Marriage of Holtemann

Frank Holtemann (defendant) and Barbara Holtemann (plaintiff) married in 2003. During the marriage, the Holtemanns executed a “Spousal-Property Transmutation Agreement” (the agreement) under which Frank transmuted some of his substantial separate assets into community property and transferred those transmuted assets to the newly created Holtemann Community Property Trust (the trust). Both the agreement and the trust stated that the transmutation was affected for estate-planning purposes, and the trust specifically stated that all community property transferred to the trust would remain community property even if the trust itself was revoked. The Holtemanns executed both the agreement and the trust with the advice of counsel, and Frank was specifically advised of the potentially irreversible legal consequences of transmuting his separate property into community property. In 2006, Barbara filed for divorce, and Frank exercised his power to revoke the trust. At trial, Frank argued that neither the agreement nor the trust established that Frank expressly intended to immediately and irrevocably transmute his separate property into community property. Specifically, Frank argued that, because the agreement and trust were executed for estate-planning purposes, it was ambiguous whether the agreement and trust were intended to affect an immediate transmutation of his separate property. Alternatively, Frank argued that the trust, as a will substitute, was unenforceable in a divorce proceeding commenced prior to his death.