How does being married affect your estate plan?

In California, being married can present unique challenges to the estate planning process. More detail will be provided in other posts, but here is a preview of some of the issues that couples may face:

  1. If you own community property with your spouse, you may need consent before transferring  the community property to a third party.
  2. If you own community property assets that will pass without probate (for example, by beneficiary designation), then you may need your spouse's consent to name a beneficiary other than your spouse.
  3. You are not entitled to designate the beneficiary of your spouse's retirement plans that are protected by ERISA (401(k), 403(b), etc.). (But see point 2, above.).

Although there may be complications, there are also benefits. For example, spouses can generally rollover the retirement benefits of their predeceased spouse. In addition, any community property that is owned by a married couple will get a full step-up in cost basis after the death of one of the spouses (which may reduce income tax consequences for the surviving spouse). Property that is transferred from one spouse to the other is also excluded from property tax re-assessment.