§3.7 Community and Separate Property

JurisdictionWashington
§3.7 COMMUNITY AND SEPARATE PROPERTY

During planning for an estate and during administration of a decedent's estate, characterization of property as community or separate property is one of the first steps in the process.

(1) General principles

This subsection addresses general principles of community and separate property in Washington.

(a) Significance of characterization

In connection with testamentary dispositions, the ownership of property as separate property or community property determines important rights, such as the individual's ability to dispose of all or only half of an item of property upon death, RCW 11.02.070; the rights of the surviving spouse to administer the property in probate, RCW 11.28.030; the surviving spouse's intestate share, RCW 11.04.015; an omitted spouse's claim to an intestate share upon marriage, RCW 11.12.095; and a creditor's rights against the property, RCW 11.10.030.

(b) Community property

Unless held as a joint tenancy, interests "in common held in the names of both spouses or both domestic partners" are presumed to be their community property. RCW 64.28.020. To overcome this presumption of community property status for an asset acquired during marriage, a party must present clear, cogent, and convincing evidence that the asset falls within a separate property exception. In re Marriage of Chumbley, 150 Wn.2d 1, 5, 74 P.3d 129 (2003). The names of both spouses in a document might not be determinative of the separate or community character of the property. In re Estate of Borghi, 167 Wn.2d 480, 488, 219 P.3d 932 (2009).

Joint tenancy interests held in the names of both spouses or both domestic partners are presumed to be community property and pass to the survivor. RCW 64.28.040.

During their joint lifetimes, either spouse or domestic partner may manage and control community property, although signatures of both may be necessary to transfer community real estate. Upon death, however, neither person can devise or bequeath by will more than his or her one-half of the community property. RCW 26.16.030. At such time, one-half of community property is confirmed to the surviving spouse or domestic partner and the other half is subject to

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disposition by the decedent's will or through intestacy. RCW 11.02.070. Washington follows an "item" theory in dividing property at death, rather than an "aggregate" theory. Accordingly during the lifetime of spouses/domestic partners, each item of the community property is owned equally by both, with each owning an undivided half interest. Upon death, the decedent may not dispose of a whole interest in any specific asset, notwithstanding the fact that the other spouse may be guaranteed at least one-half of the community estate when viewed in the aggregate. In re Patton's Estate, 6 Wn.App. 464, 476-77, 494 P.2d 238, review denied, 80 Wn.2d 1009 (1972).

Practice Tip: A postdeath non-pro rata division agreed to between a personal representative and surviving spouse is a means to permit either the personal representative or surviving spouse to control specific assets, including real property.

With respect to claims asserted after death, the whole of a community estate, and not just the decedent's half, is subject to probate administration for all purposes, including payment of obligations and debts of the community, awards in lieu of homestead, allowance for family support, and any other matter for which the property would be responsible or liable if the decedent were living. RCW 11.02.070. Determining the character of the property held by the decedent, as well as the character of debts of a decedent, is necessary to properly charge outstanding debts. Community debts are charged against all of the community property, RCW 11.10.030(1), and then if the community property is not enough, they are charged against the decedent's separate property, RCW 11.10.030(3). Separate debts are charged first against a decedent's separate property and then against the decedent's share of community property. RCW 11.10.030(2). To the extent that tort claims must be asserted against the community, such claims cannot later be asserted against a surviving spouse if a creditor claim was not filed in the decedent's estate. Graham v. Radford, 71 Wn.2d 752, 431 P.2d 193 (1967) (plaintiff failed to pursue remedy against community and cannot seek judgment from separate property of surviving spouse).

(c) Separate property

Separate property includes rights owned by the spouse before marriage and acquired after marriage by gift, bequest, devise, descent, or inheritance. The rents and profits are separate and are not subject to debts or contracts of the other spouse. RCW 26.16.010. Separate property of a spouse may be managed, leased, sold, conveyed, encumbered, or

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devised by will without the joinder or consent of the other spouse to the same extent or in the same manner as though the transferring spouse were unmarried. Id. Similar principles apply to the separate property of a registered domestic partner. RCW 26.16.020.

For injuries committed by a married person, there is no recovery permitted against the separate property of the other spouse, unless there would be joint responsibility. RCW 26.16.190.

(d) Characterization of property

Washington law employs presumptions and burdens of proof that favor characterization of property as community property. These presumptions may be rebutted by clear and convincing evidence, Madsen's Estate v. Comm'r, 97 Wn.2d 792, 796, 650 P.2d 196 (1982), or direct and positive evidence, In re Marriage of Zahm, 138 Wn.2d 213, 223, 978 P.2d 498 (1999).

Separate property of spouses continues to be separate through all changes and transitions as long as it can be clearly traced and identified. In re Mastro, 465 B.R. 576, 603 (WD. Wash. 2011). Establishing that property is separate cannot be accomplished by showing availability of separate property at the time property is acquired. Rather, it must be accomplished through proper records. In re Marriage of Skarbek, 100 Wn.App. 444, 447-50, 997 P.2d 447 (2000); see Washington Community Property Deskbook §3.1(3)-(4) (Wash. St. Bar Assoc. 4th ed. 2014). If property becomes so commingled that it is impossible to distinguish or apportion it, then the entire amount becomes community property. In re Marriage of Shui and Rose, 132 Wn.App. 568, 584, 125 P.3d 180(2005), review denied, 158 Wn.2d 1017 (2006). The burden is on the spouse asserting that separate property has transferred to the community to prove the transfer. In re Marriage of Zier, 136 Wn.App. 40, 45, 147 P.3d 624 (2006), review denied, 162 Wn.2d 1008 (2007). For a detailed discussion of tracing and commingling, see Washington Community Property Deskbook ch. 3.

The community property presumption may be overcome if there is a "defunct marriage." That circumstance exists when it can be determined by the conduct of the spouses that they no longer "have a will to union." Peters v. Skalman, 27 Wn.App. 247, 252, 617 P.2d 448, review denied, 94 Wn.2d 1025 (1980). There may be a defunct marriage if there is sufficient proof of a permanent separation, such as a long period of living apart, an interlocutory order of divorce, and evidence that the parties have renounced their marriage relationship. In such cases, the...

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