Community Property

1
Chapter 4

• Community Property

2
Community Property

• 9 states have community property laws
• A marriage is a community. Everything that is
  earned inside the marriage belongs to the two
  partners .. It is community property.
• Presumption property owned by husband and wife
  belongs to them in equal shares.

3
What is Community Property?What is not Community
Property?

• Assets acquired during marriage are generally
  considered community property.
• Property that was brought into the marriage is
  not community property?
• Property that is inherited or received by gift is
  not community property.
• The character of an asset, separate or community,
  is established at the time the asset is acquired
  and is not altered by later events.

4
What is a Pre-Nup??

• Legally binding agreement between two individuals
  in anticipation of marriage.
• Full force and effect of an arms-length contract
• Can provide protection of ones estate for ones
  intended beneficiaries
• Pre-nuptual agreements can provide an inventory
  of assets brought into the marriage and the
  intended dispostions.

5
Common Law versus Community Property States

• The concept of joint tenancy with right of
  survivorship is embraced by common-law states.
• None of the community property states recognize
  the tenancy-by-the-entireties form of ownership,
  and joint tenancy with right of survivorship is
  restricted (page 79). Joint ownership does not
  trump or supercede the community presumption.
• Generally, community property is probate property.

6
Commingling of Property

• Life Insurance generally, trace the source of
  the money applied to the premium payments to
  determine the character of the policy (separate
  versus community).
• Business was business started before the
  marriage? How much of the profits during the
  community are attributable to the appreciation in
  value.
• Debts separate property is not subject to
  claims by the other spouses debts. If both
  spouses sign on the debt, then that spouses
  separate property is subject to claim.

7
Moving In and Out of Community Property States

• It gets very complex and confusing when a married
  couple moves into and out of community property
  states from common law states. This requires a
  legal review including wills, trust, pre-nuptual
  agree-ments etc. etc.
• Despite this, more than 1/3 of the common law
  states recognizes community property as retaining
  its community property identity at death when
  spouses move from a community property state from
  common law states.