Proving separate property frequently involves cash passing through cash accounts on its way to the acquisition of property. Cash is fungible, so what happens when separate and community cash is commingled in the same account? Commingled accounts become community unless they are “traced.” Tracing cash accounts relies on artificial rules developed by case law. Unlike other property, titled property rules do not apply to bank accounts. If traced, cash accounts’ community and separate character may be maintained.
I often hear clients say, “The account is in my name and it’s my money.” This does not apply even for accounts open before marriage once community cash is deposited and commingled in the account.
CPAs often are asked to trace cash accounts. Tracing rules are:
(1) cash at marriage is separate; (2) deposits during marriage are presumed community unless they can be identified from a separate source; (3) disbursements for family living expenses are paid from community funds; (4) community debts are paid from community; and (5) separate debts are paid from separate funds. Application of these rules segregates cash balances at any point as community, separate or mixed character, and overcome the commingled presumption.
In See v See (1966) 64 Cal.2d 778 the California Supreme Court stated, “If funds used for acquisitions during marriage cannot otherwise be traced to their source and the husband who has commingled property is unable to establish that there was a deficit in the community accounts when the assets were purchased, the presumption controls that property acquired by purchase during marriage is community property.”
JDCPAEsq wrote:Why not just get a chashier's check on the one account and deposit it to the other?
gd wrote:Edit: Not common-law state, by the way. This is all demonstrably her stuff.
In America, there are two systems that govern marital property: community property and common law (also called marital property).
Unless you sign a prenuptial or postnuptial agreement splitting things differently, the laws of the state in which you reside -- your domicile -- will determine what's yours, mine and ours.
Does anyone know if there is settled doctrine as to whether records indicating prompt transfers of a specific amount of money will preserve her ownership of it against later challenges?
gd wrote:We don't usually worry about ownership; she calls the overseas bank, they wire the occasional smallish amounts to our local US checking account and we do an online transfer to a joint internet bank account, but I'm trying to do some long-range asset and estate planning that could use a bit more rigor.
sscritic wrote:gd wrote:Edit: Not common-law state, by the way. This is all demonstrably her stuff.
Are you sure? States that are not community property are common law; states that are not common law are community property (I think this ignores LA).
A person is considered to be domiciled in the United States for estate and gift tax purposes if they live in the United States with no present intention of leaving the United States.
For gifts made in 2012, the annual exclusion for gifts to noncitizen spouses will be $139,000 (up from $136,000 for 2011).
The $13,000 annual exclusion amount is increased for gifts to a non-U.S. citizen spouse to $134,000 per year in 2010 ($136,000 in 2011; indexed each year). In contrast, an unlimited amount can be gifted to a spouse who is a U.S. citizen pursuant to the unlimited marital deduction.
(i) Disallowance of marital deduction where spouse not citizen
If the spouse of the donor is not a citizen of the United States—
(1) no deduction shall be allowed under this section,
(2) section 2503 (b) shall be applied with respect to gifts which are made by the donor to such spouse and with respect to which a deduction would be allowable under this section but for paragraph (1) by substituting “$100,000” for “$10,000”, and
If any amount as adjusted under the preceding sentence is not a multiple of $1,000, such amount shall be rounded to the next lowest multiple of $1,000.
campy2010 wrote:So you think you have to transfer from A->B->C and there is no option for A->C? I think you should should avoid any potential problems and find an A->C option.
I have a hard time believing that you have 2 bank accounts that don't have at least one of the following options ....
The only current path is through a joint checking account.
livesoft wrote:One can always request a check be mailed from one savings account, then after receipt it can be mailed to the other savings account. That's how I would do it 1974.
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