There are not many community property states in the US; however, California is a community property state, along with Wisconsin, Texas, Washington, New Mexico, Arizona, Idaho, Nevada and Louisiana.
What does “community property state” mean? If you reside in a community property state, it is important you learn the answer to this question, because without a thorough grasp of community property rules, you could end up accidentally converting your separate property assets to community property, which could potentially cause you to lose a portion of the hard-earned assets you brought into marriage after the death of a spouse or divorce.
What Is Community Property in California?
What is considered community property? How is community property divided in California? What happens to communal property in California once a spouse dies? While California’s community property rules may seem confusing, they are more straightforward than you might think.
In this state, all marital property is essentially community property, meaning that any property acquired over the course of a marriage by either spouse, subject to limited exceptions (e.g., property acquired by gift or an inheritance), is regarded as belonging equally to both spouses, regardless of which spouse acquired it. We will get to what happens to community property following the death of a spouse later in this article.
The following are examples of what can be considered community property in California if acquired during marriage:
- Income
- Personal property
- Real estate
- Bank accounts
- Retirement accounts
- Debt
Suppose you get married, after which you purchase a new home with your personal savings from before marriage. Unless you take the necessary steps to convert title to the property to your sole and separate property, the home could presumably be considered community property, which would mean that you only own a 50% interest in the home, with your spouse owning the remaining 50%. This is an example of how spouses who are not careful can inadvertently convert separate property to community property under California community property law.
Community Property vs. Common Law
Many of our clients ask whether California is what is known as a “common law state,” and if so, what the advantages are of community property vs. common law. Common law marriage is a legally recognized marriage between two persons who have not obtained a marriage license or made their marriage official through a ceremony. This type of marriage is only valid in a handful of states, and even then, couples must meet certain conditions to be afforded the protections of a common law marriage.
It’s important to note that California is not a common law marriage state. While unmarried cohabitating couples may have some protections under the law in California, these protections do not make California a common law state.
Community Property vs. Equitable Distribution
Comparing community property vs. equitable distribution can be confusing, as the differences between the two are subtle.
With California community property laws, there is a precise 50/50 division of community property assets between the spouses if they get divorced or one spouse dies.
Conversely, in an equitable distribution state, which includes all the states that are not community property states, marital assets are divided fairly but not necessarily equally in the event of a divorce or death of a spouse, regardless of how title is held (i.e., as separate property or as joint tenants). In other words, a judge may order for a spouse to use their separate property asset to make a divorce settlement fair for both spouses.
What Is Separate Property in California?
What is sole and separate property? What is separate property in a marriage? Is an inheritance separate property in California? What about property obtained prior to marriage? What happens to separate property at the death of a spouse? These are all important questions to ask if you plan to get married, are married or are creating your estate plan.
Separate property in California refers to any property that was acquired prior to marriage. During marriage, separate property also includes any property received by either spouse as a gift or inheritance, or any property to which one spouse waived their community property rights. For instance, if one spouse wanted to leave a real property acquired during marriage to their children, they may ask for their spouse to sign away their 50% ownership interest to make the property their sole and separate property. This way, the spouse with sole ownership can dispose of the property to whichever beneficiaries they wish in their will or trust.
In general, a spouse who is the sole and separate owner of property does not have to leave any portion of that property to their spouse if they do not wish to, according to California community property laws. That being said, if a spouse dies without having executed a will or trust, or if their will or trust is successfully contested, their separate property could potentially end up with the surviving spouse. We’ll discuss why this is in a later section.
How Is Community Property vs. Separate Property Divided After the Death of a Spouse?
Now that we’ve touched on the differences between community property vs. separate property, let’s examine how they play out after a spouse dies. While there is not much room for interpretation when it comes to California community property law and the death of a spouse, separate property laws are slightly more complicated and can vary depending on whether the deceased spouse had executed a valid estate plan.
What Happens to Community Property in California After the Death of a Spouse?
It is not difficult to understand what happens to community property in California after the death of a spouse. To review, once you and your spouse are married, any property acquired by either spouse during the marriage is generally considered community property, which means that both you and your spouse own an equal interest in the property. This generally remains true, subject to exceptions, even if one spouse dies, which means that each spouse can dispose of 50% of the community property in their will or trust.
If a spouse wishes for their surviving spouse to inherit their 50% community property interest upon their death, they can select a way of holding title that would allow the surviving spouse to automatically absorb the deceased spouse’s ownership interest once they die without the property having to pass through probate. Spouses may also be able to avoid probate through Spousal Property Petitions and Small Estate Affidavits, among other approaches.
It’s important to note that prenuptial and postnuptial agreements can affect the inheritance rights of spouses, as can community property transmutation agreements that were executed properly.
If you’re a surviving spouse who suspects your deceased spouse is disposing of more than their 50% of the community property in their will or trust, it is vital you hire a probate attorney to dispute the document and enforce your community property rights, as spouses and registered domestic partners are bound to California community property laws, with some exceptions.
What Happens to Separate Property in California After Death of Spouse?
A spouse’s separate property in California remains their separate property even at death, meaning that they can dispose of 100% of it to whomever they please through their will or trust (i.e., they do not have to leave any portion of it to their surviving spouse). Like community property without rights of survivorship, separate property generally must pass through the court-supervised probate process or be administered through the decedent’s trust.
There are some factors that can complicate a spouse’s plans to dispose of the entirety of their separate property to someone other than their spouse. For example, if a spouse held title to a home as their sole and separate property, but they used community funds to make mortgage payments on the home or improve the home, or if the spouse titled a property as their sole and separate property during marriage, but failed to properly convert the character of the property through a legally valid transmutation agreement signed by both spouses, the spouse could argue that the community has acquired an equity interest in the property.
In most cases where the form of title presumption is in conflict with the community property presumption, the title presumption will reign supreme. Still, spouses who own separate assets should take care to keep those assets physically separate from community property assets if they wish for those assets to not become community property. It is a good idea for spouses with separate assets to open their own bank accounts to house those assets to prevent future confusion about the character of the assets in the event the spouse dies or get divorced.
If the will or trust of your deceased spouse is disposing of more than 50% of the community property or your separate assets, it is essential you seek the help of a lawyer to confirm the character of the property at issue and enforce your community property rights.
How Are Community Property and Separate Property Divided in California if the Deceased Spouse Did Not Have a Will or Trust?
When a decedent dies without having executed a valid will or trust, their assets will pass to their intestate heirs via a process known as intestate succession. Presiding over this process will be the person whom the court has appointed to be the administrator of the estate.
California’s intestate succession statutes are specific about which of the decedent’s heirs stand to inherit and in what amount; thus, there generally is not a lot of room for disputes. Also, since intestate assets do pass through probate, there is some level of court supervision involved in the process.
If the decedent who died without an estate plan had a surviving spouse, the spouse will generally receive a substantial inheritance.
Below, you will find how property is divided according to intestate succession:
- If the surviving spouse is the only survivor (i.e., they did not have any children with the decedent and the decedent did not have any surviving parents, siblings, nieces or nephews), the spouse stands to inherit all the decedent’s community and separate property.
- If the decedent had a surviving spouse and one child or grandchild when they died, the spouse stands to inherit all the community property and 1/2 of the separate property, with the remaining 1/2 going to the child or grandchild.
- If the decedent had a surviving spouse and two or more children when they died, the spouse stands to inherit all the community property and 1/3 of the separate property, with the remaining 2/3 of the separate property going to the children.
- If the decedent had children when they died, but no surviving spouse, the children generally stand to inherit all of the decedent’s property.
*California Probate Code sections 6400-6455 can be referred to for a comprehensive breakdown of intestate succession rules in the state.
While intestate succession statutes cannot generally be disputed since they are law, a lawyer can help you determine what you are entitled to from a decedent’s intestate estate under California’s intestate succession law.
Read more about the inheritance rights of surviving spouses whose spouses died without a will.
FAQs About Community Property vs. Separate Property
Understanding California’s complex separate property and community property laws can be a challenge if you don’t have legal knowledge. This is why we have compiled some of the most frequently asked questions regarding both types of property.
When does separate property become community property in California?
Out of concern for their separate assets when entering marriage, many of our clients ask: Can separate property become community property?
A person’s separate property doesn’t automatically morph into community property if they get married after acquiring it. There are two primary ways in which the character of separate property can be changed: transmutation or commingling.
The sole and separate owner of property can convert the character of their separate property into community property once they are married by taking the proper steps to execute a transmutation agreement. Once successfully transmuted, the property would be regarded as belonging equally to both spouses during their marriage, in divorce and at death.
Another way separate property can become community property is through the commingling of separate and community assets, as discussed earlier in this article. If separate and community property assets are so commingled that a court cannot trace the separate and community components, it may deem all the commingled property to be community property.
There are also other circumstances in which the community could acquire an interest in one spouse’s separate property. As discussed earlier, if community contributions are made to a separate property asset, the community can acquire an equity interest in the asset.
What is quasi-community property?
Quasi-community property refers to any property that was acquired by either spouse while residing in a state other than California that would be considered community property had they resided in California.
In California, quasi-community property can also refer to any property that was acquired over the course of a putative marriage, which is a marriage that was entered into in good faith by at least one of the spouses and is ostensibly valid, but is actually invalid because the statutory requirements for marriage had never been met. While a putative spouse is not regarded as being legally married, they are generally granted almost the same inheritance rights as legal spouses because of their good-faith belief that they had been married.
In terms of how quasi-community property is divided after spouses divorce or one spouse dies, it is generally not treated any differently from community property.
Read more about quasi-community property and putative spouses.
Do omitted spouses have community property rights?
An omitted spouse (also referred to as a pretermitted spouse) is a spouse who has unintentionally been omitted from their deceased spouse’s will or trust.
Even if a will or trust does not provide for a surviving spouse, the spouse (as long as they qualify as an omitted spouse) is entitled to whatever they would receive under California’s laws of intestacy, which generally would be all the decedent’s community property and all or a portion of the decedent’s separate property.
Read more about the inheritance rights of omitted spouses.
Do unmarried cohabitating partners have community property rights?
No. Unmarried cohabitating partners do not have community property rights, as entering into a marriage or a registered domestic partnership is a requirement for gaining community property rights in California.
That is not to say that unmarried cohabitating partners are not afforded any protections under the law. They can file something known as a Marvin Action to enforce their inheritance rights.
Read more about Marvin Actions.
Still have questions about California’s separate property and community property rules? Call us for help today.
California community property laws are not easy to navigate without the help of a trained professional, who can assist with settling disputes surrounding whether an asset is community property vs. separate property.
If you are a surviving spouse, it is vital you work with a lawyer to enforce your community property rights during administration, or your rights could end up being violated. Learn how the experienced attorneys at Keystone can help you. Call us today to request a free consultation.
