Wednesday, December 9, 2009

Just In Time for The Holidays: When Is That Porsche With The Big Red Bow NOT A Gift?

Ms. Buie was married to Mr. Neighbors. Ms. Buie had previously sold a piece of real estate, and had some money in the bank, so shortly before Mr. Neighbors' birthday, she allowed him to take $60,000 of that money and buy himself a Porsche. . . . . . or so he thought.

As a California court has already observed, ". . . divorce unsettles many of the parties' significant plans and assumptions, no matter how carefully crafted. . ."*

There was, you see, apparently no writing from Buie to Neighbors saying something like "Here is my gift to you!", or if there was, nobody could find it by the time Buie and Neighbors got to court.

California law requires that there be a writing for such a "transmutation" of community property to separate property, except as to a

". . . gift between the spouses of clothing, wearing apparel, jewelry, or other tangible articles of a personal nature that is used solely or principally by the spouse to whom the gift is made and that is not substantial in value taking into account the circumstances of the marriage." **

The trial court said "Gift!", perhaps reasoning that a Porsche was, for a middle-aged husband in Southern California, of a "personal nature", the way clothing or wearing apparel or jewelry is for a middle-aged wife. He would, after all, no more expect her to drive his Porsche than he'd expect her to let him wear her fur coat and diamond earrings.

Not so fast, said the Court of Appeal. The legislative comments to the 1984 enactment of F.C. 852 were fairly explicit that an automobile isn't "a tangible article of a personal nature". In the absence of a writing, there's no gift transmutation of the car from community to Mr. Neighbor's separate property. Even more dismaying for him, since the money used was traceable to Ms. Buie's separate property house proceeds, and she also had never made a written waiver of her right of reimbursement, she was entitled to be reimbursed for her contribution, up to the remaining equity in the car. The car was in essence, all hers, not all his.

If you find a car in your driveway this month, with a card from your spouse on it, save, treasure and keep that card!

* Marriage of Destein (2001)
California Family Code Sec. 852

1 comment:

Eric Roth said...

Informative and a bit spooky!

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