The California Separate Property Probate Trap for Married Couples

We are all living longer and our parents are living longer. All of us are going to deal with elderly parents and the eventual inheritance.

What happens when one spouse inherits during the marriage?

Here is an example to sort all this out; Husband Sam is married to Wife Floy. They have two children and have always lived in California. Husband Sam inherits a house located during the marriage from his mother. The house is owned equally between him and his sister. The sister decides to live in the property. Husband Sam decides he just does not want to deal with any issues concerning the property and is just going to let her live there. Wife Floy periodically tells him that he should do something with his share of the property. Like many people, Husband also fails to do any estate planning during his lifetime.

What happens when he dies? Wife thinks she now owns half of the property.

Under California law, inherited property is considered separate property.

In our example, assume the property is considered 100% separate property.  Per California Probate Section 6401(c)(3), the surviving spouse would receive a 1/3 share of the separate property and each child would receive a 1/3 share. If Husband Sam had a will or a trust he could have left 100% of it to Wife Floy.  Instead she is only going to be entitled to a 1/3 share of a ½ interest. Further, given the value of real property in California, Wife Floy will likely have to probate his interest to clear title.

Husband Sam could have avoided falling into this separate property trap by getting a will or a trust.

Call David A. Arietta, Esq. at (925) 472-8000 if you have any questions as to the separate property trap.