Community and Separate Property

Spring 2006

“Washington is a community property state, so it’s all community property, right?”

Wrong.

There are many misconceptions about separate and community property. Washington is one of a minority of states, all in the West, with a community property system derived from Spanish law. The idea is that each spouse makes a valuable though different contribution to the marriage, so each deserves half the financial reward gained from work by either spouse.

So let’s say wealthy Susan is about to marry charming but unmotivated Bob. Each of them has children from a previous marriage. Here are some things for them to consider:

1. Susan’s earnings from her work as an investment banker, once she and Bob are married, will be community property.

2. Susan’s contributions to her retirement plan, because derived from her work, will also be community property.

3. The assets Susan brings into the marriage will remain separate property, unless they are converted into community property by agreement or by commingling them with community assets.

4. If Bob inherits from his wealthy aunt it will be his separate property, unless it is converted into community property by agreement or by commingling it with community assets.

5. Bob may acquire an interest in the fabulous mansion Susan owns when they marry, if Susan uses earnings from her work to pay the mortgage.

6. If Susan and Bob get divorced, the Court may divvy up separate as well as community property as it deems just and equitable.

7. If Susan doesn’t change her Will upon the marriage, it is deemed revoked as to Bob and he would inherit all the community property and half of Susan’s separate property.

8. Susan and Bob can clarify ownership and change the effect of any of these rules, and predetermine the effect of a divorce or the death of a spouse, by a premarital agreement done properly and well in advance of the wedding (or a postnuptial agreement done after).


If you'd like to discuss this or any other aspect of your estate planning, please call the attorney with whom you work, or any of the members of our Trusts & Estates Group. Thanks.