community property

I live in a community property state and am planning to remarry. Are there any special precautions I need to consider?

States which follow the community property regime have different rules as to what will constitute community property and how it will be divided or distributed in the event of divorce or death. Generally, property acquired by a spouse before the marriage, as well as property acquired by gift or inheritance, will be treated as the spouse's separate property and not community property. However, income from separate property received during the marriage is treated as community property in some jurisdictions. In the event of divorce or upon death, community property is divided between the spouses, but state laws vary as to how this is done. Preserving the identity of separate property is critical and may be difficult. If one spouse contributes separate property to the purchase of property during the marriage, such as the family home, the division of the property or its proceeds in the event of divorce may be difficult. A business owned by one spouse prior to the marriage and continued during the marriage may also be community property in part. Retirement assets owned prior to and during the marriage may also be affected. A prenuptial agreement and the careful segregation of separate property through, for example, the use of a revocable trust to which a party contributes his or her separate property and does not thereafter contribute additions from sources that could be community property, can preserve the separate status of the property.

Stephen F. Lappert, Partner, Trusts and Estates Department, Carter Ledyard & Milburn LLP, New York, NY