TRANSMUTATION BY DEED IN CALIFORNIA IS A RISKY BUSINESS
By Rosemary B. La Puma, Esq.* and Andrea L. Kushner, Esq.**
Two recent California cases analyzed the validity of transmuting property by real property deed. Both cases based a portion of their analysis on the form of title.1 However, evidence of form of title in characterizing property contradicts In re Marriage of Valli, which stated that the general presumption in Family Code section 760, that all property acquired during marriage is community property, trumps the form of title presumption in Evidence Code section 662 when characterizing property.2 Accordingly, these new cases have created uncertainty for estate planners in the area of real property transmutation. Part II of this article discusses the law to date regarding transmutation by deed, generally and specifically. Part III reviews In re Marriage of Kushesh & Kushesh-Kaviani and In re Marriage of Begian & Sarajian, the two recent cases that partly rely on form of title evidence in analyzing the validity of a transmutation by deed. Part IV addresses the necessity of an analysis of undue influence after a finding of a valid transmutation by deed. Part V explains the history of transmutation law, the public policy behind the current transmutation law, its similarity to the policy behind the California Uniform Premarital Agreement Act (CUPAA), and how the new cases frustrate this policy. Finally, Part VI enumerates suggestions for estate planners to avoid testifying at their clients’ divorce trial, being sued for malpractice, and violating the Rules of Professional Conduct when transmuting real property as part of an estate plan.