05 Aug Does this house really become community property?

Q. I had a condo prior to my second marriage. I remarried and had an attorney make out a will leaving the condo to my son. I sold the condo and bought a house in my name, using funds from the condo and my own funds. But the attorney who did my closing says that new my wife owns half the house even though it’s in my name because it’s a “community property” state. How can this be true? When I die, can my wife decline the property and allow my son to take it?
— Still married

A. Community property states follow the rule that all assets acquired during the marriage are considered “community property.”

New Jersey is one of them.

Marital property in community property states is owned by both spouses equally, said Ronald Lieberman, an attorney and chair of the family law practice group at Cooper Levenson in Cherry Hill and Atlantic City.

He said this marital property includes earnings, all property bought with those earnings and all debts accrued during the marriage.

“Community property begins at the marriage and ends when the couple physically separates with the intention of not continuing the marriage,” Lieberman said. “So any earnings or debts originating after this time will be separate property.”

But, he said, any assets acquired before the marriage are considered separate property and are are owned only by that original owner.

Learn more about that here.

A spouse can, however, transfer the title of any of their separate property to the other spouse – a gift – or to the community property by making a spouse an account holder on bank account, he said.

Spouses can also comingle their separate property with community property, for example, by adding funds from before the marriage to the community property funds, he said.

“Spouses may not transfer, alter, or eliminate any whole piece of community property without the other spouse’s permission, but can manage their own half,” he said. “However, the whole piece includes the other spouse’s one half interest. In other words, that spouse cannot be alienated the one half that belongs to them.”

But your wife can direct that your son get her half.

Several community property states offer an advantageous way of holding title to community property that avoids probate at the death of the first spouse. It’s called “community property with right of survivorship.”

“If a couple holds title to property — a house, for example — in this way, when one spouse dies the property will automatically belong to the survivor, without any probate court proceedings,” he said. “The spouses can create a will directing to whom the home will go upon both of their deaths.”

It’s best to work with an estate planning attorney who can look at the specifics of your situation and create proper planning based on the goals of you and your wife.

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This story was originally published August 2019.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.