HOW IS TRANSMUTED OR COMMINGLED SEPARATE PROPERTY DIVIDED ON DIVORCE?

The following is a question which the inquirer agreed may be publicly revealed, and my answer to the question:

QUESTION: What will the divorce asset division be under the following fact scenario?

My uncle bought a house 20 years before marriage & is still paying for it. My uncle and aunt's names are both on the title. My uncle also has accumulated savings before the marriage and it's sitting in a joint account he opened with my aunt. Can my aunt claim 50% of the fair market value of the house and 50% of the savings in the joint account? Legally, can my aunt claim any share of the equity/asset that are gained by my uncle before they got married. If yes, how are those pre-marriage equity/asset divided? Also, my aunt can legally claim 50% of the equity/asset gained during their marriage, is that correct?

ANSWER: Your question reads like a bar question.

When your uncle transferred the house to joint names, he converted the house to community property, subject to his Family Code Section 2640 right to reimbursement of the equity in the house as of the date of his transfer. That will require an appraiser's valuation of the house at that date. Any equity the house gained after that date would be community property, divisible 50/50. Your uncle would be entitled to the above-noted reimbursement, and your aunt would be entitled to 50% of the equity in the house remaining after that reimbursement.

If your uncle put his premarital savings into a joint account with his wife, he commingled his separate property with community property - the earnings of either party after marriage that was put into that account. If nothing has been taken out of that account, he'd be entitled under Family Code Section 2640 to reimbursement of his traceable separate property put into that account. If monies were put into and taken out of that account, he'll need to hire a forensic accountant to review the account transactions and interview him, to render an opinion as to the separate property that remains in that account. Your aunt would be entitled to 50% of the community property portion of that account, but none of your uncle's separate property portion of that account.

Your aunt's interest in property or funds owned by your uncle before the marriage is based upon whether it was converted to community property (in which case your uncle would be entitled to reimbursement of traceable separate property converted to community property), whether it was commingled with community property, or whether your uncle or aunt spent money, time and talent during the marriage improving and/or increasing the value of the property or funds.

To the extent that your uncle can trace or prove the value of his separate property prior to marriage, your aunt should not be entitled to a share of that value.

Unless there is a valid and enforceable prenuptial agreement between your uncle and aunt, the earnings and accumulations of both parties during the marriage are community property, divisible 50/50.

How your aunt's community interest can be divided or paid off depends upon whether there is sufficient community property to divide in kind or whether your uncle has sufficient community and separate property to provide her community property portion to her in property or other community assets, or whether your uncle can qualify to borrow funds sufficient to pay her community share with borrowed funds.

This educational blog is brought to you by DONALD F. CONVISER, a Los Angeles Certified Family Law Specalist, owner of Warner Center Law Offices in Woodland Hills in the San Fernando Valley, an effective and aggressive Los Angeles Divorce Lawyer serving clients in the courts of Los Angeles and Ventura County for over 35 years, offering a free confidential consultation regarding your divorce or family law issues, at 818/880-8990, www.conviser.net