Idaho is a community property state. Estate planning is affected by property and it’s designation as to whether it is community property or not. There are many times when I am assisting people in completing their estate planning that they are surprised to learn how community property affects their ability to give gifts to others.Here are the four main things to know about Estate Planning and community property.
1. COMMUNITY PROPERTY IS JOINTLY OWNED
Community property is exactly as it sounds, it is owned jointly by two people. These two people are husband and wife. the presumption in Idaho is that all property that is owned by a husband and wife is community property. Because community property is jointly owned it is important to understand that it belongs to both the husband and the wife equally. this can sometimes be a hard concept for people to grasp. The easiest way to understand it is just to know that all community property is owned equally between the husband and the wife.
2. YOU CAN ONLY GIVE AWAY WHAT YOU PERSONALLY OWN
The second thing to understand about Community Property is that when it comes to giving gifts away of property a person could only give away what they personally own. When it comes to community property a person could only give away their interest individually. The practical effect of this is that when a person who is married in Idaho passes away, their Last Will and Testament that names individuals who will receive their property, can only give away their portion of the community property that they own.
As an example, a parcel of land that is owned by both the husband and wife is not completely given away upon the death of the husband. Rather, the husband can only give away his ½ undivided interest in the community property to another individual. This means that the wife still retains her ownership interest in that property even after the husband passes away.
3. TITLED COMMUNITY PROPERTY DOES NOT AUTOMATICALLY TRANSFER
This leads to the third important thing to understand about community property. Community property does not automatically transfer in Idaho. Particularly if it is title property like a parcel of land. In this instance, there must be a probate that is begun for the individual who passed away so that the court can appoint a personal representative who will have the authority to transfer the parcel of land away from the estate of the person who passed away to another individual.
4. THE NATURE OF PROPERTY CAN CHANGE OVER TIME
The final thing to understand about community property is that the nature of the property can change over time. What this means is that if there is a husband and wife who jointly owned a parcel the property, one of the spouses can’t give their interest away to the other spouse at any time. This then turns that property from being community property into being separate property of the recipient spouse.
Additionally, a person may own a home when they become married in Idaho. Under the circumstances that home would still be considered separate property of the individual who owned it before the marriage. However, if there is a mortgage and Community assets are used to pay that mortgage, the nature of that homemade change from separate property to community property at least in part.
If you are working on your estate planning and you have questions about whether your property is community property or separate property, or if you have questions about how such property can be given away as gifts through your estate planning, we can help. Call us toll free at 877-232-6101 or 208-232-6101 for a consultation with Lane Erickson and the Racine Olson team of Estate Planning attorneys in Idaho. You can also email Lane Erickson directly at email@example.com. We will answer your Idaho Estate Planning questions and will help you solve your Idaho Estate Planning problems.
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