Married couples usually own most, if not all, of their valuable property together. If you want to leave everything to your spouse when you die, as many people do, you don't need to worry about what belongs to you and what belongs to your spouse. If you'd rather divide your property among several beneficiaries, you'll need to know what's yours to leave.
Common Law States: Ownership by Title
Most states (except the community property states listed below) use the "common law" system of property ownership. In these states, it's usually easy to tell which spouse owns what. Look at the deed, registration document, or other title paper: If you're the only person named, the property is yours. You are free to leave your property to whomever you choose.
If an item doesn't have a title document, generally you own it if you inherited it, paid for it with money you earned, or received it as a gift.
To protect spouses from being disinherited, most common law states have an exception to these rules: A surviving spouse can often claim one-third to one-half of the deceased spouse's estate, no matter what a will or title says. (Learn more about inheritance rights.)
If you and your spouse have joint ownership of the propertymeaning both of your names are on the titleyou each own a half-interest in the property. Your freedom to give away or leave that half-interest depends on how you and your spouse share ownership.
- If you own the property in "joint tenancy" (also called "joint tenancy with right of survivorship") or "tenancy by the entirety," the property automatically belongs to the surviving spouse when one spouse diesno matter what the deceased spouse's will says.
- If you own the property in "tenancy in common" (less likely), then you can leave your half-interest to someone other than your spouse if you wish.
Community Property States
The rules are different when you live in one of the states that use the "community property" system of property ownership in marriage. Here's a list of the community property states, with links for more details:
What Is Community Property?
Community property is property that is owned equally by the spouses. In community property states, money earned by the spouses during marriage and all property bought with those earnings are generally considered community property. Likewise, spouses are equally responsible for debts incurred during marriage. When one of them dies, that spouse's half of the community property goes to the surviving spouse unless there is a valid will that directs otherwise.
Community property includes:
- money either spouse earns during marriage
- things bought with money either spouse earns during marriage
- separate property that has become so mixed ("commingled") with community property that it can't be identified as separate, and
- separate property that has been transferred to the community, or
- separate property than has been "transmuted" (or "transformed"), such as when a spouse contributes separate property funds to buy a community property house.
What Is Separate Property in a Community Property State?
Living in a community property state doesn't mean that a married person can't own their own property. Property that is owned by only one spouse is "separate property." A spouse can leave separate property to anyone.
Separate property includes:
- anything you owned before you got married
- gifts (as long as they were given to you only, not to both you and your spouse), and
- any money, property, or other items that you inherited.
Generally, these rules apply no matter whose name is on the title document to a particular piece of property. For example, if you live in a community property state and own a car with the title in your name only, your spouse might still own a half-interest in the vehicle.
Examples of Community vs. Separate Property
Here are some other examples to illustrate the differences between separate and community property:
A computer your spouse inherited during marriage
Your spouse's separate property
Property inherited by one spouse alone is separate property
A car you owned before marriage
Your separate property
Property owned by one spouse before marriage is separate property
A boat, owned and registered in your name, which you bought during your marriage with your income
It was bought with community property income (income earned during the marriage)
A family home, which the deed states is owned by you and your spouse as "husband and wife," and which was bought with your marital earnings
It was bought with community property income (income earned during the marriage) and is owned as "husband and wife"
A camera you received as a gift
Your separate property
Gifts made to one spouse are that spouse's separate property
A checking account owned by you and your spouse, into which you put a $5,000 inheritance 20 years ago
Community property (probably)
The $5,000 (which was your separate property) has become so mixed with community property funds that it has become community property (unless you can prove the $5,000 is your separate property with documentation and evidence)
Opting Out of Community Property Ownership
Married couples don't have to accept the rules about what is community property and what isn't. They can sign a prenuptual agreement, postnuptual agreement, or other written agreement that makes some or all community property the separate property of one spouse, or vice versa.
Several community property states offer a way of holding title to community property that avoids probate when one spouse dies. It's called "community property with right of survivorship." If a couple holds this type of title to propertya house, for examplethe property will automatically belong to the survivor when a spouse dies, without any probate court proceedings.
States Where You Can Opt In to Community Property Ownership
In a few states (listed below), married couples can opt in to the community property system or designate specific assets as community property.
In Alaska, spouses can opt in by creating a community property agreement that states all (or some) property and income acquired by the spouses during the marriage is considered community property. Spouses can also establish a community property trust which covers specific assetsall property transferred to that trust will be treated as community property. (See Alaska Stat. §§ 34.77.01034.77.995 (2022).)
In Florida, spouses can create a "community property trust." To create the trust, spouses must follow certain rules. For example, the trust must state that it is a community property trust, and be signed by both spouses. (See Fla. Stat. §§ 736.1501736.1512 (2022).)
In Kentucky, spouses can create a "community property trust." The trust must state that it is a "Kentucky community property trust" and must have a warning about the legal consequences of putting property into the trust. Any property the spouses transfer to this trust will be treated as community property. (See Ky. Rev. Stat. §§ 386.620386.624 (2022).)
In South Dakota, spouses may create a "South Dakota special spousal trust," which must include a written declaration that the property is "community property." Any property the spouses transfer to this trust will be treated as community property. (See S.D. Codified Laws §§ 55-17-155-17-14 (2022).)
In Tennessee, spouses can create community property rights to property or assets that they transfer to a valid community property trust. Among other requirements, the trust must state that it is a "Tennessee community property trust," and must have a specific warning about the legal consequences of putting property into the trust. Any property the spouses transfer to this trust will be treated as community property. (See Tenn. Code §§ 35-17-10135-17-108 (2022).)
You can learn more by reading Plan Your Estate by Denis Clifford (Nolo). If you're ready to make your estate planning documents, you can create a customized will today using Nolo's Quicken WillMaker. Or if you want a lawyer's help or advice, contact an estate planning attorney.