Montana and Community-Source Property

Charles W. Willey (Adjunct Professor, The University of Montana School of Law) has recently authored an article entitled Effect in Montana of Community-Source Property Acquired in Another State (and Its Impact on a Montana Marriage Dissolution, Estate Planning, Property Transfers, and Probate), 69 Mont. L. Rev. 313 (2008).

Here is an excerpt from the article’s introduction:

When a domiciliary of Montana has an interest in real or personal property that was community property in the domiciliary’s former state of residence, that property continues as community property in Montana. This is because: (1) the community property interest is a constitutionally protected, vested interest in the state of original acquisition; and (2) under Montana law it is presumed to continue to be community property at the time of the Montana domiciliary’s death, and thus presumptively vested at that time. Under case law from most other jurisdictions (there is no such case law in Montana), the change of domicile to Montana is not a divesting event. Thus, the property being vested both at the time of original acquisition and at death, it must also be vested during the Montana domiciliary’s lifetime. In other words, the move does not change the character of the property.

This doctrine applies not only to property that was community property at acquisition, but to any subsequently acquired property that can be traced back to the original community property. Thus, the doctrine also applies to property acquired from sale proceeds of the original property, property acquired using the “rents, issues, or income” of the original community property, and property acquired through an exchange of the original community property.