Understanding Community Property vs Separate Property
What is Community Property?
Community Property is a legal concept that applies to assets owned by married couples in certain states. It means that both spouses have an equal ownership interest in property acquired during the marriage, regardless of whose name is on the title.
Key Features of Community Property
Shared Ownership: Assets earned or acquired by either spouse during the marriage are considered Community Property. This includes income generated by both spouses.
Asset Acquisition: Assets purchased with Community Property income, such as a residential home, are also considered Community Property, regardless of whose name is on the title.
Community Property States in the US
Community Property laws are recognized in Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. In Alaska, couples can choose to opt into Community Property.
Joint Trusts in Community Property States
With FastWill's Trust-based Estate Plan, any trust for a married couple in a Community Property state will automatically be a Joint Trust. We believe this is the most beneficial option from a tax and legal standpoint, as it aligns more closely with state laws.
We do not offer a separate Trust option for married individuals in Community Property states.
What is Separate Property?
Separate Property is a legal term used in some states to describe assets that belong to just one spouse, not both. This typically means if you own something before you get married, or if someone gives you a gift or leaves you something in their will, it's considered yours alone, even if you're married.
Separate Property States
Separate Property laws are recognized in Alabama, Alaska, Arkansas, Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Hawaii, Illinois, Indiana, Iowa, Kansas, Kentucky, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, New Hampshire, New Jersey, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, Vermont, Virginia, West Virginia, and Wyoming.
Trust Options for Separate Property States
With FastWill's Trust-based Estate Plan, married couples can create mirror-image Trusts, naming each other as Successor Trustees, which provides a similar long-term outcome to Joint Trusts but with the aforementioned benefits. We also provide the option for married couples to create a Joint Trust in Separate Property states.