Property Ownership Rules for Spouses

When making your will with Quicken WillMaker, it will be useful to understand how you and your spouse own property together. That is, you may want to understand what you own, what does your spouse own, and what you own together. Or you may have a more specific question, like If both spouses are on the house title, who gets the house when one spouse dies? Or, do I have a right to my husband's house when he dies if my name is not on the deed?

Most married or partnered people leave all or a large share of their property to their surviving spouses or partners. For them, the nuances of marital property law are less important, since the survivor gets the property anyway.

But if you plan to leave your property to several people instead of, or in addition to, your spouse or partner, the picture becomes more complicated. Under your state's laws, your spouse or partner may own some property you believe is yours. And if you do not own it, you cannot give it away—either now or at your death. And vice versa, of course. You may have rights to property that you think of belonging to your spouse.

Questions about which spouse owns what property are important if your spouse does not agree to your plan for property disposition.

When making your estate plan, there are two issues to consider:

For example, you may want to know: Do I own any part of my house if only my spouse's name is on the title? Or if my spouse and I co-own our house, when I die, will my spouse automatically own all of it, or can I leave my portion to someone else?

This article will help you determine what you own so can leave it to others in your will. To figure it out, you need to know a little about the laws in your state. When it comes to property ownership, states are broadly divided into two types: community property states and common law property states.

Here are the community property states:








New Mexico


Registered domestic partners are also covered by community property laws.

Alaska, South Dakota, and Tennessee allow a married couple to make a written agreement stating that they wish certain property treated as community property. (See a lawyer if you want to make this kind of agreement.)

Community Property States

If you live in a community property state, there are a few key rules to keep in mind while making your will:

  • You can leave your separate property to anyone you wish.
  • You can leave half of the community property (property you and your spouse or partner own together) to anyone you wish.
  • After your death, your spouse or partner automatically keeps his or her half of the community property.
  • If you're unsure how you hold title to your house (or any other property), but you bought the house during your marriage, you probably own the house 50-50 as community property. This is true even if the funds to buy it came mostly from one spouse -- unless the funds were either inheritance or income acquired before marriage and kept entirely separate.
  • The community property rules that apply to married couples may also apply to registered domestic partners.
  • If you want to leave everything to your partner, you may be able to avoid probate by owning your property "with right of survivorship" or by making a "community property agreement."

Your Separate Property

The following property qualifies as separate property in all community property states:

  • property that you own before marriage
  • property that you receive after marriage by gift or inheritance
  • property that you purchase entirely with your separate property, and
  • property that you earn or accumulate after permanent separation.

In some states, additional types of property—such as personal injury awards received by one spouse during marriage—may also qualify as separate property. (See "Property That Is Difficult to Categorize," below.)

Community property states differ in how they treat income earned from separate property. Most hold that such income is separate. But a number of states take the opposite approach, treating income from separate property as community property.

Normally, separate property stays separate as long as it is not:

  • so mixed with marital property that it is impossible to tell what is separate and what is not, or
  • transferred in writing by the separate property owner into a form of shared ownership.

Just as separate property can be transformed into shared property, community property can be turned into separate property by a gift from one spouse to the other. The rules differ somewhat from state to state, but, generally speaking, gifts made to transform one type of property into another must be made with a signed document.

Community Property

The basic rule of community property is simple: During a marriage, all property earned or acquired by either spouse or domestic partner is owned 50-50 by each spouse or partner, except for property received by only one of them through gift or inheritance.

More specifically, community property usually includes:

  • All income received by either spouse or partner from employment or any other source (except gifts to or inheritance by just one spouse or partner)—for example, wages, stock options, pensions, and other employment compensation and business profits. This rule generally applies only to the period when the couple lives together as husband and wife or domestic partners. Most community property states consider income and property acquired after the spouses or partners permanently separate to be the separate property of the spouse or partner who receives it.
  • All property acquired with community property income during the marriage.
  • All separate property that is transformed into community property under state law. This transformation can occur in several ways, including when one spouse or domestic partner makes a gift of separate property to both of them or when property is so mixed together that it's no longer possible to tell what property is separate (lawyers call this "commingling").
  • As mentioned above, in a few community property states, income earned during marriage from separate property—for example, rent, interest or dividends—is community property. Most community property states consider such income to be separate property, however.

EXAMPLE: Beth and Daniel live in Idaho, one of the few community property states where income earned from separate property belongs to the community. Beth inherits 22 head of Angus cattle from her father. Those cattle go on to breed a herd of more than 100 cattle. All the descendants of the original 22 animals are considered income from Beth's separate property and are included in the couple's community property estate. In her will, Beth can name beneficiaries for all of the original 22 animals, but she can name beneficiaries for only half of the descendants.

EXAMPLE: Monique and Tasha are married and own a home together as community property (without right of survivorship) in California. They each also have small collections of art that they acquired on their own before they married. In their wills, they can each name beneficiaries for one-half of the home and their own art collections.

Property That Is Difficult to Categorize

Normally, classifying property as community or separate property is easy. But in some situations, it can be a close call. There are several potential problem areas.

Businesses. Family businesses can create complications, especially if they were owned before marriage by one spouse or domestic partner and expanded during the marriage or partnership. The key is to figure out whether the increased value of the business is community or separate property. If you and your spouse or partner do not have the same view of how to pass on the business, it may be worthwhile to get help from a lawyer or accountant.

Money from a personal injury lawsuit. Usually, but not always, awards won in a personal injury lawsuit are the separate property of the spouse or partner receiving them. There is no easy way to characterize this type of property. If a significant amount of your property came from a personal injury settlement, research the specifics of your state's law or ask an estate planning expert.

Pensions. Generally, for married people, the part of a pension gained from earnings made during the marriage is considered to be community property. This is also true of military pensions. However, some federal pensions—such as Railroad Retirement benefits and Social Security retirement benefits—are not considered community property, because federal law deems them to be the separate property of the employee earning them. Also, because the federal government does not recognize domestic partnerships, community property rules will not apply to federal benefits acquired by registered domestic partners.

Common Law Property States

Common law property states are all states other than the community property states listed above.

In these states, you own:

  • all property you purchased using your property or income, and
  • property you own solely in your name if it has a title slip, deed or other legal ownership document.

In common law states, the key to ownership for many types of valuable property is whose name is on the title. If you and your spouse or registered domestic partner take title to a house together—that is, both of your names are on the deed—you both own it. That is true even if you earned or inherited the money you used to buy it. If your spouse or domestic partner earns the money, but you take title in your name alone, you own it.

If the property is valuable but has no title document, such as a computer, then the person whose income or property is used to pay for it owns it. If joint income is used, then you own it together. You can each leave your half in your will, unless you signed an agreement providing for a joint tenancy or a tenancy by the entirety.

EXAMPLE 1: Will and Jane are married and live in Kentucky, a common law property state. They have five children. Shortly after their marriage, Jane wrote an extremely popular computer program that helps doctors diagnose illness. She has received royalties averaging about $200,000 a year over a ten-year period. Jane has used the royalties to buy a car, boat, and mountain cabin—all registered in her name alone. The couple also owns a house as joint tenants. In addition, Jane owns a number of family heirlooms that she inherited from her parents. Throughout their marriage, Jane and Will have maintained separate savings accounts. Will works as a computer engineer and has deposited all of his income into his account. Jane put her unspent royalties in her account, which now contains $75,000.

Jane owns:

  • the savings account listed in her name alone
  • one-half interest in the house (which, because it is held in joint tenancy, will go to Will at Jane's death)
  • the car, boat, and cabin, since there are title documents listing them in her name (if there were no such documents, she would still own them because they were bought with her income), and
  • her family heirlooms.

Will owns:

  • the savings account listed in his name alone, and
  • one-half interest in the house (which, because it is held in joint tenancy, will go to Jane at Will's death).

EXAMPLE 2: Martha and Scott, who are married, have both worked for 30 years as schoolteachers in Michigan, a common law state. Generally, Scott and Martha pooled their income and jointly purchased a house, worth $400,000 (in both their names as joint tenants); cars (one in Martha's name and one in Scott's); a share in a vacation condominium (in both names as joint tenants); and household furniture. Each maintains a separate savings account, and they also have a joint tenancy checking account containing $2,000. In addition, Scott and his sister own a piece of land as tenants in common.

Martha owns:

  • her savings account
  • half-interest in the house, the joint checking account and the condo (which, because they are held in joint tenancy, will go to Scott at her death)
  • her car, and
  • half the furniture.

Scott owns:

  • his savings account
  • half-interest in the house, the joint checking account and the condo (which, because they are held in joint tenancy, will go to Martha at his death)
  • his car
  • half the furniture, and
  • a half-interest in the land he owns with his sister.

Moving From State to State

Complications may set in when a husband and wife acquire property in a common law property state and then move to a community property state. California, Idaho, Washington, and Wisconsin treat the earlier-acquired property as if it had been acquired in the community property state. The legal term for this type of property is "quasi-community property." Wisconsin calls it "deferred marital property."

The other community property states do not recognize the quasi-community property concept for will-making purposes. Instead, they go by the rules of the state where the property was acquired. If you and your spouse move from a non-community property state into one of the states that recognizes quasi-community property, all of your property is treated according to community property rules. However, if you move to any of the other community property states from a common law state, you must assess your property according to the rules of the state where the property was acquired.

Couples who move from a community property state to a common law state face the opposite problem. Generally, each spouse retains a one-half interest in the community property the couple accumulated while living in the community property state. However, if there is a conflict after your death, it can get messy; courts dealing with the issue have not been consistent.