Community Property Agreement
There are so many deficiencies and drawbacks to Community Property Agreements that, although they are recognized in Washington, our firm will not prepare community property agreements for clients because they are simply not the best way for us to protect our clients’ interests.
Community Property Agreement can only be revoked in writing by the spouses while they are alive or by divorce. The agreements do not enable the deceased to make gifts to children, grand children, charities or friends. The agreements do not cover medical decisions, power of attorney, health care directives, or medical mental incompetency management of financial assets.
Description- A community property agreement is an agreement between spouses regarding the character of their community and separate property. The agreement has the effect of converting all property owned by a deceased spouse into community property, which essentially results in the surviving spouse owning all of the property without the need to go through the probate process.
Advantages- The agreement is a simple and effective way to transfer the property of the deceased spouse to the surviving spouse.
Disadvantages- In addition to several negative tax consequences (which can be explained to you by your tax professional), a community property agreement may have other drawbacks. Most notably, the agreement may be insufficient to convert all of the deceased spouse’s property (such as certain retirement plans) into community property. Any assets not converted to community property will pass according to the beneficiary designations made by the decedent in addition to the disadvantages set forth above.
Please watch our video: Estate Planning and Probate Explained in 7 Minutes
For a little bit of time and money, you can create a comprehensive Peace of Mind Planning package that is effective now, will remain in effect in the event you become mentally unable to handle your financial matters and save your family and friends the heartache and hassle of cleaning up your affairs. Please click this link to watch our videos on Peace of Mind Planning.
Over the past 31 years, I have helped over 800 clients prepare and utilize simple and effective planning techniques to protect them and their families in order to avoid probate, save estate taxes, save money and save added emotional burden that comes from a long term illness and/or death of a family member. Give us a call to schedule a free consultation to find out how we can help you and your family.