(15) Community Property: Agreements Flashcards
Definition / Before & After a certain date rule:
Transmutations
Definition: A transmutation is an agreement between spouses during marriage to change the character of an asset (either from separate property to community property or vice versa). No consideration is necessary for transmutation to occur.
Before 1985 Rule: Prior to 1985 oral (express and implied) and written transmutations were valid.
1985 On Rule: Starting in 1985, a transmutation is valid only if (1) it’s in writing; (2) signed and consented to by the spouse whose interest is adversely affected; and (3) it expressly declares a change in ownership.
Gift of Insubstantial Value Exception
Transmutations
Community Property can be transmuted into separate property by gift from one spouse to another if the gift is: (1) tangible property of personal nature; (2) used solely by the recipient spouse; AND (3) insubstantial in value considering the lifestyle of the parties.
Prenuptial Agreements
Prenuptial agreements allow parties to contract out of community property laws and are valid if in writing and signed by both parties. However, oral agreements are enforceable if (a) made orally and fully performed; or (b) if the party detrimentally relied on the agreement.
Are agreements concerning spousal support per se unenforeable?
NO, agreements concerning spousal support are not per se unenforceable.
Unenforceable Rule:
When is a prenuptial Agreement deemed unenforceable?
A prenuptial agreement will be deemed unenforceable if it is (a)involuntary; (b) unconscionable; or (c) encourages divorce.
“Unconscionable” rule
Prenuptial Agreements
a prenuptial agreement will be deemed unconscionable if: (a) the terms are unfair; or (b)if a spouse did not know the extent of the other spouses property before signing the agreement.
“Involuntary” rule
Prenuptial Agreements
a prenuptial agreement will be deemed involuntary unless the court finds all of the following: (1) the party against whom enforcement is sought was represented by independent legal counsel (or expressly waived legal counsel in a separate writing); (2) the party had not less than 7 days to review the agreement; (3) if unrepresented by legal counsel, the party against whom enforcement is sought has fully informed of the terms, basic effect and rights and obligations of the agreement, and was proficient in the language used in the agreement (the explanation of the rights and obligations relinquished shall be memorialized in writing and delivered to the party prior to signing the agreement); AND (4) the agreement was not executed under duress, fraud, undue influence or lack of capacity.
