When Separate Property Becomes Marital Property, Also Known as the Transmutation of Property

Transmutation of PropertyGeorgia is an equitable distribution state, which means that during property division, all property will be categorized as either separate or marital. Each spouse gets to keep his or her separate property, and all marital property is subject to division. But what happens when property interest and ownership has become blurred? Transmutation of property in a Georgia divorce is when separate property becomes marital property. The courts must figure out if the property is marital or separate.

For example, if spouses pooled their separate funds when they got married or if one party used personal property to contribute to the marriage, how is the line drawn between separate and marital property?

Understanding Transmutation of Property in a Georgia Divorce

Transmutation, or the process of transferring ownership of separate property into marital property, is a common point of contention in many divorces that can greatly complicate property division.

Any property you acquired prior to marriage is considered separate property, as are any gifts or inheritances you receive during marriage. Anything you acquired during the course of your marriage is considered marital property. Property can change character, though, when one spouse uses his or her separate property to contribute to the marital estate. There are three primary ways property can be transmuted.

  • Gifts – If one spouse gifts personal property to other or to the marital estate (such as using an inheritance to renovate the kitchen), then the property is transmuted into marital.
  • Agreement – If the spouses make an agreement to transfer ownership of separate funds into marital, then the property will be categorized as marital. This often occurs when couples have postnuptial agreements or when one spouse transfers a car or home owned prior to marriage into both spouses’ names.
  • Commingling – When assets become so integrated that they no longer can be identified as separate, the property will be considered marital for the purposes of property division. This can happen when spouses join bank accounts upon marriage or when one spouse receives a personal gift and deposits it into the couple’s joint account.

Determining Ownership for Equitable Distribution

Determining ownership can be extremely difficult in a divorce. In order for the courts to classify transmuted property back into separate, you’ll need to be able to trace the property back to your ownership. The burden of proof rests on the party requesting the funds.

For example, if your aunt gave you a $10,000 gift, and you deposited it into your and your ex’s joint money market account, you can provide the courts with a copy of the check made out to you and maybe even testimony from your aunt that those funds were yours. In this case, the courts likely will allocate those funds to you. If you are unable to provide adequate proof of ownership, though, the property will be considered marital.

When determining which property is separate and which is marital, Georgia courts often use the “source of funds rule,” held by the Supreme Court of Georgia in Thomas v. Thomas. The rule states that a spouse who contributes separate property is entitled to interest  “in the ratio of the nonmarital investment to the total nonmarital and marital investment in the property,” while remaining property is marital and subject to equitable distribution. Basically, if you contributed separate property to the marriage, you are entitled to some percentage of interest. The value of the remaining property is considered marital and will be divided.

A Divorce Attorney at Ward Law Firm Can Protect Your Interests

For help with all aspects of divorce, property division and protecting your interests, call a property division attorney at Ward Law Firm in Georgia. We can answer any questions you may have about transmutation of property in a Georgia divorce and how to safeguard your personal interest during a divorce. Contact us today at 770-383-1973 or fill out our online contact form for your REAL Case Analysis.