Transmutation agreement

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A transmutation agreement is a postnuptial agreement that changes the character of the spouses’ property from community to separate, or vice versa. It may be used to change the character of property to be acquired in the future, as well as property that the spouses own at the time of the agreement. Spouses are free to alter the character of property in this manner, provided that all statutory requirements are met. The principal limitation on transmutation agreements between spouses is that (i) they must be fair and based on full disclosure of the pertinent facts, and (ii) they must not be a fraudulent transfer of assets.^{[citation needed]}

While postnuptial agreements are generally subject to the same notice and recording rules as premarital agreements, the rules for transmutation agreements are slightly different. A transmutation of real property is not effective with respect to third parties who are without notice of the transmutation unless the transmutation instrument is recorded. While recording is not a prerequisite to the validity of the transmutation as between the spouses, it is a prerequisite in making the transmutation effective with respect to third parties who are otherwise without notice. This requirement is consistent with the fact that transmutations are subject to the laws governing fraudulent transfers.^[1]