Community property laws are only active in a few states, and California is one of them. That is why couples living in California may want to look into signing a community property agreement as part of their estate plan to ensure their property is properly distributed after death. A community property agreement is essentially a binding contract between married couples that designates which of their assets is “community property” and “separate property.”
These agreements can be extremely beneficial in a couple’s estate plan as it guarantees your marital property will be transferred at the time of death. It also will substantially reduce tax consequences for your estate and beneficiaries. Without a community property agreement, some assets may be labeled as separate or quasi-community property and therefore unavailable to the surviving spouse.
Ventura Estate Planning Lawyers | California Community Property Agreements Explained
If you’re considering incorporating a community property agreement in your estate plan, contact Botti & Morison Estate Planning Attorneys, Ltd.. California community property agreement lawyers Chris Botti and Paul Morison have assisted married couples with their customized, comprehensive estate plans for decades. They can utilize their past knowledge and extensive resources to draft an effective community property agreement for your estate plan and ensure your assets are protected.
Call Botti & Morison Estate Planning Attorneys, Ltd. today to set up your first consultation with a skilled California estate planning lawyer today at (877) 585-1885. Botti & Morison Estate Planning Attorneys, Ltd. has locations in Ventura, Westlake Village, Bakersfield, Valencia, Santa Barbara, and San Luis Obispo.
- Property Types in California
- What is the Purpose of a Community Property Agreement?
- Why You May Need a Community Property Agreement
- Additional Resources
Property Types in California
Before we can get into community property agreements, it’s important you have a general understanding of California’s different property types. There are three different types of property in the state of California and they are all defined by how they were obtained.
- Community Property – Any property, income, or assets acquired during marriage is known as community property under California law. These are jointly owned assets, and each spouse has 50% interest in any community property.
- Separate Property – Property owned prior to the marriage or received as a gift or inheritance during marriage is known as separate property. This type of property is individually held, and the other spouse has 0% interest in it. If the couple divorces or the other spouse dies, the surviving partner cannot legally claim ownership, interest, or stake in the property.
- Quasi-Community Property – Property and/or assets purchased by any spouse in a different state that would have been labeled as community property is referred to as quasi-community property in California.
What is the Purpose of a Community Property Agreement?
Many married couples are under the popular misconception that the surviving spouse will receive all of the other spouse’s assets if they are deceased. However, this isn’t always the case. In California, if one spouse dies the other will automatically inherit all community property, but they will not have any legal claim in property that’s legally considered “separate.”
Couples can avoid this by designating what assets are community property or separate property with a community property agreement. The agreement is essentially a contract between spouses that ensures all marital property is transferred to the surviving spouse upon death. The agreement is also useful as it reduces tax consequences on the estate. Without an agreement set up, California law will allocate the ownership of all marital property as follows:
- Assets acquired prior to the marriage are given to their individual owners
- Assets acquired during the marriage are designated as community property
- Assets acquired as a gift, inheritance or bequest during the marriage will remain as property of the recipient.
Why You May Need a California Community Property Agreement
No matter how well you and your spouse get along, it’s important you label which assets are community or separate property. You and your partner may have different ideas of what should count as community property vs. what should be considered separate property due to a variety of reasons. When discussing your community property agreement, you may want to ask your partner the following questions.
- Are there are any assets they wish to be considered separate?
- If one or both spouses have children from a previous relationship, would either spouse wish to gift any assets to these children when the parent of the child dies?
- What would happen if one spouse passed the family home to their stepchildren, and then the stepchildren wanted to sell the home. Where would the surviving spouse live?
After some discussion, you may find your spouse wishes to recategorize some community properties as separate properties. Couples tend to do this if:
- Each spouse has children from previous relationships and wish their children will receive most or all of their assets
- One spouse acquired an object of unusual value or has great sentimental importance and wishes to give it to a specific person upon death
- One spouse is paying in full for a home, vehicle, or other expensive asset and wants to retain full interest in said asset
Estate Planning Coursebook by Botti & Morison – Visit the official website for the Estate Planning Coursebook which was created by the legal staff at Botti & Morison. Access the document to learn the advantages of a will vs. a trust, what to consider when selecting an executor or trustee, transferring ownership of retirement accounts, and other information.
Probate Code | California Statutes – Visit the official website for California’s statutes and learn more about their laws surrounding probate. Access the site to learn more about the process, powers of attorney, health care decisions during incapacity, non-probate transfers, and more.
Estate Planning Lawyers for Married Couples | Ventura County, CA
A community property agreement may save you, your spouse, and your family a ton of time, expense, and stress if it’s properly drafted. Get started on yours the right way today with the help of an experienced and skilled estate planning California lawyer at Botti & Morison Estate Planning Attorneys, Ltd.. With over 60 years of experience helping spouses craft effective and efficient estate plans, our team at Botti & Morison Estate Planning Attorneys, Ltd. is best prepared to help you and your family.
You can reach our offices by calling Botti & Morison Estate Planning Attorneys, Ltd. at (877) 585-1885. We happily serve residents all over California including Ventura County, San Luis Obispo County, Santa Barbara County, Los Angeles County, and Kern County.