What Is Community Property and How Does it Affect Probate?
“Community Property” is a legal term used to define the treatment of property and income acquired during a marriage.
Certain states are considered “community property states,” and these have very specific laws about spousal rights to property.
Community property laws directly impact the probate process and how inheritance is determined.
In a Community Property State, all assets (including income) purchased or earned during a marriage is deemed to be the property of both spouses unless both spouses have specifically agreed that it is separate property.
Any assets considered to be community property are automatically 100% inherited by the surviving spouse.
There is one exception to the community property rule: money or property inherited by one spouse during a marriage is always considered separate property.
What Happens to Community Property in Probate?
Only assets that do not automatically pass to someone else go through probate. Because community property transfers automatically 100% to the surviving spouse, these assets go through a different path.
A surviving spouse will still need a court order to officially transfer title, but the assets are not technically probate assets and thus are not subject to the will or to creditors.
In short, community property can only be inherited by the surviving spouse, regardless of the will or other devices that may state otherwise.
What are Community Property States?
The following states are Community Property States:
- New Mexico
- All of the US territories (Puerto Rico, Guam, Mariana Islands, the Virgin Islands and American Samoa).
Additionally, Alaska is an elective Community Property state, meaning that couples can choose to sign documents that apply community property rules to their marriage.