Marital Property Agreements as Part of Comprehensive Family Estate Plan
Sometimes when a couple engages our firm with the task of creating an estate plan for their family, it becomes apparent that the couple should either confirm or transmute their respective rights to certain assets as part of their estate plan. Transmutation is the process by which property rights of married persons are changed or converted. Through a post-marital property agreement, couples can convert the separate property of one spouse either to the community property of both spouses or to the separate property of the other spouse. Couples can also convert their community property to the separate property of either or both spouses.
It is always a better plan for a couple to transmute their respective rights to a property in a written agreement. For example, in a situation where one spouse has a substantially larger estate than his or her spouse and wishes the other spouse in order to take full advantage of the applicable tax exclusions or as mentioned above, where title to a property is contrary to the agreement of the spouses, it is particularly important to do so. In order to avoid litigation as to these issues upon the divorce or death of one or both spouses, it is extremely important that the parties clarify their intention to transmute their property so that the understanding and agreement of the spouses is reflected in a writing.
The issues stated herein become very important in situations where one or both spouses have different beneficiaries, such as children from a previous marriage, whom they want to provide for in the case of their death.