What is an Interspousal Transfer Grant Deed?

In this blog post we explain the use of an interspousal grant deed and how it can help minimize some of the inevitable challenges that end up arising between spouses encounter serious financial difficulties or the marriage ends.

California, Property, and Transmutation

California is a community property state. That means that once a couple is married, all property, subject to a few exceptions, is deemed community property and belongs to each spouse equally. Therefore, most property and income that each spouse gains during the marriage belongs to the community, with each spouse having an equal share in that property. This includes real property.

Transmutation:

• Transmutation is the process by which spouses can change the character of property from community property to separate property or vice versa. This change in property characterization can have implications for property rights and taxes.

Making Transmutations Effective:

• For a transmutation to be legally effective, it must be in writing and contain an express declaration that is made or accepted by the spouse whose property interest is being affected negatively.
• The spouse who is losing the community property interest must acknowledge in writing that they accept the transmutation of the property to the separate property of the other spouse.

Using the Interspousal Transfer Grant Deed for Transmutation:

One practical way to achieve a transmutation from community property to separate property or vice versa is through an Interspousal Transfer Grant Deed. This deed is particularly useful because:

• It is considered an interspousal transfer rather than a change in ownership. As a result, it does not trigger property reassessment for property tax purposes.
• The transfer is typically exempt from property transfer taxes.

When is the Interspousal Transfer Grant Deed Used?

This legal tool is commonly used in the following scenarios:

1. Divorce Proceedings: When property is being allocated to one spouse as part of a divorce settlement, the other spouse can use an Interspousal Transfer Grant Deed to transfer their interest without tax consequences.
2. Financial Hardships: If one spouse’s financial difficulties are negatively affecting the other spouse’s credit, they may use this deed to transfer property and separate their financial interests.
3. Estate Planning: It can also be used in estate planning to ensure that specific real property assets are inherited by a particular spouse.

In summary, an Interspousal Transfer Grant Deed is a valuable legal instrument that allows married couples in California to transfer property between spouses while maintaining certain tax advantages and legal protections. It is commonly used during divorce proceedings, financial challenges, and estate planning. Understanding and utilizing this tool can help couples navigate complex real estate matters effectively.

Need Help Regarding Interspousal Transfer Grant Deed In California?

Deeds come in many shapes and forms and cover different aspects of owning real property. The real estate attorneys at Schorr Law have years of experience litigating cases involving the various forms. Real estate law can get complicated, so we are here to help simplify. Contact us today to see if you qualify for a free 30-minute consultation. You can call us at (310) 954-1877, text us at (310) 706-2265, or send us a message here.