Community Property Survivorship Agreement
A community property survivorship agreement (CPSA) is a legal document that allows married couples to avoid probate when one spouse passes away. This agreement is available in only 9 states in the United States and is often used as an alternative to a traditional joint tenancy with right of survivorship.
Understanding Community Property Laws
First, it is important to understand the community property laws of the state in which you reside. In community property states, marital property is considered equally owned by both spouses. This means that all property acquired during the marriage, except for gifts and inheritances, is considered community property. There are currently 9 community property states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin.
What is a Community Property Survivorship Agreement?
A CPSA is a legal document that establishes that all of the community property owned by the couple will pass to the surviving spouse when one spouse dies, without going through probate. This means that the surviving spouse will automatically become the sole owner of the community property without any court involvement.
The CPSA must be signed by both spouses and should be notarized. It is important to note that the agreement only covers community property, not separate property. If a spouse wishes to leave separate property to the surviving spouse, they will need to create a separate estate planning document, such as a will.
Benefits of a Community Property Survivorship Agreement
One of the main benefits of a CPSA is that it allows for a smoother transfer of assets when one spouse dies. When a spouse passes away, their assets typically go through probate, which can be a time-consuming and expensive process. With a CPSA, the surviving spouse can avoid probate altogether. This could mean that the surviving spouse can access the deceased spouse’s assets much faster than if they had to go through probate.
Another benefit of a CPSA is that it provides a degree of certainty and predictability for the surviving spouse. Because the agreement is a legally binding document, the surviving spouse can be confident that they will be the sole owner of the community property when the other spouse dies. This can provide peace of mind during a difficult time.
Considerations for Creating a Community Property Survivorship Agreement
While a CPSA can be a useful estate planning tool for some couples, it may not be right for everyone. It is important to consider your unique circumstances before creating a CPSA. For example, if you have children from a previous marriage, you may want to create a more comprehensive estate plan that takes into account their needs as well.
It is also important to work with an experienced estate planning attorney who can help you create an estate plan that meets your unique needs. The attorney can help you understand the legal requirements for creating a CPSA in your state and can provide guidance on other estate planning tools that may be right for you.
A community property survivorship agreement can be a useful tool for married couples who want to avoid probate and ensure that their community property goes to the surviving spouse. However, it is important to consider your unique circumstances and work with an experienced estate planning attorney before creating a CPSA. The attorney can help you create an estate plan that meets your needs and provides peace of mind for you and your loved ones.