There’s a lot of confusion out there on how assets are divided upon death and divorce. Although I’m not a divorce attorney, my clients get divorced and we have to deal with the division of assets held in their trusts.
In this post, I will share with you 3 simple rules I learned from a judge to pass the Bar Examination. Then I’ll add my 4th rule in case you can’t remember the first three.
This post will only be on Community Property. Look for another post on how other states view marital assets.
There are only nine community property states: California, Washington, Idaho, Nevada, Arizona, Texas, New Mexico, Louisiana and Wisconsin.
If the property was acquired prior to the date you got married it is presumed to be the separate property of that spouse.
If the property was acquired after the date you got married it is presumed to be community property.
If the property was received through an inheritance, gift or bequest it is presumed to the the separate property of that spouse.
Now, these presumptions can be rebutted, but normally you must rebut them with clear and convincing evidence. That’s a fairly high standard of proof, which brings us to my rule.
Gary’s Community Property Rule
Community property is a sucking Black Hole.
Any asset that appears to be close to community property, like a black hole, it is likely to be declared to be community property. And, like a black hole, any asset that is community property is very difficult to re-characterize as separate property.
Now, the state rules will vary; however, these are good guidelines.
What is not as important, especially in Nevada, is title. If the property was acquired during the marriage but it’s in his name, use Rule 2–the property was acquired during the marriage so it’s presumed to be community property.
At death, there are bitter fights over these rules if there is not a trust clearly marking the character of the assets.
When you use a qualified attorney to help you plan, these issues can be discussed and accounted for.[/vc_column][/vc_row]