When you think of what makes California unique you might think of the beautiful wine country, exquisite coastline, and the cultural traditions. Our community property system is probably not something that comes to mind, but it is important to married couples during their lives and as they create their estate plan.
What Is Community Property?
Generally, community property means that property that is acquired or earned during a marriage belongs to both spouses equally. There are exceptions, however, for gifts and inheritances that are made to just one spouse. These types of property are considered to be separate property. Additionally, the property that each spouse brought to the marriage is considered to be separate property. In certain circumstances, a married couple may convert separate property to community property.
Why Is Community Property Important to California Estate Plans?
Before you can create an estate plan, you need to understand what you own. California law will typically allow you to give all of your separate property to whomever you want in your estate plan. Additionally, you can give up to 50 percent of your community property to whomever you want in your estate plan. However, the other 50 percent of your community property belongs to your spouse and you do not have the authority to control how it is distributed. If you intend to leave your entire estate to your spouse then this may have little consequence. However, if you have children with someone other than your spouse and you intend to leave money directly to your children or if you have someone else whom you want to provide for in your estate plan then this may be significant to you.
If you are married and you live in California, or have lived in California during your marriage, then it is important to consider how community property laws could affect your estate plan. For more information on creating the estate plan that works for you, please read our free brochure, The Ten Things You Must Know Before Creating (or Amending) Your Will or Trust.