Is pre-marital money still separate property if I transfer to new brokerage account?

[ryanf1475]

Hello all! Let's say that I have a premarital brokerage account. After getting married, I open a new brokerage account and transfer the holdings of the old account to the new broker via ACATS transfer (which means I don't sell any securities--I'm just changing the broker). Are those securities now marital assets? Thank you!!

 

[Zigner]

In October of last year you were here asking a similar question. At the time, you were pointed to
https://leginfo.legislature.ca.gov/faces/codes_displayText.xhtml?lawCode=FAM&division=4.&title=&part=2.&chapter=2.&article=
For an explanation of California community property rules.

 

[ryanf1475]

Thank you, but those rules don't answer my question. My question is probably best answered by an attorney who's been through such cases and witnessed how this is hashed out in court (if one is out there).

 

[Zigner]

Thank you, but those rules don't answer my question. My question is probably best answered by an attorney who's been through such cases and witnessed how this is hashed out in court (if one is out there).

They absolutely DO answer your question.

770.
(a) Separate property of a married person includes all of the following:

(1) All property owned by the person before marriage.
(2) All property acquired by the person after marriage by gift, bequest, devise, or descent.
(3) The rents, issues, and profits of the property described in this section.

(b) A married person may, without the consent of the person’s spouse, convey the person’s separate property.

You wish to convey your separate property (to yourself) and do not need the consent of your spouse. Once conveyed, it remains your separate property.
Of course, and as always, you should run this by your attorney.

 

[ryanf1475]

OK, so I am "gifting" it to myself? Is that legit? That almost seems like some legal gymnastics.

In any case, I guess the complicating factor here is the (presumed?) rule that if an account is established and funded during marriage, then its contents would be marital?

 

[Zigner]

OK, so I am "gifting" it to myself? Is that legit? That almost seems like some legal gymnastics.

In any case, I guess the complicating factor here is the (presumed?) rule that if an account is established and funded during marriage, then its contents would be marital?

Why do you think that's a "rule"? As stated, it's not. The only time such an account would be considered marital property is if marital property is used to fund it.

 

[zddoodah]

Let's say that I have a premarital brokerage account. After getting married, I open a new brokerage account and transfer the holdings of the old account to the new broker via ACATS transfer (which means I don't sell any securities--I'm just changing the broker). Are those securities now marital assets?

I couldn't find the prior thread to which Zigner referred, but here's the analysis:

- In the event of a divorce, all assets possessed by either spouse are presumed to be community property. Cal. Fam. Code section 760.
- As to any given asset, the community property presumption can be rebutted in a number of ways, including by evidence that the asset was owned before the marriage. Cal. Fam. Code section 770.

That's really all there is to it.

OK, so I am "gifting" it to myself?

No. Not at all.

What you're describing is no different than taking money held in a bank account at Bank X and moving the money to a bank account at Bank Y (assuming the money was owned by Spouse 1 before the marriage and that both accounts are only in Spouse 1's name). You're not changing the character of the asset in any way by moving it from one brokerage account to another.

In any case, I guess the complicating factor here is the (presumed?) rule that if an account is established and funded during marriage, then its contents would be marital?

Why do you think that's a "rule"? As stated, it's not.

It very much is a rule: Fam. Code section 760 is every bit as much a "rule" as is section 770.

For the OP, in your case, the phrase in section 760, "Except as otherwise provided by statute," is of critical importance. Section 770 provides that statutory exception.

 

[Zigner]

I couldn't find the prior thread to which Zigner referred ...

https://forum.freeadvice.com/threads/what-is-the-real-effect-of-reinvested-dividends-on-separate-property.662843/

It very much is a rule: Fam. Code section 760 is every bit as much a "rule" as is section 770.

Here is 760: Except as otherwise provided by statute, all property, real or personal, wherever situated, acquired by a married person during the marriage while domiciled in this state is community property.

The OP stated that "if an account is established and funded during a marriage, then its contents would be marital." AS STATED, that is not (necessarily) true, which means it's not a "rule". It's certainly not the law according to 760, as evidenced by the OP's situation. In fact, the OP doesn't even need the opening exception, since the funds in question were not "acquired during marriage."

 

[LdiJ]

OK, so I am "gifting" it to myself? Is that legit? That almost seems like some legal gymnastics.

In any case, I guess the complicating factor here is the (presumed?) rule that if an account is established and funded during marriage, then its contents would be marital?

No, you are not gifting it to yourself, you are conveying it to another account owned solely by you (the new brokerage account). It is the same money, the same premarital asset. If you owned a car before marriage, and you moved from one address to another, that car wouldn't become marital property because you registered it at the new address would it? Please don't overthink the whole thing.

 

[adjusterjack]

if an account is established and funded during marriage, then its contents would be marital?

That could be an issue.

Have you made contributions to the account during your marriage with money from your earnings (which are community property)?

 

[Zigner]

That could be an issue.

Have you made contributions to the account during your marriage with money from your earnings (which are community property)?

1: This thread is from August - it must have been reopened due to a (now-deleted) spam post.
2: If the "funding" was provided by separate assets, as has been presented in this thread (a transfer of funds from an account with premarital funds [separate] to a new account), then it does not convert to community property simply because it was "funded" during the marriage.

 

[Bali Hai Again]

Thank you for clearing this up. In the case of the brokerage, if there were yearly taxable dividends (1099 DIV) paid with marital funds would the dividends be marital? In the case of a car, if registration, maintenance, insurance, gasoline, tires, car wash etc. etc. we’re paid with marital funds would those things be marital?

I would certainly “try” to claim entitlement to those items. Divorce judges have “wide discretion” in these matters.

 

[LdiJ]

Thank you for clearing this up. In the case of the brokerage, if there were yearly taxable dividends (1099 DIV) paid with marital funds would the dividends be marital? In the case of a car, if registration, maintenance, insurance, gasoline, tires, car wash etc. etc. we’re paid with marital funds would those things be marital?

I would certainly “try” to claim entitlement to those items. Divorce judges have “wide discretion” in these matters.

That isn't the issue in this thread. Switching from one sole account to another sole account does not change the nature of a asset.