Regular readers of my blog probably understand that estate planning laws can differ from state to state. For example, California and several others are known as “community property” states. So in this blog we’ll explore what comprises community property versus separate property, and how both relate to estate plans.

“Community property” is defined as any asset that is earned or acquired by either spouse during the time of their marriage. “Separate property” is property that is owned or acquired by either spouse before the marriage took place. These definitions mostly come to bear in divorce cases, and though they may seem clear cut, exceptions and disputes are common.

Let’s use the example of a living trust, also known as an “inter vivos” trust. Many people elect to place assets in a living trust. The law allows both community property and separate property to be put into a living trust. This is an excellent way to organize assets of all kinds, for disposition according to the grantors/spouses’ wishes. Both spouses can decide how they wish their community property to be bequeathed; and separate property may also be specifically addressed. For example, if one spouse inherited a family cottage or heirloom jewelry they may wish to keep it in the family. This is allowable because any asset that was inherited, whether before or during a marriage, falls in the category of separate property, and is not subject to the laws governing community property. Other asset types that have particular legal considerations in living trusts and estate plans include real estate, life insurance, and some qualified retirement plans.

Remember, don’t take what is written in this (or any!) blog as legal advice.  This is simply my opinion on an issue.  Consulting with a knowledgeable estate planning attorney is the only way to obtain complete, actionable information and guidance relating to assets of all kinds.  There is no “one size fits all” when it comes to estate plans. I focus my practice on estate planning, and would be glad to address any and all questions and concerns you may have regarding this important process. To set up a consultation, please contact me at 818.956.9200.

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