In re Marriage of Lafkas

Summary

Husband owned a one-third partnership interest before marriage. During the marriage the partnership agreement was modified to list him and wife, as husband and wife, as owners of that one-third interest, and the lender wanted her credit. The court held the modification lacked an express declaration under section 852, so the interest stayed separate. It remanded to decide whether the lenders relied on community assets or credit for the $404,000 in loans, which would give the community a proportionate share. The judgment on the partnership interest and the attorney fee award were reversed, and the rest was affirmed.

What it means for the financial analysis

Do not treat joint title on a premarital asset as converting it to community property. Check first for a signed writing that expressly states the character is changing. If the interest stays separate, the community claim depends on loan tracing. That means getting the loan file to see whether the lender looked to partnership assets, which here were worth about $500,000 to $600,000 against $404,000 of debt, or to the couple's salaries and personal credit. Then calculate the proportionate community share if the lender relied on community credit.

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