny new red car, was there a transmutation?
The Family Code says that while regular small gifts of personal property (clothing, jewelry, etc.) can be changed to separate property without a writing, if a large piece of personal or real property is to be transmuted, there needs to be a writing that demonstrates the intent to change the nature of the property. So, the card that comes with that car needs to be pretty specific! Otherwise, at divorce, the court could find there was no transmutation. Perhaps transmutation cards are the future of Hallmark cards!
Just like prenups, some might think transmutation Valentine’s Day/Birthday/Anniversary cards are not all that romantic but, in a way, what better way to say “I love you”? A transmutation card says, “I love you so much that even if this doesn’t work out, I still want you to have it,”– Really, what could be more romantic than that?
As a side note to those not yet married: Say your beloved calls all your friends and family and coordinates a massive synchronized YouTube-worthy proposal – drops to a knee and reveals a Hope- diamond sized ring. Then a few months later, your love retracts the proposal and asks for return of the ring. Under a strange California law, who gets the ring depends on who breaks off the engagement. So, if your soon-to-be-former beloved breaks off the engagement, most likely, you will get to keep the ring!
Best of luck, lovers! Happy Valentine’s Day!