Monday, June 17, 2013

Nevada Transplants-Separate Property vs. Community Property Law


According to the most recent estimates from the U. S Census Bureau, Nevada ranked fifteenth (15th) in state population growth.  Many residents of Nevada are transplants, having lived and worked in other states before relocating to Nevada.  Most states are “separate property states”; however, Nevada is a “community property state”, one of only nine (9) such states.  Generally speaking, in a community property state such as Nevada, each spouse owns an undivided one-half interest in all property acquired during the course of a marriage regardless of how the property is titled.  (Exceptions to this rule are property acquired during marriage by gift or inheritance and an award of personal injury damages, which are the separate property of the recipient only.) Contrast community property law with separate property state law under which ownership is determined by how the asset is titled.  For example, assume two hundred (200) shares of Apple stock are purchased during the course of a marriage and are titled in the individual name of the husband.  In a separate property state, ownership of all of the stock is vested in the husband, while in a community property state such as Nevada the husband has a one-half ownership interest in the stock and the wife has a one-half ownership interest in the stock. 
However, what happens if property is acquired during the course of a marriage while the couple are residents of a separate property state, they then move to a community property state such as Nevada, and are residents of Nevada when the first spouse dies?  This is a very common occurrence in Nevada.  At the time of death of the first spouse, is the property the separate property of the spouse in which the property is titled per separate property state law or is the property owned one-half by each spouse per community property law?  In Nevada, ownership of an asset acquired during the course of a marriage is determined under the laws of the state in which the couple was domiciled when the asset was acquired, and the ownership is not altered if the couple moves to another state.  Accordingly, since the asset was acquired when the couple were residents of a separate property state, the asset is the separate property of the spouse in which the property is titled per separate property state law.

Understanding community property law, separate property law, and how and when they are applied is essential in the proper determination of what assets the deceased spouse owned for death tax, allocation of assets and administration purposes.

         

1 comment:

  1. There are some laws and rules that you should have to follow when we are going to buy or sell a property either it is a commercial or residential property.

    todd costa

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