This is a question that comes up often with both my estate planning clients and my probate estate clients. In both cases, the first question is “What is Separate Property?”
The question of distribution of separate property only comes up if the person is married or in a registered domestic partnership when they are planning or when they die. California does not recognize common law marriages, so unless the couple doing estate planning is married or are registered domestic partners or the decedent was married or had a registered domestic partner, there is no need to determine what is separate property versus community property.
Separate property is defined in the Family Code at Section 770 as all property owned by a person before marriage, all property acquired by a person after marriage by gift, bequest, devise or descent, and all rents, issues, and profits of separate property during marriage. Community property is defined in the Family Code at Section 760 as all other property acquired by a person during marriage while domiciled in California. Any community property assets acquired outside of California are called quasi-community property and is treated as the same as community property. Separate property can be transmuted to community property and there is a full analysis of whether the character of the asset was properly transmuted that is beyond this post.
How community property is distributed upon the first spouse’s or registered domestic partner’s death is straightforward if there is no estate planning. The surviving spouse or registered domestic partner is entitled to receive 100% of the community property when no estate planning exists. This is true even if the asset is in the deceased spouse’s or registered domestic partner’s name alone, but the distribution may require a probate court order determining that the asset is community property. When it comes to preparing an estate plan, a spouse or registered domestic partner only has the right to give away 50% of their community property assets. So, in an estate plan with a Will, Trust or with Beneficiary Designations, a person can only give away 50% unless the other spouse or domestic partner consents to more being given to someone else (i.e., spouse or domestic partner signs consent on beneficiary designation of an insurance policy).
A spouse or registered domestic partner has the right to give away 100% of their separate property without the other spouse or registered domestic partner’s consent through estate planning. If there is no Will or Trust which details the distribution of the separate property, then the Probate Code has default distribution provisions in Section 6401. The distribution depends on if the deceased spouse or domestic partner has other surviving relatives. The surviving spouse or registered domestic partner receives 100% of the separate property if the deceased spouse or registered domestic partner did not leave any children, grandchildren, great-grandchildren, parents, siblings (including half-siblings) or nieces and nephews. A surviving spouse or registered domestic partner receives 50% of the separate property if the deceased spouse or registered domestic partner has one child or issue of that one deceased child, or leaves a parent or issue of a parent (i.e., siblings). A surviving spouse or registered domestic partner receives one-third of the separate property if the deceased spouse or registered domestic partner is survived by more than one children or issue of any of their multiple children.
There are separate Probate Code sections on how the separate property is distributed to those relatives that are not the surviving spouse or registered domestic partner and those can be found at Section 6402. This code section also dictates how assets are distributed if there is no spouse at all and no estate planning documents.
While there are default code sections on how assets are distributed when there are no estate planning documents or if the documents do not address the separate property assets, it is important to have an estate plan so it is clear what your intent is with both your community and separate property assets. I have been involved in several court procedures with surviving parents and children (including minor children) sharing assets or a surviving spouse sharing assets with in-laws.