Community property is a type of jointly held spousal property available only in California, Arizona, Nevada, Texas, Idaho, New Mexico, Washington, Wisconsin, Louisiana. It is also available by trust in Alaska.
Automatic Community property
In the states other than Alaska, any property acquired during marriage is presumptively community property, i.e., it belongs to the “community” of the two spouses. Each spouse has a claim to one half of the community property. This is true of all property acquired during the marriage, but is especially important for income: in community property states, a spouse is automatically entitled to one half of the other spouse’s paycheck.
Alaska Community Property Trusts
In Alaska, community property is not automatic, but a married couple may elect to put their property into a community property trust, rendering it community property. The most notable part of this method is that the couple need not live in Alaska—a married couple anywhere in America may take advantage of the Alaska community property trust.
How do we maintain our community property?
Fortunately, community property is very easy to maintain. All property acquired during the marriage is presumptively community property, and only a few exceptions (e.g., gifts or inheritance made to only one of the two spouses) will rebut this presumption. Thus, the difficulty is actually in maintaining property as non-community. This is good news for those looking to accrue the benefits of community property—you don’t need to do anything at all to maintain its status, so long as you live in a community property state.
What are the benefits of community property?
When one spouse dies, community property automatically passes to the surviving spouse—without any need for probate. More importantly, though, is that transferring property in this way can help you avoid paying expensive capital gains tax, which can result in significant savings.
Are you interested in these tax benefits? Do you live in Texas or have you lived in a community property state and want to know more about the status of your property? Click “get started” above to set up an appointment with Kim Raemdonck, an experienced attorney licensed in Colorado and Texas.
