California is one of only a handful of states that follows community property laws. This means that most property acquired during a marriage is considered equally owned by both spouses. Things like who earned the income or whose name is on the title may not be as relevant. 

These laws can impact how you should design your estate plan. Working with a Rancho Santa Fe estate planning lawyer can help you navigate these rules effectively.

Understanding Community Property in California

Under California law, assets that you’ve acquired during a marriage, such as income, real estate, investments, etc. are generally considered community property. This also means that usually debts incurred during the marriage are shared. 

Separate property includes assets you owned before the marriage, inheritances, and certain gifts. They can become community property if commingled with joint assets.

How This Affects Your Estate Plan

Since each party in a marriage owns half of the community properly, you can only directly control your 50% share of it in your will or trust. If you have assets from a prior marriage that you want to leave to children, a charity, or other beneficiaries, then planning with community property becomes complicated.

You and your spouse should clearly document your intentions or your estate may end up in California’s probate court, where disputes can arise over whether certain assets are community or separate property. This process can be lengthy, expensive, and emotionally taxing for your loved ones.

Strategies to Navigate Community Property Rules

  • Create a Living Trust: This can help you and your spouse outline exactly how assets should be distributed and avoid probate.

  • Use a Marital Property Agreement: Couples can agree in writing to change the community property classification of certain assets.

  • Keep Clear Records: Maintaining documentation for separate property can help avoid disputes later.

  • Update Beneficiary Designations: Ensure your retirement accounts, life insurance policies, and payable-on-death accounts align with your estate plan.

Seek Proper Guidance for Your Estate Plan

Overall, there are some assets that you might not realize are community property if you acquired them during your marriage. Talking to a legal expert will help you in these cases and with other legal challenges you might not be aware of.