Neighbors as Bedfellows with Gifts

This is the story of Tatia Buie and her ex-husband Walter Neighbors. It is a legal California Appellate Court Decision entitled In Re Marriage of Buie and Neighbors. And the case is made for California culture.

In 2001, Husband’s birthday was soon, so he decided to buy himself a Porsche 996 for $60,000. He took the money out of Wife’s separate property account to purchase the car.

A few years later the Neighbors divorced and Wife asked the trial court to determine whether the car was community property. If so, then she was entitled to half of its value. Husband, however, argued that the car was a gift from Wife, thus transmuting (changing) the car from community property to his own separate property, meaning he was entitled to 100 percent of its value.

Wife also argued, that since the original funds for the Porsche came from her separate property, it was her separate property, and she was entitled to the full value of the car.

The trial court agreed with Husband and determined that Wife had given Husband a gift, and now that gift was his separate property.

Wife did not agree with the trial court and appealed.

The Appellate Court disagreed with the trial court:

“Under section 852, subdivision (a), ‘[a] transmutation of real or personal property is not valid unless made in writing by an express declaration that is made, joined in, consented to, or accepted by the spouse whose interest in the property is adversely affected.’ An exception to the writing requirement exists for certain types of interspousal gifts. Section 852, subdivision (c) states: ‘This section does not apply 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.’ Accordingly, only if a gift from a spouse is a ‘tangible article[] of a personal nature’ and is ‘not substantial in value,’ can it be transmuted to the recipient spouse's separate property without a qualifying writing.”

The Appellate Court noted that the trial court focused on the value of the Porsche considering the financial situation of the marriage and not whether the Porsche was a tangible article of a personal nature. This court determined that a car was not of a personal nature, and therefore, could not be a gift from Wife to Husband. Nor, had Wife written any documentation making the Porsche solely Husband’s property. (The only other way the Porsche could legally be his.)

The Appellate Court also noted that “…Section 2640, subdivision (b) provides: In the division of the community estate under this division, unless a party has made a written waiver of the right to reimbursement or has signed a writing that has the effect of a waiver, the party shall be reimbursed for the party's contributions to the acquisition of property of the community property estate to the extent the party traces the contributions to a separate property source.’ This provision ‘creates a substantive right of reimbursement that can be relinquished only by an express written waiver by the contributing spouse. [Citation.] `In the absence of such a written waiver the donative intent of the contributing spouse does not bar reimbursement....

“It is undisputed that the Porsche was bought entirely with funds that were Buie's separate property. It is further undisputed that Buie did not sign a document waiving her right to reimbursement for her separate property contribution to the purchase of the Porsche. Here, because the purchase of the Porsche can be traced entirely to Buie's separate property funds, Buie has a substantive right to reimbursement of those separate property funds under section 2640, subdivision (b).”

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