Revocable Trust Created By Spouse During Marriage (California)

[tonelab77]

Jurisdiction

California

I would like to know if a residence placed in a revocable trust during marriage (California) is considered separate property. The trust was created during the marriage and our marital residence was purchased by the trust. The residence was later refinanced using my credit. This required the finance company to transfer the residence out of the trust, and it was in both our names for a short while, before being transferred back to the trust. Please see attached trust.

Thank you in advance for any insight.

 

[Tax Counsel]

I think it quite likely would be marital as you both own it now and simply transferring the property to the trust would not terminate the other spouse's community property interest in the home. How large a community share your spouse holds is something you may want to see a real estate attorney about.

 

[army judge]

I would like to know if a residence placed in a revocable trust during marriage (California) is considered separate property.

Which spouse acquired title to the home?

In what year was the home acquired?

Did that spouse acquire title to the home before or after the marriage?

How was the deed to the home titled originally?

Which spouse,, female or male is the higher wage earner?

Are there any issue of this marriage?

If so, what is(are) their ages?

 

[tonelab77]

Which spouse acquired title to the home?

In what year was the home acquired?

Did that spouse acquire title to the home before or after the marriage?

How was the deed to the home titled originally?

Which spouse,, female or male is the higher wage earner?

Are there any issue of this marriage?

If so, what is(are) their ages?

My ex

2013

Title was acquired at purchase inception by the trust in 2013.

We were married in 2006.

Female is higher "earner" (trust/ inheritance in 2011)

What type of issue? There were tons of issues, hence the divorce.

Yes; 17, 12 & 10

 

[tonelab77]

I think it quite likely would be marital as you both own it now and simply transferring the property to the trust would not terminate the other spouse's community property interest in the home. How large a community share your spouse holds is something you may want to see a real estate attorney about.

How so? The title is in my ex's revocable trust.

 

[adjusterjack]

Title was acquired at purchase inception by the trust in 2013.

If the trust was the purchaser of the property with inherited funds that were already segregated as sole and separate property, an argument might be made that the property was also sole and separate.

I emphasize might because there are many variables that can push it in either direction.

You're going to need a lawyer to figure that out.

 

[Tax Counsel]

How so? The title is in my ex's revocable trust.

That the trust has a title to the property does not in itself mean the home was entirely separate property. A spouse in a community property state my only transfer whatever community property share he or she has at the time of the transfer. That's why in community property states title insurance companies, mortgage lenders, and real estate brokers usually will ask that the person wishing to sell real estate either affirm that the seller has never been married or get both spouses/ex-spouses to sign the transfer deed so that the seller can be assured of getting a clean title. Unless both spouses joined in the transfer and it was clear that one of the spouses was giving up his/her community property interest, there will be a cloud on the title that the trust has. If that is not addressed while the (apparently now ex) spouses are alive, that cloud on the title may end up requiring litigation after death to figure out exactly what rights the trust has. That will delay trust distributions and may end up costing the parties to the litigation thousands of dollars to battle it out.

 

[army judge]

What type of issue? There were tons of issues, hence the divorce.

ISSUE, as used in a wiil, for example.

ISSUE, not the version specifying problem, for instance.

issue

1) n. a person's children or other lineal descendants such as grandchildren and great-grandchildren.

It does not mean all heirs, but only the direct bloodline. Occasionally, there is a problem in determining whether a writer of a will or deed meant issue to include descendants beyond his or her immediate children.

While a child or children are alive, issue refers only to them, but if they are deceased then it will apply to the next living generation unless there is language in the document which shows it specifically does not apply to them.

2) n. any matter of dispute in a legal controversy or lawsuit, very commonly used in such phrases as "the legal issues are," "the factual issues are," "this is an issue which the judge must decide," or "please, counsel, let us know what issues you have agreed upon."

3) v. to send out, promulgate, publish or make the original distribution, such as a corporation selling and distributing shares of stock to its initial investors.

4) n. the shares of stock or bonds of a corporation which have been sold and distributed.

 

[tonelab77]

If the trust was the purchaser of the property with inherited funds that were already segregated as sole and separate property, an argument might be made that the property was also sole and separate.

I emphasize might because there are many variables that can push it in either direction.

You're going to need a lawyer to figure that out.

The initial down payment was made with inherited funds, but the monthly payments came from a joint account that were are funds were comingled. I only want a portion of the profit/gains of the sale.

 

[zddoodah]

I would like to know if a residence placed in a revocable trust during marriage (California) is considered separate property. The trust was created during the marriage and our marital residence was purchased by the trust.

Based on your follow up post #9, it seems like the property was initially the separate property of the spouse whose inherited funds were used to acquire the property. However, in your original post, you mentioned a transfer of title from the trust to both spouses. You also mentioned using community property funds to pay the mortgage. Absent the existence of a relevant prenup or post-nup, the marital community likely has at least an interest in the property. If the wife wants to claim that some or all of the property is her separate property, she'll have the burden of proving that with clear evidence that the property is not community property.

The residence was later refinanced using my credit. This required the finance company to transfer the residence out of the trust, and it was in both our names for a short while, before being transferred back to the trust.

When it was transferred to "John Smith and Jane Smith," how did John and Jane hold the joint title? "As community property"? "As joint tenants"? Something else? At the time title was transferred back to the trust, was there any documentation signed that indicated an intent by the marital community to relinquish its interest and transmute the property to the wife's separate property?

Please see attached trust.

What you attached is an assignment of assets, not a trust, and it doesn't really help the analysis, except that it seems to indicate that, as of nine years ago, there was only a single trustee.

What type of issue? There were tons of issues, hence the divorce.

"Issue," in the context of the question that you were asked, means children/grandchildren, etc. It's not relevant to the question you asked. However, it's interesting that you didn't mention in your original post that there is/was a divorce. Do you have an attorney representing you?

 

[tonelab77]

Based on your follow up post #9, it seems like the property was initially the separate property of the spouse whose inherited funds were used to acquire the property. However, in your original post, you mentioned a transfer of title from the trust to both spouses. You also mentioned using community property funds to pay the mortgage. Absent the existence of a relevant prenup or post-nup, the marital community likely has at least an interest in the property. If the wife wants to claim that some or all of the property is her separate property, she'll have the burden of proving that with clear evidence that the property is not community property.




When it was transferred to "John Smith and Jane Smith," how did John and Jane hold the joint title? "As community property"? "As joint tenants"? Something else? At the time title was transferred back to the trust, was there any documentation signed that indicated an intent by the marital community to relinquish its interest and transmute the property to the wife's separate property?




What you attached is an assignment of assets, not a trust, and it doesn't really help the analysis, except that it seems to indicate that, as of nine years ago, there was only a single trustee.




"Issue," in the context of the question that you were asked, means children/grandchildren, etc. It's not relevant to the question you asked. However, it's interesting that you didn't mention in your original post that there is/was a divorce. Do you have an attorney representing you?

1) Would the interest be half, or based on forensic accounting of how much was actually contributed by both parties?

2) I'm not sure how we held joint title. It's been a long time and I don't remember. How could I find that out? I'm also not sure about the documents that were signed to move it back into the trust.

4) I had an attorney representing me and my ex was paying his fees for years, but recently the judge ordered that my ex no longer had to pay my legal fees, so I had to go pro per/se.

 

[zddoodah]

Would the interest be half, or based on forensic accounting of how much was actually contributed by both parties?

1. Impossible to determine based on information provided in this thread.

2. Review the title documents.