What’s Yours Is Mine, Right?

Depositphotos_3044655_l By Genene Dunn

It is commonly known that California is a community property state and when a person gets married, there is no longer a thought process of “what’s mine is mine” as it then becomes “what’s mine is ours.” While most people understand the concept of community property in that everything that is owned by a person who is married is also owned by the spouse of that person in equal parts, many are unaware of how that concept is applied in real life situations.

The latest trend in real estate seems to be for a married couple to acquire title to property they are buying as joint tenants with a right of survivorship which provides that if one spouse dies, the entire property passes to the surviving spouse. However, based on the recent cases our office has dealt with in the probate court, it doesn’t seem as though joint tenancy was always the automatic option that was chosen for how married buyers would take title.

In the past few months, we have had an increasing amount of clients whose spouses have passed away and while they were dealing with the financial aspect of this loss, they have learned that their homes were not held jointly with their spouse. Most of the deeds we obtained from these clients showed them as holding their property as “husband and wife as community property.” As soon as we read those words on a deed in front of a grieving spouse, our hearts sink as we know the process is going to be even more difficult than they expected.

Titling property for a married couple only as community property seems to have been somewhat of a trend in the real estate industry in the 70’s and 80’s, and we have come across an increasing amount of clients who had no idea how their house was titled, as they just signed wherever they were told when they bought it. I know when my husband and I bought our house, our realtor never asked us how we wanted to hold title, and only assumed we would want it in joint tenancy and informed us afterwards that it was held as so. We were lucky this was the method she chose, that I understood what that meant, and that it was the best option for us at that time.

What many people don’t understand is that holding title in your home only as community property does not make the property automatically pass entirely to the surviving spouse even if you are married and bought the house together. In fact, it requires a petition to the court to determine that the property is in fact a community property asset that should pass completely to the spouse without any further action needed. And, of course, whenever it is required to go to the court for something, that means an increase in cost and time that is almost always unexpected by the surviving spouse.

Whenever these situations occur, we always get the same response from our clients, which is, “Probate court? But we were married, we owned everything together, there is nothing to go to court over?” While it would seem like that’s how it should be since this is California which is a community property state, unfortunately that is not the case. If the title to a home does not explicitly provide for an avenue to pass outside of probate, the court must get involved to determine how it should pass. Having your home titled as community property is not enough to show that the surviving spouse should get the entire home, and that determination must be made by the court.

So what should you do? First, check how your house is titled. Many people have never even looked at their deed to their home, and only assume their realtor or escrow company set it up in the best way for them. If your home is held only as husband and wife as community property, it may not accomplish what you expect it to if something were to happen to yourself or your spouse. If your home is held in joint tenancy, this may also not be the best option for you depending upon your circumstance. The best way to ensure that your house is completely protected from probate and that you can control what happens to it and ensure your family is completely protected should something happen to you, is to have your house held in trust. By having your house held in your trust, you avoid probate, you get to take advantage of certain tax benefits, and you get to control what happens to your house after you have gone.

Genene Dunn is a law clerk at the Law Offices of Donald A. Hunsberger. Hunsberger Law is a full-service estate and business planning legal firm, with estate planning attorneys and a licensed, professional fiduciary on staff. Connect with Don Hunsberger by calling (714) 663-8000 or visiting www.hunsbergerlaw.com

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