Many states follow “common law” rules to determine who owns assets or property after a marriage, but that’s not the case in the state of Washington. In Washington state (and eight other states, as well), “community property law” is used to determine property ownership after a marriage.
Community Property Law in the State of Washington
In Washington, typically all property or assets that belong to a person are called “separate property.” You may carry separate property with you into a marriage, and anything that was yours before will still belong entirely to you afterwards. Here are some examples of separate property:
- The balance of your bank account before marriage
- Property you owned before marriage
- Vehicles you owned before marriage
- Inheritances you received before marriage
- Any asset or property given to or inherited by just one spouse, even during marriage
However, once a marriage happens, the rules for future ownership change. Any money earned and items purchased by either spouse will become “community property” and belong to the marriage. That is, both partners have a fifty percent ownership claim. This can become particularly important during estate planning—or during a divorce, when community property is typically divided equally between the couple.
An exception to separate property is if you bring your separate property into a marriage and “commingle” it with community property. This means, it can no longer be identified as your separate property and has effectively become community property—so your spouse has a right to fifty percent.
Gifts or inheritances given only to one partner are another exception to community property—these typically remain separate property and belong only to the person who receives them.
What Is a Community Property Agreement?
A community property agreement (CPA) is a powerful estate planning tool available to any married couple. It is a legally binding agreement which can turn all property that you or your spouse own into community property, including what was once your separate property and any assets acquired during the marriage. The agreement may take effect immediately, or it may only be effective upon death of a spouse.
Why would anyone want to do this? The answer is usually to avoid probate court. Community property in the state of Washington automatically transfers to the surviving spouse without having to go through probate. If your assets and estate planning requirements are relatively simple, it can seem like a good idea; however, there are plenty of disadvantages that make CPAs unsuitable for many situations. Before you sign anything, you should definitely weigh the pros and cons of a CPA carefully.
If a CPA immediately converts all property into community property, the biggest concern is a divorce. If there is property that you would not wish your spouse to receive a share of during the asset division phase of divorce, a CPA is going to make that difficult. A CPA can only be revoked by mutual consent of both parties, so you’ll likely end up needing to negotiate with your spouse for the asset or property that you want.
Do I Need an Attorney to Create a CPA?
With the growth of the internet has come a proliferation of online legal assistance sites, many promising quick and modestly-priced downloads of “do it yourself” legal forms to save some money. However, these sites tend to offer only generic agreements that may not be right for every situation, and they offer no expert guidance or review of your estate plan to see how a CPA will fit in. Some may not even help your spouse avoid probate, which is the biggest advantage that a CPA can offer.
While finding certain forms online for simple legal matters may be fine for less complicated situations or smaller estates, the CPA is a complex document with long-term ramifications for your marriage and your estate plan. For example, a CPA will take priority over your will in nearly every situation, even if your will has very different wishes in it. Your attorney will help make sure your estate plan and your CPA are legally valid and contain no contradictions, and that it will protect you, your spouse, and your heirs.
Get Help With Your Community Property Agreement
When you’re ready to speak to a family law and estate planning attorney about your situation to discuss whether a CPA is right for you, the Law Offices of Molly B. Kenny can help. Our office is located conveniently in Bellevue, and we are available for private consultations.
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