Can Assets Be Transferred to Domestic Partners

Emily just called, frantic. She and Robert had been domestic partners for 22 years, meticulously building a life together, but Robert passed away unexpectedly last week. Emily believed she was automatically entitled to everything, assuming California law mirrored spousal rights. It doesn’t. Robert had a codicil to his will leaving the bulk of his estate to a childhood friend, and Emily discovered it was misplaced after the 120-day contest period had already expired. The loss is devastating, not just emotionally, but financially – a preventable catastrophe stemming from a misunderstanding of domestic partner rights. She’s facing the loss of a home and years of accumulated savings.

As an estate planning attorney and CPA with over 35 years of experience here in Escondido, I’ve seen this scenario play out too many times. Many people mistakenly believe domestic partner rights are equivalent to those of married couples, particularly regarding inheritance. While California provides significant rights to registered domestic partners, they are not identical to marital rights, and careful planning is crucial to avoid unintended consequences. My CPA background allows me to uniquely address the tax implications of these transfers—specifically the potential for lost step-up in basis and increased capital gains exposure—something many attorneys simply overlook.

What Rights Do Domestic Partners Have in California?

California law recognizes registered domestic partnerships, granting similar, but not identical, rights as marriage. This includes the ability to acquire property jointly, establish community property, and inherit property under certain circumstances. However, the key difference lies in the default rules and the need for explicit estate planning. Unlike marriage, where certain inheritance rights are automatic, domestic partners must proactively establish those rights through wills, trusts, and beneficiary designations.

How Can Assets Be Transferred to a Domestic Partner?

There are several ways to transfer assets to a domestic partner, each with its own legal and tax considerations. These include:

• Direct Transfer: A simple gift transfer, subject to annual gift tax exclusion limits.
• Joint Ownership: Adding your partner as a joint tenant with right of survivorship on real property or bank accounts. This ensures automatic transfer upon death, bypassing probate, but can have unintended consequences regarding creditor access and control during life.
• Beneficiary Designation: Naming your partner as a beneficiary on retirement accounts, life insurance policies, and payable-on-death (POD) accounts. This is often the simplest and most effective method for specific assets.
• Trusts: Creating a revocable living trust allows for comprehensive estate planning, including provisions for your partner’s care and inheritance. A trust can address complex situations, minimize probate costs, and provide for management of assets if your partner is unable to do so themselves.
• Wills: A will dictates how your assets are distributed upon your death. While a will is essential, it’s subject to probate and can be challenged, particularly if it doesn’t clearly reflect your intentions regarding your domestic partner.

What Happens If There’s No Estate Plan?

This is where Emily found herself. Without a clear will or trust outlining her inheritance, Robert’s estate will be distributed according to California’s intestate succession laws. These laws prioritize biological relatives. While a domestic partner can inherit under intestate succession, it’s a complex process, and the partner may not receive the entire estate, or may face challenges from other potential heirs. Furthermore, the absence of a trust can lead to significant probate costs, potentially diminishing the assets available to your partner.

What About Disputes and Challenges to the Transfer?

Even with a will or trust, transfers to domestic partners can be challenged. Family members might claim undue influence, especially if the partner was a caregiver or had a close relationship with the deceased. Probate Code § 21380 creates a presumption of fraud if a care custodian is named a beneficiary during their service, shifting the burden of proof. This makes meticulous documentation of the senior’s capacity and independent decision-making absolutely vital. Additionally, disagreements over asset valuation or the interpretation of trust provisions can lead to costly litigation.

What If Assets Are Not Titled in the Name of the Trust?

This is becoming increasingly common, especially with real estate. For deaths on or after April 1, 2025, if a home valued up to $750,000 isn’t titled in the trust, a ‘Petition for Succession’ under AB 2016 (Probate Code § 13151) might be quicker than a Heggstad trial. It’s essential to understand the difference – this is a Petition requiring a Judge’s order, not simply an affidavit. We are seeing increased use of this process to efficiently transfer smaller assets and avoid the expense of full probate. Disputes over “missing” assets also require a thorough understanding of both Heggstad Petitions and the newer AB 2016 procedures.

How Can We Protect Your Domestic Partner?

Proactive estate planning is the key. This includes:

• Comprehensive Estate Planning Documents: A will, trust, power of attorney, and advance healthcare directive tailored to your specific circumstances.
• Clear Beneficiary Designations: Reviewing and updating beneficiary designations on all relevant accounts.
• Proper Asset Titling: Ensuring assets are titled correctly to align with your estate plan.
• Documentation of Capacity and Intent: Maintaining records that demonstrate your capacity to make decisions and your clear intent regarding your partner’s inheritance.
• Digital Asset Access: Without specific RUFADAA authority (Probate Code § 870), accessing crucial digital evidence like emails can be blocked.

Don’t wait for a crisis to strike. Planning today can protect your partner and ensure your wishes are honored, providing peace of mind for both of you. Ignoring these issues can lead to outcomes like Emily is now facing – devastating financial loss and emotional distress.

How do California trustee duties and funding rules shape the outcome for beneficiaries?

Success in trust administration depends on more than just the document; it requires active management of assets, precise accounting to beneficiaries, and careful navigation of tax rules. Whether dealing with a blended family or complex real estate, understanding the mechanics of trust law is the only way to ensure the grantor’s wishes survive scrutiny.

To manage complex legacy goals, you can secure privacy for public figures with blind trusts, or preserve wealth across multiple generations by establishing a dynasty trust that resists dilution over time.

Ultimately, the success of a trust depends on the details—proper funding, clear terms, and a trustee willing to follow the rules. By anticipating friction points and documenting every step of the administration, fiduciaries can protect the estate and themselves from liability.

Verified Authority on California Trust Litigation & Disputes

• The 120-Day Rule (Probate Code § 16061.7): California Probate Code § 16061.7
  The most critical statute in trust litigation. It establishes the 120-day deadline for contesting a trust after the notification is mailed. Missing this deadline usually ends the case before it starts.
• Caregiver Presumption (Probate Code § 21380): California Probate Code § 21380
  This statute protects seniors by presuming that gifts to care custodians are the result of fraud or undue influence. It is the primary weapon used to overturn “deathbed amendments” that favor a caregiver over family.
• No-Contest Clauses (Probate Code § 21311): California Probate Code § 21311
  Defines the strict limits on enforcing penalty clauses. It explains that a beneficiary can only be disinherited for suing if they lacked “probable cause” to bring the lawsuit.
• Petition for Instructions (Probate Code § 17200): California Probate Code § 17200
  The “gateway” statute for most trust litigation. It allows a trustee or beneficiary to petition the court for instructions regarding the internal affairs of the trust, from interpreting terms to removing a trustee.
• Asset Recovery “Backup” (AB 2016): California Probate Code § 13151 (Petition for Succession)
  Effective April 1, 2025, this statute provides a streamlined path (Judge’s Order) to resolve disputes over ownership of a primary residence valued up to $750,000, often avoiding costly Heggstad litigation.
• Digital Discovery (RUFADAA): California Probate Code § 870 (RUFADAA)
  Essential for modern litigation. This act governs who can access a decedent’s digital communications—often the “smoking gun” evidence in undue influence or capacity trials.