Transmutation

When someone enters a marriage with property they own or is given separate property or received separate property through inheritance, a Court can determine that the separate property was transmuted or changed its classification from ‘separate property’ to ‘community property’.

An important common scenario is when a refinance occurs during the marriage and the Supreme Court has indicated guidelines as to when property has changed from separate property to community property through the process of refinancing.

The Idaho Supreme Court found that a transmutation to community property may not have occurred when:

“[t]he quitclaim deed was one of a number of documents related to the sale and refinancing. At trial, Ann testified that she would not have signed the quitclaim deed had she understood that she was giving Gregory a one-half interest in the property. From the time of the refinancing until 2003, Ann made payments on the BSV debt from a separate checking account. In 2003, Ann and Greg opened a joint checking account and Ann made payments on the debt from that checking account. At the time of the divorce trial, the debt was reduced to $22,881.” Barrett v. Barrett, 232 P.3d 801 (Idaho 2010)

“The party asserting transmutation must prove the claim by clear and convincing evidence. [W]here it is asserted ... that a spouse intended to transmute property or to make a gift, the burden is on the party urging the assertion to prove the intent in question by clear and convincing evidence.” Barrett at 801.

“(1) whether the community was liable for payment on the loan; (2) the source of the payments toward the loan; (3) the basis of credit upon which the lender relied in making the loan; (4) the nature of the down payment; (5) the names on the deed; and (6) who signed the documents of indebtedness.” Barrett at 802

Although this Court possesses authority to revise the disposition of community property on appeal, I.C. § 32-714, the determination whether property has been transmuted is a question of fact turning on intent. In making this factual determination, trial courts are free to consider all relevant evidence regarding that intent. Barrett at 803.

I.C. § 32-712(1)(a). In the event that the magistrate judge determines that the Etna property is community property, he should further decide whether that determination constitutes compelling circumstances warranting an unequal division of community property. Dunagan, 147 Idaho at 603, 213 P.3d at 388.

NOTE: Determining whether property is community or separate or whether property has been transmuted or whether there are reimbursable contributions is very complicated and an attorney should be sought.