Married persons, and registered domestic partners, need to consider how much control they want to allow one another – acting alone – over their community property assets.  

This is important when creating their powers of attorney, wills and joint trust.  

The analysis involves three time periods: First, while both are alive and competent; second, when one spouse becomes incompetent while the other is alive; and, third, after the first spouse dies while the surviving spouse remains competent.

First, what authority do they want to give each other independently to control community property assets – both those inside and outside of a joint trust, as relevant – while both are competent? Should either spouse alone be allowed to make gifts without the other’s participation or consent?  

This issue can be thorny in blended families when one spouse wants to help his or her child(ren) and the other spouse may not be quite as enthusiastic.  

Second, if and when one spouse becomes incompetent, what authority should the other spouse then have over community property assets? Should the competent spouse be authorized to change their community property assets into his or her own separate property to qualify the incompetent spouse for Medi-Cal eligibility?  

California law requires each spouse’s consent to name death beneficiaries of the community property non probate assets – retirement accounts, annuities and life insurance.  

Does the couple want the competent spouse to be able to change designated death beneficiaries on such assets to reflect unforeseen changed family circumstances? If so, each spouse’s durable power of attorney should be drafted to enable the other spouse to do so.   

Third, after the first spouse dies, what authority should the surviving spouse have over the couple’s community property assets?

If they want the surviving spouse to have complete control, then the surviving spouse will need to be granted legal authority over the decedent’s one half interest in the community property assets after death.  

In that regard, let us consider assets inside their joint trust and their other non probate assets.

Even if their trust says the surviving spouse may amend and revoke the trust, case law shows that such provision should not be depended upon to allow the surviving spouse to amend or revoke the trust with respect to the deceased spouse’s one-half interest in the joint trust’s community property assets.  

Rather, the joint trust should either provide that any community property assets are included in the surviving spouse’s sole trust, or that the joint trust would grant the surviving spouse a power of appointment over the deceased spouse’s one-half interest in community property assets.      

Next, let us consider the death benefits on any retirement accounts, annuities and life insurance policies titled in the surviving spouse’s name, which are either wholly or partially community property.  

The deceased spouse has a community property interest in such assets. For the surviving spouse to change who receives the death proceeds it is necessary for the deceased spouse, while alive, to have given the surviving spouse written authority over the deceased spouse’s interest. This is typically accomplished through a will.  

Otherwise, failing such authority in the deceased spouse’s will, any changes made by the surviving spouse are only partially effective; that is, only effective over the surviving spouse’s own one-half interest in the community property  and any separate property interest of the account only.

The foregoing limitation, however, does not apply to the surviving spouse’s ERISA qualified retirement plans (i.e., pensions and 401(k) plans).  

Federal law allows the participant spouse exclusive control to name death beneficiaries.

Lastly, the foregoing approach requires the drafting attorney to strike the right balance between flexibility and caution.  

Doing so entails imposing sensible limitations that curtail flexibility in order to prevent undesired results.

Dennis A. Fordham, attorney (LL.M. tax studies), is a State Bar Certified Specialist in Estate Planning, Probate and Trust Law. His office is at 55 First St., Lakeport, California. Dennis can be reached by e-mail at This email address is being protected from spambots. You need JavaScript enabled to view it. or by phone at 707-263-3235. Visit his Web site at www.dennisfordhamlaw.com .