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Community Property • Federal Preemption
CPROP#060
Legal Definition
When state community property law is inconsistent with federal law, federal law prevails. To determine if there is an issue, there is a two part test: (1) does the property right conflict with the express terms of federal law, and (2) if so, does the state law cause sufficient injury to federal objectives so as to require preemption?
Thus, federal homestead law, armed forces life insurance benefits, U.S. savings bonds, social security law, railroad retirement benefits, and VA disability benefits all preempt community property law.
However, federal civil service and foreign service retirement benefits are subject to community property law. ERISA pension benefits prohibit testamentary disposition of a decedent's community property interest to anyone other than their surviving spouse.
Thus, federal homestead law, armed forces life insurance benefits, U.S. savings bonds, social security law, railroad retirement benefits, and VA disability benefits all preempt community property law.
However, federal civil service and foreign service retirement benefits are subject to community property law. ERISA pension benefits prohibit testamentary disposition of a decedent's community property interest to anyone other than their surviving spouse.
Plain English Explanation
Federal laws sometimes disagree with state laws, and when they do, the federal laws are more important. To figure out if there is a problem, we look at two things: (1) does the law about what belongs to who conflict with what the federal law says, and (2) if it does, does the state law make it hard for the federal government to do what it wants to do? Some examples of things that federal law controls include things like where soldiers and sailors can live, how much money they get from the government, and how their money is split up if they get divorced. But, there are some things that state laws control, like how much money some government workers get when they retire, and what happens to that money if they die.
Hypothetical
Hypo 1: Bob, a retired military officer, has life insurance benefits from his service. When he and Amy get divorced in California, Amy claims half of those benefits as community property. Result: Federal law steps in and says that armed forces life insurance benefits are not subject to state community property laws. So, in this case, Amy doesn't get a share of Bob's military life insurance benefits.
Hypo 2: Amy and Bob are divorcing in California. Bob has a federal civil service retirement plan. Amy claims a portion of this plan. Result: Since federal civil service retirement benefits are subject to state community property laws, Amy is entitled to a portion of Bob's retirement plan according to California's community property division.
Hypo 3: After retiring, Bob receives VA disability benefits. During his divorce with Amy, she claims a share of these benefits. Result: According to federal preemption, VA disability benefits override state community property laws. Hence, Amy is not entitled to a portion of Bob's VA disability benefits.
Hypo 4: Bob and Amy are divorcing in California. They own a rental property together in Arizona. Amy claims that federal law should determine the division of this property since it has to do with interstate rights. Result: This scenario does not involve federal preemption. The division of a rental property in a different state is governed by state community property laws, not federal laws, since there is no specific federal interest or law conflicting with state laws in this case.
Hypo 2: Amy and Bob are divorcing in California. Bob has a federal civil service retirement plan. Amy claims a portion of this plan. Result: Since federal civil service retirement benefits are subject to state community property laws, Amy is entitled to a portion of Bob's retirement plan according to California's community property division.
Hypo 3: After retiring, Bob receives VA disability benefits. During his divorce with Amy, she claims a share of these benefits. Result: According to federal preemption, VA disability benefits override state community property laws. Hence, Amy is not entitled to a portion of Bob's VA disability benefits.
Hypo 4: Bob and Amy are divorcing in California. They own a rental property together in Arizona. Amy claims that federal law should determine the division of this property since it has to do with interstate rights. Result: This scenario does not involve federal preemption. The division of a rental property in a different state is governed by state community property laws, not federal laws, since there is no specific federal interest or law conflicting with state laws in this case.
