Attorney
Do you know who actually owns your property under California law? For many married couples, the answer isn’t as straightforward as it seems. California is a community property state, which means that assets and debts acquired during marriage are generally considered jointly owned, regardless of who earned them or whose name is on the title.
If you’re creating or updating your estate plan, understanding how community property works is key. Without the right planning, your wishes might not play out the way you intend. In this post, we’ll break down what community property means, how it affects your estate plan, and the steps we can take together to help protect what matters most.
What Is Community Property in California?
Under California law, community property is everything that either spouse acquires during the marriage while living in the state. This includes income, real estate, retirement benefits, and even debt. Unless you’ve taken steps to keep something separate, it’s likely considered jointly owned.
Examples of community property include:
- Wages earned by either spouse during the marriage
- A house purchased while married, even if only one name is on the deed
- Business income if the business was started after marriage
Separate property, on the other hand, generally includes assets one spouse had before marriage, as well as gifts and inheritances received by one spouse alone, so long as those assets remain separate and aren’t mixed with joint funds.
Why Community Property Rules Matter in Estate Planning
When one spouse dies, the rules around community property can directly affect what the surviving spouse receives and what goes to other heirs. If there’s no estate plan in place, California’s intestate succession laws will kick in, and those laws might not reflect your wishes.
Let’s say you and your spouse both have children from prior relationships. You opened a retirement account after you got married and have been contributing to it ever since. Under California law, that retirement account is considered community property. If you pass away without an estate plan, your half of that account would automatically go to your spouse. That might not be what you intended—it might mean your children receive nothing from that account, even though you had hoped to leave something behind for them.
Even in traditional families, assumptions can cause problems. Many people believe their spouse will receive everything, but community property law only applies to jointly owned assets. If you’ve kept a separate bank account or inherited a piece of property, those may pass differently unless your estate plan says otherwise.
How to Plan Around Community Property Rules
A well-crafted estate plan lets you take control and make your intentions clear. A number of tools can help address community property rules and ensure your loved ones are protected.
Some of the most effective options include:
- Revocable living trusts, which allow you to decide who receives what, avoid probate, and make sure both community and separate property are handled correctly
- Community property agreements, which confirm how you and your spouse want to classify and distribute certain assets
- Prenuptial or postnuptial agreements, which clearly define what is separate and what is shared
The most important thing is to put your intentions in writing. Assumptions don’t hold up in court. Clear documentation gives your family clarity, and that can make a big difference during an already difficult time.
How We Can Help You Plan With Confidence
At Horizon Elder Law & Estate Planning, Inc., we work with California families to create estate plans that reflect their values and goals. If you’re not sure how your property is classified—or you want to make sure your plan reflects your wishes, we’re here to help.
We’ll take the time to understand your situation, walk you through your options, and build a plan that provides peace of mind. Whether you’re just getting started or you need to review an existing plan, we’ll help you feel confident about your next steps. Contact us today for a consultation.