Estate Planning – Understanding the Character of Property (Separate or Community)

In California, all property falls into one of 3 categories:  Community, Separate or Quasi-community.

Community Property – all property acquired during marriage other than property acquired by gift or inheritance.

Separate Property – all property acquired outside of marriage (before marriage or after separation) or acquired during marriage by gift or inheritance.

Quasi-Community Property – all property acquired while living outside of the State of California that would have been community property had the owner been a resident of California at the time they acquired the property.

Some special issues come up with characterizing property especially where people owned property prior to marriage or acquired property during marriage by gift or inheritance.   For example, if you receive property during marriage by gift or inheritance, but you mix it with the community property of the marriage, it will lose its separate property character.  It is important if you wish to maintain the “separate” character of property to not “co-mingle” or mix the property with your community property.

Another example is property acquired prior to marriage.  This property would usually be characterized as separate property.  The situation becomes less clear-cut when there is a lien or encumbrance, like a mortgage, against the property.  If the lien or encumbrance is being serviced or paid off with community funds, the community is probably accumulating an interest in the property.

In helping with estate planning, it is good to ask questions about when assets were acquired and which spouse acquired them.

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