How do community property laws affect estate planning?

Is estate planning affected by whether a jurisdiction is an equitable distribution or a community property state? The answer is yes, and since California is a community property estate, individuals should heed several considerations.

In a community property state, the law automatically deems all money or property acquired during a marriage to be owned in equal shares between the spouses, perhaps even if it was not titled that way. This is in contrast to equitable distribution states, where courts will endeavor to divide property fairly, but not necessarily equally. Thus, a surviving spouse in California automatically owns one-half of the community property after the decedent’s passing. 

Of course, many California couples choose to title their real estate and other types of assets as held in joint tenancy. In that case, the surviving spouse simply becomes the sole owner of any jointly owned property after the decedent’s passing. In fact, court involvement is often not required in California when a decedent’s estate was comprised only of community property and there is a surviving spouse. 

However, there are exceptions to that general outcome. For example, if a premarital agreement called for a different approach to property division and holdings in the marital estate, the surviving spouse’s rights will be affected. Perhaps property was placed into a living trust, making it a non-probate asset.

There are also other options available in California estate planning. A surviving spouse may elect to have his or her share of the community property handled differently. Such an election may make sense when a surviving spouse wishes to leave more assets to children or other heirs. Our law firm focuses on estate planning and can help you better understand these options.

Source: FindLaw, “Inheritance Law and Your Rights,” copyright 2014, Thomson Reuters

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