When is your spouse's consent not required for gifts of community property?

There are some exceptions to the general rule that your spouse must provide consent when you make gifts of community property. 

Situations Where Spousal Consent Isn't Required

  1. Both spouses are mutually making a gift of community personal property to a third party.
  2. The third party pays for the community personal property at a fair and reasonable value.
  3. The gift of community personal property is to the other spouse.

Void vs. Voidable Gift

What about community property gifts that your spouse made in the past without your consent?

In general, a gift that your spouse makes without your consent is considered a "voidable" (not "void") gift. That means you could technically bring a legal action to set aside or have the gift declared void, but that the gift itself is not void without any further action. If you're spouse is still alive, you could void the gift in its entirety, whereas, once your spouse passes away, you may only void the gift up to your one-half community property interest.

Sometimes, people run afoul of this rule without thinking much about it because the item of community property being given away is of nominal value or because it's not worth the effort to enforce one's community property interest in a certain item.

However, the underlying principal generally applies to all gifts of community property, so it's important to keep these rules in mind when one spouse tries to gift assets that are valuable.

When does your spouse need consent to give gifts?

Generally, a person is free to give away property that he or she owns. However, in so-called "community property" states such as California, one cannot gift his or her community property without the consent of the other spouse.

Community Property

Let's first start with the definition of what "community property" is. For this, we turn to California Family Code Section 760, which states:

Except as otherwise provided by statute, all property, real or personal, wherever situated, acquired by a married person during the marriage while domiciled in this state is community property.

A married person's salary or wages is one of the most common examples of community property. After you get married, every dollar you earn, unless you have some sort of marital agreement, is considered community property, and community property is considered jointly owned between two spouses.

Restrictions

California Family Code Section 1100(b) and 1102(a) describe restrictions around the gifting of community personal property and community real property:

1100(b): A spouse may not make a gift of community personal property, or dispose of community personal property for less than fair and reasonable value, without the written consent of the other spouse. This subdivision does not apply to gifts mutually given by both spouses to third parties and to gifts given by one spouse to the other spouse.

1102(a): Except as provided in Sections 761 and 1103, either spouse has the management and control of the community real property, whether acquired prior to or on or after January 1, 1975, but both spouses, either personally or by a duly authorized agent, must join in executing any instrument by which that community real property or any interest therein is leased for a longer period than one year, or is sold, conveyed, or encumbered.

Living in a community property state such as California presents interesting challenges, as well as benefits when it comes to estate planning. As such it is important to explain the nature of the assets you own to your estate planning lawyer so that he or she may account for them appropriately.

What is a "putative spouse" and how might that affect your estate plan?

A putative spouse is someone who you have a good faith belief that you are married to, but where the marriage is not legally valid.

Let's say for example, you go through the process of becoming married but for some reason your marriage certificate was never filed. Technically, the marriage is not legally valid, but you and your spouse thought that the marriage was valid. This is a situation where your spouse would be a putative spouse. Or, let's say for example, that you thought your prior divorce was complete (but it wasn't), and you later were legally married to someone else. Then your new marriage is not legally valid, and your new spouse is a "putative spouse".

The rights of a putative spouse can be tricky to determine. Ideally, if you find yourself in this situation, it should be dealt with before the death of either spouse. If there was a prior divorce that was not properly dissolved, it should be done so immediately. And, if your current marriage was defective because of some technicality, steps should be taken to make sure the marriage formalities are followed. Of course, this is often easier said than done, because oftentimes problems of this type never come to the forefront until after one of the spouses dies and someone from the past comes out of the woodwork.

Some court decisions have held that a "putative spouse" should be given the same rights as a legal spouse. Thus for example, he or she would be entitled to whatever a legal spouse would've been entitled to of your estate. However, other courts have taken a different approach when there was the presence of a surviving legal spouse, as well as a surviving putative spouse.

As a result, if you are in the process of getting married, be sure you get the proper documentation, including a validly filed marriage certificate, or if you're getting a divorce, make sure to obtain a final divorce decree from the court signed by the judge, so that there's no doubt in the future.