Under the law of some community property states, married persons may agree to convert some or all of their separate property to community property. Such an agreement may be referred to as an agreement to convert separate property to community property or as a transmutation agreement.

The legal character or nature of debts of married persons may also be changed by transmutation in some community property states—changing debts of the parties’ separate estates to debts of the community estate, or debts of the community estate to debts of the separate estates. But an agreement between married persons to change a community debt to the debt of one of the spouses separate estates may not be binding on the creditor—unless the creditor agrees in writing to only look to one spouse for satisfaction of the debt.

In community property states, the laws regarding the availability and scope of transmutation agreements vary from state to state. These laws are usually located in a state’s statutes—often in the family code or domestic relations code.

Michigan is not a community property state; it is an equitable distribution state. This means that during a divorce, marital property is not automatically split 50/50 but rather divided in a manner that is equitable, or fair, which may not necessarily be equal. Since Michigan does not follow community property laws, the concept of transmutation agreements, where separate property is converted to community property, does not apply in the same way as it would in community property states. However, Michigan law does allow spouses to enter into postnuptial agreements that can change the nature of property ownership, which may be similar to transmutation agreements. These agreements must be in writing and are subject to certain legal requirements to be enforceable. As for debts, Michigan courts will decide upon the division of marital debts during a divorce based on what is equitable, considering various factors. An agreement to assign debt to one spouse may be made, but creditors are not bound by such an agreement unless they agree in writing. It is important for individuals in Michigan to consult with an attorney to understand how marital property and debts will be treated in the event of a divorce.