Leaving Assets to Beneficiaries
Many people leave all or most of their worldly goods to their spouse in their wills, but no rule requires you to do so in California. The law permits every person, married or not, to dispose of his assets by will when he dies. A person making a will names the beneficiaries he wants to inherit his property and the court will carry out his wishes to the extent they are legal. However, in a community property state like California, property ownership is not always easy to determine.
If you live in California, the state considers the property you or your spouse acquire during your marriage and the debt you incur as belonging to the community, not to the individual spouse. If the marriage ends, each spouse has the right to one-half of the community property and must assume one-half of the community debt. The division is important during divorce proceedings, when property must be separated between the two spouses. It is also significant when one spouse dies since his will can only include his share of the community assets.
Even in community property states like California, some property is separate property, belonging entirely to one spouse. Generally, property one spouse acquired before the marriage is his separate property, as is money he received during the marriage as a gift or inheritance. A couple can also agree in writing to keep finances separate, making all property separate property. Often, couples mingle community and separate property, making it difficult to straighten out. But the distinction between community property and separate property is critical once spouse dies, since he can will all of his separate property to a third party, but only his 50 percent share of community property.
Community Property With Right Of Survivorship
If you and your spouse own real property, the type of title you hold can preclude willing the property to a third party on your spouse's death. California recognizes a form of taking title to jointly owned real estate called "community property with right of survivorship." This type of title, like joint tenancy, gives each spouse an undivided one-half interest in the property while both are alive; when one spouse dies, the other takes title to the whole. The decision to use this form of title, rather than joint tenancy, is often a function of estate and tax planning, but it will have a decided impact on a spouse's ability to devise real property at his death.