What is Considered “Community Property?

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California is a community property state. Marital property in community property states is owned by both spouses equally, according to nj.com’s recent article, “Does this house really become community property after marriage?”

Let’s imagine you own a home before your second marriage and created a will leaving the condo to a child. However, you sold the home and purchased another house in your name using funds from the sale and your own funds.

Does your new spouse own half the house, even though it’s in your name because it’s a “community property” state?

Marital property includes earnings, all property bought with those earnings, along with any debts accrued during the marriage. Community property begins at the marriage and ends when the couple physically separates with the intention of not being married. Thus, any earnings or debts originating after this would be separate property. Any assets acquired prior to the marriage are considered separate property and are owned only by that original owner.

However, a spouse is permitted to transfer the title of any of their separate property to the other spouse as a gift. He or she can also make it community property, by making a spouse an account holder of a bank account. This is called “comingling,” and spouses can also comingle their separate property with community property, by adding funds from before the marriage to the community property funds.

However, a spouse can’t transfer, alter, or eliminate any whole piece of community property, without the other spouse’s permission. They can only manage their own half. The whole property includes the other spouse’s one-half interest. In other words, that spouse can’t be alienated from the one-half that belongs to him or her. A spouse, however, can direct that your child receives her half.

Several community property states offer an advantageous way of holding title to community property that avoids probate at the death of the first spouse known as “community property with right of survivorship.”

If a couple holds title to property like this, when one spouse dies, the property will automatically belong to the surviving spouse with no probate court proceedings. Spouses can create a will instructing who will get the asset, upon both of their deaths.

Better yet, a revocable trust can be funded with both community property and the separate property of both spouses.

Work with an experienced estate planning attorney who can examine the specifics of your circumstances and create proper planning based on your goals.

Reference: nj.com (August 5, 2019) “Does this house really become community property after marriage?”