§ 8.04 COMMUNITY PROPERTY BROUGHT FROM ANOTHER COMMUNITY PROPERTY STATE TO WASHINGTON

• Jurisdiction: Washington

§ 8.04 COMMUNITY PROPERTY BROUGHT FROM ANOTHER COMMUNITY PROPERTY STATE TO WASHINGTON

Community property brought to Washington from one of the other eight community property states will generally retain its identity as community property unless it is intentionally converted to separate property. (An exception would arise if there has been extensive commingling of small community funds with extensive separate property, in which case arguably the property would be separate.) With respect to the attributes of such community property, however, it does make a difference in what state the property was acquired and how it was characterized under the laws of the state in which it was acquired. Although no attempt will be made here to exhaustively analyze the differences between Washington community property law and the community property law of each of the other community property states, this discussion will illustrate some of the issues that the practitioner should watch out for.

Life insurance proceeds may be characterized differently, depending upon the state where the parties were originally domiciled. In Washington, characterization of proceeds may differ, depending upon whether the life insurance is cash value or term insurance. At least for term insurance, Washington applies the "risk payment" theory, whereby the ownership of the policy (and hence the proceeds) follows the source of payment of the premium paid for the period during which the insured died. Aetna Life Ins. Co. v. Wadsworth, 102 Wn.2d 652, 689 P.2d 46 (1984). Arizona, California, Idaho, and New Mexico probably would use the same risk payment approach as Washington with regard to term life insurance. See, e.g., Estate of Logan, 191 Cal. App. 3d 319, 326 n.7, 236 Cal. Rptr. 368 (1987). However, with regard to cash-value life insurance, if the client has moved from a so-called "inception of title" state such as Arizona, Louisiana, New Mexico, or Texas, then until the move to Washington, if the policy was initially acquired as the separate property of one spouse but premiums have subsequently been paid from community property, the policy will still be separate, although a community right of reimbursement will arise for the amount of premiums paid. After the spouses become Washington domiciliaries, and to the extent the premiums are thereafter paid from community funds, it would seem that an ever-increasing portion of the proceeds would be community property, attributable to that portion of the...