This is the third installment of our “Estate Planning Series”. In case you missed the first two, click the links: Estate Planning Basis and When to Update Your Estate Planning.
Many clients come to us having heard that Washington is a community property state, but not really understanding what that means or how it impacts them. In this post, we will describe what community property and separate property actually are.
Community Property and Separate Property
Washington is a community property state. Property’s character (separate or community) factors into much of the estate planning, business planning and real estate transaction work we conduct.
There are nine community property states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Alaska has a system where community property is an option.
What is community property?
Generally, in community property states, money earned by either spouse during marriage and all property bought with those earnings are presumed and considered to be community property that is owned equally by husband and wife. Likewise, debts incurred during marriage are generally debts of both the husband and the wife. At the death of one spouse, his or her half of the community property goes to the surviving spouse unless he or she left an estate planning document that directs otherwise.
How can you make sure that your spouse receives your half of your community property at your time of death? Execute estate planning documents or consider a community property agreement.
What is separate property?
Married people can still own separate property. For example, property inherited by one spouse belongs to that spouse alone as their separate property. The other spouse may have no interest in the inherited funds. A spouse can leave separate property to anyone; it doesn't have to go to the surviving spouse. How can you “opt out” of these presumptions and rules? By executing estate planning documents that may include a prenuptial or postnuptial agreement. What are prenuptial or postnuptial agreements? Stay tuned for another blog post on that topic! If you can't wait for the blog post, give us a call or email and we can discuss these types of agreements with you.
If you have questions on this topic or would like to discuss how living in a community property state affects you or if you would like information on prenuptial or post nuptial agreements, please contact us.
Disclaimer: The information in this blog post (“post”) is provided for general informational purposes only, and should not be construed as legal advice from Leos & Gilkerson, PLLC or the individual author, nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting on the basis of any information included in, or accessible through, this Post without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a licensed lawyer.