Property gains its character as community property or sole and separate property at the time it is acquired. The character of the property doesn’t change unless the parties take actions that have the legal effect of transmuting (changing) the property from one type (e.g., sole and separate) to another (e.g., community). An example of conduct which might transmute sole and separate property to community property is comingling (mixing) funds earned before the marriage with funds earned during the marriage.
An action which does NOT transmute separate property to community property is placing the property in a revocable trust. Consider this example. Husband owns real estate in his name before the marriage. The real estate is owned by Husband free and clear. Upon their marriage, Husband and Wife form a revocable trust on which both Husband and Wife are beneficiaries. Husband transfers his sole and separate real estate into the trust. The real estate continues to be Husband’s sole and separate property despite the transfer to the trust of which Wife is one of the beneficiaries. In the event of a divorce, the real estate goes to Husband.
The above example has been simplified for sake of illustrating a principle. There are actions Husband and Wife might take other than placing the real estate in the trust which might create a claim for Wife. If, for example, Husband and Wife use during-marriage earnings to make improvements to the real estate, then although the real estate would continue to be Husband’s separate property, the marital community would have a claim for reimbursement based on value added to the real estate by the improvements paid for with marital funds.
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