An interspousal transfer deed is a legal document used to transfer ownership of shared or communal property (if you live in a community property state) to one spouse in a marriage. Also known as an interspousal transfer grant deed, this legal instrument operates under three primary rules:
- Property is transferable anytime: No special occasion or reason is necessary to seek an interspousal transfer. Spouses can pursue a transfer at any time.
- Taxes: Interspousal transfers are un-taxable, unlike many other property ownership transfers.
- Timeline: Interspousal transfers are valid up to one year after in the event of a divorce. Signing a transfer after the one-year grace period could expose you to fees.
Here’s a quick guide to Interspousal Transfer Deeds. We’ll explain its purpose, and how to file for this deed in your jurisdiction.
What is the Purpose of an Interspousal Transfer Deed?
The primary purpose of an interspousal transfer deed is to facilitate the transfer of shared property to one person. Just as the term “spouse” suggests, it only applies to legally married people. Scenarios where a married couple might need to use an interspousal transfer deed include:
Divorce
The most common time couples use an interspousal transfer deed is when filing for divorce. If both their names are on a title and the spouses agree that a specific property should go to one of them as part of the marriage dissolution, they can use this grant or deed to transfer ownership. This also applies to property owned individually by spouses but acquired while still legally married in community property tax states (except when spouses sign prenuptial agreements).
People enter into marriages in different situations. Some get married when they already own property, while others start from scratch and acquire assets together. If you and your spouse decide it’s best for one of you to gain full ownership of a property you acquired together or separately while still married, you’ll need a particular type of deed.
Financial crisis
If a marriage is rock-solid, but one spouse’s credit difficulties limit financing for the other spouse, who is financially healthy, they can use an interspousal transfer deed to enable the financially healthy spouse to have a clean bill of financial health.
For example, if a husband has a poor credit score that prevents them from refinancing a loan for a house he acquired with his wife, he can transfer full property ownership to the wife for her to obtain refinancing.
Borrowing Money
Lenders may sometimes ask a borrower’s spouse to sign an interspousal transfer deed when their spouse takes out a loan. This prevents a vengeful spouse from claiming half the recovered debt in case the property is foreclosed in the future.
How Do I File an Interspousal Transfer Deed?
You should file an interspousal transfer deed with your lawyer and the county where the transferred property is located. But first, you’ll need to get an interspousal template online or a document from your attorney. The deed must:
- Be in formal writing
- List both spouses in the transfer
- State the address and legal description of the property being transferred
- Signed before a notary public
Who Signs an Interspousal Transfer Deed?
The grantor/s involved in the transfer of property ownership must sign the interspousal transfer deed. The signatory must do it before an authorized witness or notary.
Is an Interspousal Transfer a Gift?
An interspousal transfer is not a gift transfer per se since gift taxes don’t apply to here. However, an interspousal transfer can be used to transfer property as a gift to a spouse for a special occasion without extra taxes.
Want to file an interspousal transfer deed? It may be the best course of action if you’re divorcing or in financial turmoil. A family law attorney can help you with filing to avoid any mistakes. Find a lawyer near you today.