§ 5.06 SUSPENSION AND DISSOLUTION OF THE MARRIAGE OR THE REGISTERED DOMESTIC PARTNERSHIP BY THE PARTIES

• Jurisdiction: Washington

§ 5.06 SUSPENSION AND DISSOLUTION OF THE MARRIAGE OR THE REGISTERED DOMESTIC PARTNERSHIP BY THE PARTIES

The marital relation between spouses (and the domestic partnership between registered domestic partners) continues until the death of one, the dissolution of the marriage or partnership by decree of a court of competent jurisdiction, or the termination of the partnership by other means permitted by statute. However, spouses and partners can modify or terminate their relationship in certain respects relevant to the status of community property, and thereby effect changes as to the management of previously acquired assets, ownership of new acquisitions, and vulnerability of assets to creditor claims.

[1] Separation Contracts

Spouses and registered domestic partners may execute a separation contract either without seeking any decree or while seeking a decree of separation or dissolution of the marriage or partnership. RCW 26.09.070. Such a separation contract is binding upon the court in an action for dissolution of the marriage or partnership, a decree of separation, or a declaration of the invalidity of the marriage or partnership, unless the court finds the contract "was unfair at the time of its execution." RCW 26.09.070(3). The separation contract referred to in the statute normally accompanies a determination by the spouses to separate, which triggers a settlement of their respective property rights by agreement. The effect of other specific agreements for separate rather than community property ownership not involving any purpose of the spouses to separate has been discussed previously in §§ 5.01-5.03, above.

Although a court decree that former spouses should hold property as tenants in common is disfavored, Bernier v. Bernier, 44 Wn.2d 447, 267 P.2d 1066 (1954), superseded by statute on other grounds as stated in In re Marriage of Robins, 2010 Wash. App. LEXIS 2567 (Wash. Ct. App. Nov. 18, 2010) (unpublished), the spouses can so agree by separation contract. In the absence of adequate identification of assets covered by the agreement, former community property will be held by them as tenants in common after the dissolution of the marriage. This was the result as to life insurance policies in Yeats v. Estate of Yeats, 90 Wn.2d 201, 580 P.2d 617 (1978). In In re Marriage of Sedlock, 69 Wn. App. 484, 849 P.2d 1243, review denied, 122 Wn.2d 1014 (1993), the court ruled that the trial court could leave the husband and wife as tenants in common as long as the shares were fixed at the time the tenancy was created (distinguishing Bernier v. Bernier, in which no shares were established).

The parties to the separation contract contemplated by the statute may have it recorded and "cause notice thereof to be published," which "shall constitute notice to all persons of such separation and of the facts contained in the recorded document." RCW 26.09.070(2). Recording and publication are not required, but optional. Indeed, in RCW 26.09.070(8) there is provision for termination of the separation contract by mutual agreement without formality unless the contract was recorded, in which case "a statement should be filed terminating the contract."

If the spouses separate permanently, postseparation acquisitions by either will be the separate property of the acquirer. This had long been the rule for the wife's acquisitions by reason of the original provisions of RCW 26.16.140, and the court in Togliatti v. Robertson, 29 Wn.2d 844, 190 P.2d 575 (1948), implied its agreement with this result, holding that the husband's acquisitions were separate property. The 1972 amendments extended RCW 26.16.140 to acquisitions of both spouses, and in 2008 the statute was extended to include domestic partners, so that now "[w]hen spouses or domestic partners are living separate and apart, their respective earnings and accumulations shall be the separate property of each." RCW 26.16.140. In addition, earnings and accumulations of minor children belong to the spouse having custody. The marriage or partnership must be "defunct" for the statute to control. These issues are discussed in Chapter 3, § 3.03[3]. Mutuality is essential to the finding of a defunct marriage or partnership. When the abandoned spouse is incompetent, mutuality cannot be established. Seizer v. Sessions, 132 Wn.2d 642, 940 P.2d 261 (1997).

Even though the marital relationship or domestic partnership has not yet been ended, either permanent separation of the spouses or a separation contract or other agreement providing that future acquisitions shall be separate property will operate to terminate the community relationship, so that acts by one spouse will not affect the property of the other. See, e.g., Yates v. Dohring, 24 Wn.2d 877, 168 P.2d 404 (1946), in which the wife's necessary board and room expenses, incurred after the separation, were held not to be a separate liability of the husband.

Although one spouse has no power to manage or otherwise affect (either directly or indirectly) the separate property of the other, see RCW 26.16.190-.200, permanent separation, even though it ends the community relationship, does not change the character of existing community property absent a separation contract. Continued management of such property may be necessary, see, e.g., Cohn v. Cohn, 4 Wn.2d 322, 103 P.2d 366 (1940), as well as continued management of community litigation. Gleason v. Metro. Mortg. Co., 15 Wn. App. 481, 551 P.2d 147, review denied, 87 Wn.2d 1011 (1976). In Dizard & Getty v. Damson, 63 Wn.2d 526, 387 P.2d 964 (1964), in which the wife expressly authorized the husband's continuing management power after their separation, the court noted that in such cases of permanent separation there may be some risk to the third person extending credit. This at least suggests that only acts reasonably necessary with respect to the community property are within a spouse's managing power after separation. See Harry M. Cross, Equality of Spouses in Washington Community Property Law—1972 Statutory Changes, 48 WASH L. REV. 527, 543-44 (1973). If the separation of the spouses is the consequence of desertion by one, it appears that the deserting spouse may not assert control over the community property. Wampler v. Beinert, 125 Wash. 494, 216 P. 855 (1923).

Comment: Among many reasons to execute a Separation Agreement is the fact that often parties do not want the financial details of their marriage/separation to become public. RCW 26.09.070(5) provides that unless the parties agree to the contrary, the terms of the Agreement shall be incorporated in the Decree or filed. Thus, they may keep it private by simply incorporating it by reference. Another common reason to execute a Separation Agreement it to make spousal maintenance nonmodifiable. RCW 26.09.070(7) allows that provision; otherwise, the court is without power to make spousal maintenance nonmodifiable.

[2] Property Division Contracts

An agreement dividing property between spouses apparently will not affect the rights of an existing community creditor, who may assert an equitable lien against former community property that has become the separate property of one of the spouses. Adams v. Rowe, 39 Wn.2d 446, 236 P.2d 355 (1951); see Watters v. Doud, 95 Wn.2d 835, 631 P.2d 369 (1981) (only equity in home at time of dissolution was reachable by community creditor). Conversion of community property into the separate property of one of the spouses might amount to a fraud on creditors, in which event, of course, the creditors could set aside the conveyance. In the absence of fraud, such separate property is secure against the claim of a separate creditor of the other spouse, and against that of a subsequent community creditor. Stewart v. Kleinschmidt, 51 Wash. 90, 97 P. 1105 (1908); see also MacKenzie v. Sellner, 58 Wn.2d 101, 361 P.2d 165 (1961) (former community property—separate property of nontortfeasor spouse under the agreement—could not be reached for claim based on postagreement tort). An agreement that future acquisitions be separate rather than community property is ineffective against an existing creditor, i.e., one whose claim existed at the time of the agreement. Fisher v. Marsh, 69 Wash. 570, 125 P. 951 (1912). On the other hand, such an agreement is effective against a subsequent creditor. Piles v. Bovee, 168 Wash. 538, 12 P.2d 914 (1932); Union Sec. Co. v. Smith, 93 Wash. 115, 160 P. 304 (1916).

Filing a petition for legal separation, dissolution, or declaration of invalidity does not interrupt the equal management power of the spouses. However, the good faith inherent in equal management and the preservation of the community property becomes a concern. RCW 26.09.060(2)(a) provides for a restraining order or temporary injunction for the protection of either spouse.

Existing creditors are not and cannot become parties to the action for a dissolution, legal separation, or declaration of invalidity; they have no notice of the proceedings, and they cannot intervene. Due process protects them from a loss of the property to which they look for satisfaction of their claim. Arneson v. Arneson, 38 Wn.2d 99, 227 P.2d 1016 (1951).

The petition does not affect the rights of an existing creditor. Denying that creditor the right to attach community assets during the interim between filing and entry of a final decree would do an injustice to the creditor who has relied on those assets in extending credit.

By its decree, the court can fix the character of liabilities as between the parties; a party required by the decree to undertake a particular liability does so as his or her individual liability. The parties are joint obligors with respect to liabilities formerly of a community nature that are omitted from the decree, each with a right of contribution against the other. Separate obligations retain that character.

Under RCW 26.09.050, the court shall "make provision for the disposition of property and...