Community Property

There was a recent story about a California man who was a high-level Silicon Valley executive. He met his sixth wife when he went to a bar where she worked as a waitress. They married. The honeymoon was short-lived. They battled for a while. The man passed away and left his $100 million to each his son and his daughter. For his wife, he left a measly $20.

Unlike other states, California estate planning laws does not have an elective share wherein a spouse is entitled to elect a share of the estate regardless of what it says in the will. This is because California is a community property state, which means that all property acquired during the marriage gets split automatically, 50/50, to each spouse.

Community Property State

California is a community property state and has been since 1850. This is despite the efforts of many to change the law.

The concept behind the law is that all property acquired during the marriage equally belongs to both spouses. Conceptually, both spouses, regardless of their roles, contributed to the success of the marriage. This is applicable when one is a homemaker and the other spouse earns millions of dollars, which is the scenario in our case.

This is also applicable when the parties are not married, i.e. live-in partner, but manage their lives as spouses.

Property Acquired During the Marriage

Community property rights are only applicable to property acquired during the marriage, not property a party brings to a marriage. In addition, property acquired via gift or inheritance does not fall into the community property bucket.

As such, when determining property rights, a judge will often order an evaluation and forensic accounting of the property. At what point did a party acquire the property? How traceable is the pre-marriage property? A person can be in the midst of purchasing a property and marry in the interim. This will then be a question of fact with respect to the property’s status as community property.

Separated Spouses

Separated spouses may not have community property at probate, though that is a different topic. In the story from the previous post, husband and wife were officially living together, though they slept in separate bedrooms. What is more, California protects the surviving spouse by allowing that spouse to live in the marital property for 60 days after the case is filed. Upon court order, this can extend beyond 60 days.

In the story from the previous post, the house would not be community property because it belonged to the husband prior to marrying the wife. However, because it was the marital property, she can continue living there. While his son and daughter want to evict her from a home that is worth millions of dollars, she would have at least 60 days from the time of filing. More likely, she would be able to remain there for a long period of time.

Drafting a will? Probate issues? Contact the law firm of Melanie Tavare, a Hayward Bay Area Estate Planning Firm.