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Is California a Community Property State?

In the process of considering divorce, many people get concerned about whether California is a community property state, and what that will mean for them. While California is indeed one of only nine community property states in the U.S., the difference between the rules in our state and those of other states is not nearly as drastic as many people suppose.

To understand why, we need to explore California’s community property rules, how they are applied, and how this compares to property division schemes in other jurisdictions.

What is Community Property?

Community property is the term used to describe assets that belong to both spouses in a marriage. It is sometimes referred to as marital property.

The opposite of community property is separate property. When property is classified as separate, it belongs entirely to one spouse.

Community property is divided between spouses in divorce while separate property is kept by the spouse to whom it belongs and it is not subject to division. Therefore, the process of determining whether property should be legally classified as marital or separate is vitally important.

Just to make matters confusing, some property can be classified as a hybrid mix of separate property and community property, so that part of the value of that property would be divided in divorce and some of the value would be retained by only one spouse.

Marital Agreements Override California Laws

Since community property is split in divorce and separate property is not, fierce disagreements often arise about how assets should be classified. If the couple executed a prenuptial agreement before they got married or created a postnuptial agreement during the marriage, that agreement probably addresses the issue, at least with regard to some assets.

For instance, if one spouse owned a business before the marriage, they might establish an agreement specifying that the business would remain the separate property of that spouse even if the other spouse assisted in operating the business. Or if one spouse expected to inherit the family beach house, the agreement might state that the house would belong to that spouse only as their separate property even if the couple invested marital funds in making upgrades to property.

If the marital agreement was executed in compliance with the requirements of California law, then the terms of that agreement override the provisions in California community property laws. Couples can control their own future through the use of marital agreements, which is why these agreements are becoming increasingly popular.

When is Property Considered Separate?

As a general rule, assets are considered to be separate property if:

  • One spouse owned the property before the start of the marriage
  • One spouse received the property as an inheritance
  • One spouse received the property as a gift (from someone other than their spouse)

Everything else is community property. That includes salary earned by a spouse during the marriage, as well as retirement benefits they accrued. It does not matter whether one spouse purchased an asset on their own or only put their name on the title. If it was acquired during the marriage (other than by gift or inheritance) the property is community property.

Moreover, property that starts out as one spouse’s separate property can transform into community property either fully or partially unless that spouse takes careful steps to preserve the separate status. In the example above, for instance, if a spouse inherited a vacation home, that inheritance would initially be considered separate property, but if marital funds were invested to improve it, at least part of the value of the home would likely be considered community property. The spouse who inherited it might preserve the separate characterization by executing a postnuptial agreement or scrupulously avoiding the use of marital funds on the upkeep of the house.

How is Community Property Divided in a California Divorce?

Property that has been classified as marital community property is divided equally in divorce in California. In many other states, marital property may be divided according to equitable principles instead of a 50/50 split. However, they usually start with the assumption of an equal split and then adjust the division to account for other factors in the marriage. Some community property jurisdictions follow this practice as well.

Most states follow the same general rules for classifying property as marital or separate. The end result is that property division in a community property state may not be much different than in other states. Regardless of where you are, it is important to work with a divorce attorney who is prepared to produce persuasive arguments regarding how property should be classified.

If a couple has not been married long or if they executed a marital agreement keeping certain property separate, then they may not need to divide up much marital property. Couples married for a longer time may have considerable community property and face very complex asset division situations.

Holstrom, Block & Parke, APLC Protects Your Property Interests in Divorce

The experienced team at Holstrom, Block & Parke, APLC understands how to demonstrate that particular assets should be classified in the way that best supports your interests in divorce. Our team of Certified Family Law Specialists is ready to help you secure your rightful share of property in divorce. Schedule a free, confidential consultation to learn more about the ways we can protect your interests.

Understanding Estate Planning in California

Estate planning involves creating a comprehensive plan that lets you determine how your assets will be distributed when you pass away, who will care for your minor children if you are unable to, and how your healthcare and financial decisions will be handled if you become incapacitated. Estate planning can often seem complex and daunting, and for that reason many people put it off. However it is crucial to ensure that your loved ones are protected. 

Without an estate plan in place, California law determines who receives your property, manages your affairs, and raises your children. If you become incapacitated without planning documents in place, your family could be required to seek guardianship through lengthy and expensive legal proceedings. An estate plan minimizes the potential for uncertainty and conflict in the future, and it can significantly reduce burdens on loved ones, including tax liability.  

Why is Estate Planning in California Necessary?

Estate planning is often perceived as something reserved for the wealthy or older people. However, the truth is that everyone, regardless of their age or financial status, can benefit from having a comprehensive estate plan in place. In California, where state laws and regulations play a significant role in the distribution of assets, having an estate plan is not just a recommendation; it’s a necessity. Here are some reasons why: 

  1. An accident or illness can cause incapacitation at any age. Having the right documents prepared enables family or friends to assist with financial matters and authorize medical treatment. 
  2. An estate plan allows you to provide for the management of your assets if you are incapacitated and the distribution of your assets when you pass away. Without an estate plan, the state will decide how your assets are distributed according to intestate succession laws. This can often result in your assets going to the last people you’d want to receive them. For example, if you are separated but not legally divorced, your estranged spouse could inherit your entire estate.
  3. Estate planning in California is necessary to protect your minor children. An estate plan allows you to designate a guardian for your minor children in the event of your passing. Otherwise, the guardian will be chosen by the court, and the choice may not align with your wishes. 
  4. An estate plan can allow you to eliminate or reduce estate taxes and other tax liability. 

The Elements of a Comprehensive Estate Plan

A comprehensive estate plan typically includes a will, a living trust, a durable power of attorney for finances, and an advance health care directive. A will is essential for designating guardians for your minor children and outlining how your assets should be distributed. Creation of a living trust can allow assets to pass assets to beneficiaries without the need for a lengthy, public, and expensive probate process. 

A durable power of attorney for finances allows you to appoint someone you trust to make financial decisions on your behalf if you cannot do so. In California, an advance health care directive enables you to appoint someone to make healthcare decisions if you become incapacitated and to provide instructions about the type of care you would want to receive in certain situations if you are not able to communicate on your own.

Estate Planning and Divorce in California

Divorce can be emotionally charged and complex, especially in California, where state-specific laws and regulations can significantly impact the outcome. One critical aspect often overlooked during this time is updating your estate plan. When you're going through a divorce, it's essential to remember that your current estate plan may still list your soon-to-be ex-spouse as the primary beneficiary of your will or trust. Without an update, your spouse could inherit a significant portion of your assets, even if that is no longer your wish. 

Moreover, your estranged spouse may still have the power of attorney over your finances and healthcare decisions. This could give them the authority to make crucial decisions on your behalf, decisions that may not align with your preferences or best interests. 

In California, where community property laws dictate that any assets acquired during the marriage are considered jointly owned, the implications of not updating your estate plan can be even more significant. For example, if your spouse is listed as the beneficiary of your life insurance policy, they could still receive the payout even if you are separated or in the process of divorcing.

Furthermore, an updated estate plan can help protect your child's custody and support rights. By clearly outlining your wishes, you can help ensure that your children are cared for by the right person and that any support payments are used in their best interests.

Contact Holstrom, Block & Parke, APLC for Estate Planning in California

Every adult needs to have an estate plan in place, and it is important to update plans over time as needs and laws change. At Holstrom, Block & Parke APLC, we can help you prepare a plan or update your plans so that you and your loved ones are prepared to face whatever may come in the future. To schedule a confidential consultation, call today at 855-426-9111 or contact us online.

True Love Lasts a Lifetime. So Does an Estate Plan.

There are many different ways to express how much we care and say, “I love you.” Red roses, a date night, a spa day, or planning a trip are all great ways to celebrate Valentine's Day. However, what says "I love you" more than assuring them that you will do anything you can to minimize their stress should something happen to you? This Valentine’s Day, consider giving your loved one an unconventional gift… an estate plan. Don't forget the flowers and chocolates too!

While a legal document may not be the most "romantic gift," it is definitely one of the most meaningful and heartfelt gifts you can give or receive. Sitting down and taking time with your significant other or family member to review your current estate plan, or discuss your estate planning goals and create a carefully crafted strategy, is an important and thoughtful “date” that will protect and benefit your family for years to come. An estate plan is not just an important legal document that saves your loved one's time, money, stress, and potential heartbreak. An estate plan is also a way of expressing care, commitment, and love. Present your loved ones with a gift that will last well beyond February 14 and will continue providing and supporting that individual today, tomorrow, and even after your passing.

The past twelve months have been a constant reminder that life is truly unpredictable. Major life events such as a global pandemic, marriage or divorce, death, or a crippling change in one's financial situation could happen at any time, and any one of these would require changes to your estate plan to keep it valid. Whether you are in the beginning stages of your estate plan or revisiting an existing plan, everyone needs to plan ahead— no matter how young, healthy, and invincible you may feel. While your estate plan will never expire, it is strongly advised that you review your plan once every three years.  Make this a regular date night! Enjoy a nice bottle of wine together, review your plan, discuss your goals, address any major changes. There is no better way to show your commitment and love for one another.

Sandoval Legacy Group is now a division of Holstrom, Block & Parke, a Professional Law Corporation, one of the largest and most respected family law firms in Southern California. Once you are ready, we encourage you to meet with one of our experienced estate planning attorneys. With over 30 years of experience, we are here to guide and support you and your loved ones throughout your estate planning journey. We will ensure you, your loved one, and your legacy is protected no matter what life has in store. Request a consultation or contact us at (855) 939-9111 for any estate planning needs.

What is a medical directive?

 

A medical directive is a document where you appoint someone to make your medical decisions in the event that two doctors have said you're no longer able to make your own decisions. In those documents you're also able to set forth what you want those decisions to be.

For example, do you want life support or not? Who do you want to receive your remains? Do you want an autopsy? Do you want to donate organs? When you're able to set these forth in a document, it makes it easier for your loved ones to make those decisions in the event that it becomes necessary.

If you have any questions about making a medical directive, please give us a call at Holstrom, Block & Parke and we'll be happy to assist you.

Call (855) 939-9111 Now for a Free Phone Consultation.

We pledge to serve and protect your interests through fast, effective solutions.

Probate Duration and Typical Fees Explained

Generally, the probate process takes anywhere between 9 and 12 months. The length and cost of the probate process depends on the complexity of the estate, and whether the deceased left the estate in order. A lot depends on the courts' calendar, and whether disputes arise in regard to who may be appointed as administrator or executor. The fees for a probate are set by statute, which is set by the court. State law also dictates the fees that attorneys and executors would receive.

We've been handling probate cases here for over 20 years at Holstrom, Block & Parke and we’re happy to help you if you have any questions.

Call (855) 939-9111 Now for a Free Phone Consultation.

We pledge to serve and protect your interests through fast, effective solutions.

Learning from Tom Petty’s Estate Planning Mistakes

Estate planning mistakes become a costly affair when families have to sort out disagreements in probate court. More than a year after the unexpected death of rock legend Tom Petty, his widow and two daughters from a previous marriage are litigating the management of his estate.

Aretha Franklin's Estate: Uncertainty Months After Death

NEW YORK, NY - FEB 18, 2012: Aretha Franklin performs in concert at Radio City Music Hall on February 18, 2012, in New York. (Editorial Use Only)

Based upon documentation filed in Michigan’s Oakland County court, the beloved singer-songwriter’s estate is estimated to be worth approximately $80 million dollars. However, despite her wealth and access to counsel, she died with no will, trust or estate plan. In December, the IRS filed a claim in probate court alleging that Ms. Franklin owed several million dollars in back taxes and penalties at the time of her death. These claims must be either satisfied or contested prior to the distribution of the estate, and could add years to an already complicated, expensive process. To add to the disorder, it is being reported that an heir to Ms. Franklin’s estate is attempting to obtain a court order requiring the estate to provide them with monthly financial documents and that another potential heir suffers from special needs.

Ms. Franklin’s lack of a comprehensive estate plan has resulted in the details of her wealth, debts and family relationships being a very public matter. Generally, the rights to song royalties, copyrights and publishing rights and the inherent difficulty in valuing such assets, lead to prolong battles with the IRS and will ensure a long and very public probate process. Additionally, the consequences of a distribution of funds to a special needs beneficiary can have far reaching, unintended effects to such beneficiary.

A properly drafted estate plan could have avoided this very public probate, kept her estate assets and debts private, expedited the distribution of her wealth and provided appropriately for the special needs of one of her children.

Whether you’re a celebrity or not, the best course of action, always, is to prepare for the eventuality of death with an updated, current estate plan, which takes into consideration all aspects of your life and ensures that your estate, big or small, and the distribution of your assets remains a private matter between you and your loved ones.

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The information on this website is for general information purposes only. Nothing on this site should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship.