Ask Liz Weston

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Couples & Money

Q&A: Home equity in community property states

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Dear Liz: I live in California and have been married for 20 years. My spouse bought our home before our marriage and my name is not on the title as a co-owner. However, I contribute to most of our monthly financial obligations which include paying the mortgage, property taxes, etc. In the event of death or separation, how much of the current home equity am I entitled to? This is our only and primary residence.

Answer: Normally, an asset that was purchased before marriage is considered separate property even in community property states such as California. But if the mortgage is paid down with “community funds” — money earned by either spouse during the marriage — then the spouse who isn’t on the title may be entitled to some of the appreciation that occurs after the wedding.

That may not prevent you from being evicted if your spouse dies, however, or having to fight an expensive battle in court if you divorce. Consulting an attorney now could help you better prepare for either possibility.

Q&A: What’s a qualified charitable distribution?

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Dear Liz: I have a suggestion for the couple who is facing the start of required minimum distributions from their retirement accounts but who do not need the money. They could consider making a qualified charitable distribution (QCD). A QCD allows you to donate to a charity directly from your IRA and satisfies your RMD requirement. The only caveat is that the money cannot pass through your hands. It must go directly from the IRA to the charity. You can’t take a deduction for the contribution, but the money won’t count as taxable income. Although the age of RMD has been rising in recent years, the age for a QCD remains at 70½. The maximum allowable is $100,000 per taxpayer a year. A husband and wife can each make a QCD if they have separate IRAs.

Answer: Qualified charitable distributions can be a great solution for people who have saved more in their retirement accounts than they need and who want to benefit good causes. The charity must be a 501(c)(3) organization that can receive tax-deductible contributions, and, as you note, the money needs to be transferred directly from the retirement account and the contribution made before the year’s RMD deadline, which is typically Dec. 31. There are a few other rules involved, so consider consulting a tax pro before arranging a QCD.

Q&A: Married more than once? Here’s what that means for Social Security survivor benefits

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Dear Liz: I’m in a second marriage that’s lasted 10 years. Is my wife fully entitled to my Social Security after I die? My first wife and I were married for 19 years. Is my ex entitled to any of it?

Answer: Both your current spouse and your ex could be entitled to survivor benefits based on your work record. Typically someone must be married nine months to qualify for survivor benefits on a current spouse’s record. If the spouses divorced, the marriage must have lasted 10 years. Each survivor benefit can be up to 100% of your benefit. The amount may be reduced if the women start benefits before their own full retirement age, but they don’t have to share — the amount isn’t reduced because you’ve had more than one spouse.

Q&A: California is a community property state. How that affects your and your spouse’s need for a will

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Dear Liz: Does a spouse automatically inherit everything if the other passes away without a will?

Answer: Not necessarily.

Anything that has a beneficiary designation, such as retirement accounts and life insurance, would typically pass to the person named as beneficiary even if that’s not the surviving spouse. Bank and investment accounts also may have “transfer on death” or “pay on death” beneficiaries. In many states, cars and even homes can be passed with beneficiary designations. In addition, jointly owned assets would pass to the other owner.

Other assets would pass to the deceased spouse’s survivors according to state law if there is no will or living trust. You can look up those laws by searching for the state’s name and the words “intestate succession.” If there are no children, the surviving spouse may inherit everything or may have to share with the deceased’s parents or siblings. If there are children, the surviving spouse inherits a portion of the estate with the children getting the remainder.

For example, in California — a community property state — the spouse would inherit all the community property and one half of the separate property if there is one child, and the child would inherit the rest. With two or more children, the spouse gets all of the community property and one-third of the separate property, with the children sharing the rest.

Q&A: Death and document retention

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Dear Liz: After a spouse’s death, I am wondering if there is some guidance on how long to keep items such as a driver’s license, Social Security card, Medicare and health plan card, passport, veteran’s information and so on. I haven’t seen this addressed in your column.

Answer: Guidance about what to keep and discard after a death can vary widely, so you may want to ask your estate attorney for help. In general, though, you can begin to dispose of many documents three years after the estate is settled, said Jennifer Sawday, an estate planning attorney in Long Beach.

In some cases, you can shred them sooner. Social Security numbers are often printed on the death certificate, so the card can be shredded once you verify the number on the certificate is accurate, Sawday said. You also may wish to shred the passport as soon as possible to avoid it falling into the hands of an identity thief. Another option is to mark the passport “void” and keep it as a family history item, she says.

The driver’s license is another possible family history item — and boon to an identity thief — but it can be discarded at the three-year point, Sawday said. Veteran’s information can be kept for family history purposes or discarded three years after any death VA benefits are claimed.

Medicare and health plan cards should be kept in case any medical billing issues arise and then discarded when those issues, if any, are resolved, she said.

Q&A: What happens when your unmarried life partner dies without a will?

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Dear Liz: A close friend recently lost her partner of many decades. The partner left no will or trust or anything in writing. The partner owned many properties and had a huge IRA and lots of money in the bank, but all in the partner’s name alone. My friend asked an estate lawyer and the lawyer said she had no legal right to anything, even the home she has lived in for many years. Can anything be done?

Answer: The lawyer is probably correct. Without estate documents, beneficiary designations or some kind of written agreement, unmarried partners typically can’t inherit, said Jennifer Sawday, an estate planning attorney in Long Beach.

But your friend should consider talking to a family law attorney to see if she has any recourse, Sawday said.

In California, for example, she may be able to make a “Marvin” claim against the estate. (Marvin claims stem from a 1976 California Supreme Court case between Michelle and Lee Marvin, which established that unwed partners could sue each other over property divisions after a relationship ended.)