Separate Income and Separate Property on Community Property claims

[queryous]

State of California

I have a hypothetical situation to better understand the nuances of Separate (Pre-Marital) and Community (Marital) Property with regards to shared interest income.

Scenario:
-A person is single and has $50 Million invested in Treasuries and a house.
-Said person falls in love and gets married.
-Person keeps the $50 Million in Treasuries as separate property (perhaps held in a revocable living trust to distinguish intention to keep separate).
-The house is shared with spouse and becomes community property.
-Person's sole income is the interest earned from separate property.

Question?
My understanding is that the interest income from separate property stays apart if it is not shared AND that it becomes community income when it is shared. However, does this open a door to transforming the separate property itself into community property? Will the spouse have a claim to the separate property?

Thanks in Advance

 

[Just Blue]

State of California

I have a hypothetical situation to better understand the nuances of Separate (Pre-Marital) and Community (Marital) Property with regards to shared interest income.

Scenario:
-A person is single and has $50 Million invested in Treasuries and a house.
-Said person falls in love and gets married.
-Person keeps the $50 Million in Treasuries as separate property (perhaps held in a revocable living trust to distinguish intention to keep separate).
-The house is shared with spouse and becomes community property.
-Person's sole income is the interest earned from separate property.

Question?
My understanding is that the interest income from separate property stays apart if it is not shared AND that it becomes community income when it is shared. However, does this open a door to transforming the separate property itself into community property? Will the spouse have a claim to the separate property?

Thanks in Advance

Is this for homework?

 

[LdiJ]

State of California

I have a hypothetical situation to better understand the nuances of Separate (Pre-Marital) and Community (Marital) Property with regards to shared interest income.

Scenario:
-A person is single and has $50 Million invested in Treasuries and a house.
-Said person falls in love and gets married.
-Person keeps the $50 Million in Treasuries as separate property (perhaps held in a revocable living trust to distinguish intention to keep separate).
-The house is shared with spouse and becomes community property.
-Person's sole income is the interest earned from separate property.

Question?
My understanding is that the interest income from separate property stays apart if it is not shared AND that it becomes community income when it is shared. However, does this open a door to transforming the separate property itself into community property? Will the spouse have a claim to the separate property?

Thanks in Advance

My understanding is that the interest income can be considered to be income accrued during the marriage and therefore community property. That doesn't make the separate property become community property.

 

[queryous]

Is this for homework?

Attempting to better understand how premarital separate assets can remain protected in cases where couples choose not to go down the pre-nup agreement route in Community Property states.

My understanding after research shows that some states (Idaho, Louisiana, Wisconsin, and Texas) regard income to be considered marital income. Nothing published goes into detail about this scenario. Most cover the simpler cases of commingling of accounts, etc.

For disclosure, I don't have $50M. If I did, I would retain the services of legal counsel :^).

Thanks for the interest.

 

[queryous]

My understanding is that the interest income can be considered to be income accrued during the marriage and therefore community property. That doesn't make the separate property become community property.

Thanks for the response.
Your info matches what I've read earlier today about the matter.
It seems that Separate Property income, when "gifted" to be shared as marital income is transmuted if the intent was shown as such.
I was just wondering in case a marriage goes sour and heads down the path of divorce, whether the opposing spouse's counsel had legal grounds to go after the other's separate property.

Thanks again!

 

[Litigator22]

State of California

I have a hypothetical situation to better understand the nuances of Separate (Pre-Marital) and Community (Marital) Property with regards to shared interest income.

Scenario:
-A person is single and has $50 Million invested in Treasuries and a house.
-Said person falls in love and gets married.
-Person keeps the $50 Million in Treasuries as separate property (perhaps held in a revocable living trust to distinguish intention to keep separate).
-The house is shared with spouse and becomes community property.
-Person's sole income is the interest earned from separate property.

Question?
My understanding is that the interest income from separate property stays apart if it is not shared AND that it becomes community income when it is shared. However, does this open a door to transforming the separate property itself into community property? Will the spouse have a claim to the separate property?

Thanks in Advance

You are correct in that in your state the interest income from a married person's separate property "stays apart" from the community estate. (See: California Family Code Chapter 2 Separate Property Section 770 (a)(3)

However, no transmutation occurs simply by reason of the mutual sharing of the separate estate and/or its emoluments. Therefore no "legal doors" are thus opened to the non-owning spouse. Not per se.