In re Marriage of Holtemann

In In re Marriage of Holtemann (2008) 166 Cal.App.4th 1166, a married couple executed a "'Spousal Property Transmutation Agreement'" and a trust one year before their separation. (Id. at pp. 1169-1170.) An introductory provision in the transmutation agreement stated: "'the parties are entering into this agreement in order to specify the character of their property interests pursuant to the applicable provisions of the California Family Code. This agreement is not made in contemplation of a separation or marital dissolution and is made solely for the purpose of interpreting how property shall be disposed of on the deaths of the parties.'" (Ibid.) The transmutation agreement, in its substantive provisions, stated: "'Husband agrees that the character of the property at issue is hereby transmuted from his separate property to the community property of both parties.'" (Id. at p. 1170.) The transmutation explicitly referenced the trust, and the wife "acknowledged that the transmutation of Husband's separate property into community property herewith was undertaken upon the express condition that the disposition of the trust estate of said Trust, upon the death of Husband and of Wife ... shall remain in effect, and not be amended, modified or changed by Wife ... ." (Ibid.) The Holtemann court affirmed the trial court in finding an unambiguous transmutation occurred: "Regardless of the motivations underlying the documents, they contain the requisite express, unequivocal declarations of a present transmutation. Moreover, the documents reflect that husband was fully informed of the legal consequences of his actions." (Holtemann, supra, 166 Cal.App.4th at p. 1173.) "We are not aware of any authority for the proposition that a transmutation, once effected, can be limited in purpose or otherwise rendered conditional or temporary. ... In other words, husband wishes to have his cake and eat it too. He argues that, in the event of either his or wife's death, the survivor would be able to use the Transmutation Agreement to claim the property as community property, thus obtaining a full step up in basis to the fair market value of the property at date of death, while at the same time denying the validity of the Transmutation Agreement as an instrument which created community property." (Id. at p. 1174.) "We conclude, however, that his chosen language speaks to a contrary intent." (Ibid.)