Special Issues: Community Property, Creditors, and Ethics
Community Property
California is a community property state. Property acquired during marriage with community effort is community property; property acquired before marriage, by gift or inheritance, or traceable to separate property remains separate. Key concepts: characterization, tracing, transmutation (which requires an express written declaration), and the special treatment of community property with right of survivorship. Traps: assuming title controls characterization (it is rebuttable); forgetting that income from separate property is generally community; and missing the augmented estate or quasi-community property rules for out-of-state property.
Creditors
Know the reach of creditors against probate assets, trusts, joint tenancy, and beneficiary designations. Spendthrift clauses protect trust beneficiaries from most creditors but not from the settlor's own creditors in a self-settled trust. Fraudulent transfer law can unwind transfers intended to defeat creditors.
Ethics
California attorneys must follow the Rules of Professional Conduct: competence, confidentiality, conflicts of interest, and fees. Estate planning traps include joint representation of spouses (informed written consent, and withdrawal if conflict arises), communications with beneficiaries, capacity concerns, and the unauthorized practice of law by non-attorneys.
Worked Example
A spouse uses separate funds to buy a house titled in joint tenancy with the other spouse. Title creates a presumption of community property, but the purchasing spouse may rebut with tracing evidence. If not rebutted, the property is community and passes accordingly.
Rule of Thumb
Characterize first, then apply creditor and ethical rules; title is evidence, not conclusive.