§ 8.02 BASIC CONFLICT RULES FOR CHARACTERIZING MARITAL PROPERTY

• Jurisdiction: Washington

§ 8.02 BASIC CONFLICT RULES FOR CHARACTERIZING MARITAL PROPERTY

Property acquired by either spouse during marriage is characterized based on the law of the state of domicile. In re Marriage of Landry, 103 Wn.2d 807, 810, 699 P.2d 214 (1985); Rustad v. Rustad, 61 Wn.2d 176, 179, 377 P.2d 414 (1963); In re Estate of Gulstine, 166 Wash. 325, 328, 6 P.2d 628 (1932); In re Marriage of Smith, 158 Wn. App. 248, 259, 241 P.3d 449 (2010). Thus, property acquired by a spouse while domiciled in Washington is presumed to be community property, subject to rebuttal by tracing the acquisition to a separate property source. See Chapter 3 of this deskbook.

If such community property is used to acquire other property in Washington, standard tracing principles apply to preserve its original character unless there is a mutual intent to transmute it. If, on the other hand, community property is used to acquire property outside of Washington, a potential conflict-of-laws issue arises. Nonetheless, it is well established under Washington law that when property is acquired in a state other than the domicile, as between spouses, the acquired property takes the character of the funds used to acquire it. Landry, 103 Wn.2d 807; Rustad, 61 Wn.2d 176; In re Estate of Pugh, 18 Wn.2d 501, 139 P.2d 698 (1943); Scott v. Currie, 7 Wn.2d 301, 109 P.2d 526 (1941); Meyers v. Albert, 76 Wash. 218, 135 P. 1003 (1913); Witherill v. Fraunfelter, 46 Wash. 699, 91 P. 1086 (1907); Brookman v. Durkee, 46 Wash. 578, 90 P. 914 (1907); In re Marriage of Zahm, 91 Wn. App. 78, 955 P.2d 412 (1998), aff'd, 138 Wn.2d 213, 978 P.2d 498 (1999). The rule applies regardless of whether the property acquired out of state is realty or personalty. Snyder v. Stringer, 116 Wash. 131, 198 P. 733 (1921); Brookman, 46 Wash. 578. See generally Harold Marsh, MARITAL PROPERTY IN CONFLICT OF LAWS 189-96 (1952).

Thus, under Washington law, when a married person uses community property acquired while domiciled in Washington to purchase property in another jurisdiction, that property should retain its community property character in a dispute between the spouses. See, e.g., Brownfield v. Holland, 63 Wash. 86, 114 P. 890 (1911) (the court assumed that a leasehold interest acquired by a Washington couple in oregon was community property). On the other hand, when the interests of a third person, such as a creditor, are at stake, it is possible that a nondomiciliary state may protect the creditor in the state where the property was acquired and ignore the character of the property used to acquire it. Harold Marsh, MARITAL PROPERTY IN CONFLICT OF LAWS at 191-92, 196-97.

Conversely, if a couple was domiciled in a state other than Washington when the property was acquired, Washington will look to the law of the state of domicile to characterize the property, even if the property was later brought to Washington. E.g. Landry, 103 Wn.2d at 810 (70 percent of husband's military pension was his separate property because earned while he was domiciled in a non-community property state); Estate of Gulstine, 166 Wash. at 328; Brookman v. Durkee, 46 Wash. 578, 584, 90 P. 914 (1907); see also In re Marriage of Holman, No. 45528-1-I, 2001 Wash. App. LEXIS 69, 104 Wn. App. 1011 (Wash. Ct. App. Jan. 16, 2001) (unpublished) (applying the marital property law of New York to divide the assets of a couple who spent their entire married life in New York).

Although the principles stated in the preceding paragraphs are generally consistent with the result reached under the Restatement, the route to that conclusion is a little circuitous. As to personal property acquired during marriage, Restatement § 258 says that "[t]he interest of a spouse in a movable acquired by the other spouse during the marriage is determined by the local law of the state which, with respect to the particular issue, has the most significant relationship to the spouses and the movable." RESTATEMENT (SECOND) OF CONFLICT OF LAWS § 258(1) (1971). But the Restatement then proceeds to add: "In the absence of an effective choice of law by the spouses, greater weight will usually be given to the state where the spouses were domiciled at the time the movable was acquired than to any other contact in determining the state of the applicable law." Id. § 258(2) & cmt. b.

As to land, Restatement § 234 suggests that the character of land acquired during marriage will be determined by the local law of the situs. Id. § 234. But comment a to that section clarifies that most local law will, in turn, look to the character of the funds used to acquire the land and refers to Restatement § 258, quoted above, to...