Dissolution of Marriage and Community Property

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Dissolution of Marriageand Community Property
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Dissolution of Marriage

• In Washington, divorce is called Dissolution of
  Marriage and it is governed by RCW 26.09
• Washington is a no-fault divorce state. That
  means you do not have to allege or prove any
  reason for the dissolution beyond irreconcilable
  differences.

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Filing For Dissolution

• Dissolution is relatively easy under Washington
  law.
• A person wishing to have her marriage dissolved
  must
• File a petition with the court
• Joint petition, or
• Petition gets served on other spouse
• Wait 90 days
• Receive final Dissolution Decree
• Both parties agree to the decree and it is
  accepted by the judge at a hearing, or
• Dissolution is adjudicated before a judge and the
  judge enters a decree, or
• Default decree is entered

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Dissolution Decree

• Ends the marriage
• Addresses the following issues
• Community property and debt allocation
• Parenting plan
• Custody rights
• Child support
• Spousal maintenance
• Restraining orders

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What is Property?

• In the context of marriage, property includes
• Real Property Houses and Land
• Personal Property Furnishings, cars, clothes
• Financial Assets Cash, Investments
• Future Interests Pension funds, life insurance
• Contractual Rights

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Community Property

• Washington is a community property state
• Each spouse is regarded as contributing to the
  well being of the community and equally shares in
  the financial well being of the community
• Each spouse has a one-half interest in any
  property acquired by the marital community

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When Does Community Property Matter?

• Community property becomes an issue when
• The marriage is dissolved
• One spouse dies
• One spouse wishes to dispose of some of the
  community property

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Money Flowing Into the Community

• Almost any money that a spouse earns during
  marriage is considered community property
• This includes
• Salaries, wages, and other compensation
• Windfalls
• Sale of community property
• Interest and rents from community property

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Money Flowing out of the Community

• In general, property obtained by the couple with
  community funds becomes community property

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Wifes Salary
Husbands Labor
Husbands Salary
Wifes Labor

COMMUNITY PROPERTY
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Money Flowing into the Community from Community
Property

• In general, any funds flowing from community
  property into the community become community
  funds
• Rent
• Sale
• Investment Proceeds
• Interest
• Appreciation

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Separate Property

• There is a strong presumption that any property
  or funds obtained during a marriage are community
  property
• However, some property is considered the separate
  property of one spouse or the other

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Separate Property

• Separate Property Includes
• Property held by a spouse prior to marriage
• Property received as a gift or inheritance by one
  spouse
• Rents, interests, or profits from any separate
  property

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Separate Property

• New property purchased with the proceeds of
  separate property is considered separate property
  
• This concept is called tracing
• If the used to obtain property came from the
  community, the new property is community property
• If the used to obtain property came from one
  spouses separate property, the new property is
  that spouses separate property

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Wife receives inheritance from father
Wife uses inheritance to buy new car
The car is the wifes separate property
WIFES SEPARATE PROPERTY

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Case Study 1
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Case Study 1
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Gifts Intimate Personal Property

• One spouse may give a gift to the other and that
  gift will be separate property. The intent to
  give the property as a gift must be obvious.
• Some property is considered so intimate as to
  always be considered separate property
• Clothes
• Jewelry

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Mixed Property

• It is not uncommon for a couple to use a mixture
  of community and separate funds to make large
  purchases such as houses
• It is also not uncommon for one spouse to own a
  house prior to marriage and to make payments on
  the house from community property following
  marriage or to use his or her labor to improve
  the house during marriage
• Both of these situations create some of the most
  confusing issues in community property

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Purchases of Mixed Property

• When property is purchased using both community
  and separate property, the property is
  proportioned

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100,000
100,000
100,000
Couple buys a 300,000 house and uses 100,000
from the wifes separate property, 100,000 from
the husbands separate property and 100,000
from community property. The house is 1/3
wifes, 1/3 husbands and 1/3 Community property
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If the house appreciates to 600,000, the wife
has 200,000 in separate property, the husband
has 200,000 in separate property and the
community has 200,000 in property.
200,000
200,000
200,000
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Community Expenditures on Separate Property

• Two common situations arise when one spouse owns
  separate property such as a house prior to
  marriage
• The community uses its labor to improve the house
  
• The community pays the mortgage on the house

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Community Labor

• When the community exerts its labor on separate
  property, it creates a community interest for
  that value in the property
• For example, if a wife owns a house and the
  husband builds a new deck that causes the value
  of the house to increase by 50,000, the
  community now has a 50,000 interest in the house

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Community Pays Mortgage

• When the community pays mortgage on separate
  property owned by one spouse, that spouse owes
  the community for that expenditure
• For example, if the mortgage on the wifes house
  is paid with her salary while the couple is
  married, she owes the community the value of all
  of those mortgage payments

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Case Study 2
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Case Study 2
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The House

• The houses is the wifes separate property,
  however the community has an interest in the
  house from
• The mortgage paid during the marriage
• The labor that the husband did on the house

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Personal Injury Awards

• Personal injury awards for medical expenses and
  for lost wages are community property
• Personal injury awards for pain suffering are
  separate property of the spouse who was injured

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Case Study 3
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Case Study 3
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Separation

• A married couple continues to accrue community
  property until they either divorce or the
  marriage is defunct
• Defunct is a legal term that means more than mere
  separation
• In general, the couple must have no intention of
  getting back together

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Case Study 4
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Case Study 4
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Dissolution of Marriage

• Upon dissolution of marriage, each spouse gets
• His or her separate property
• One half of all of the community property
• This does not mean that you split the house in
  half it means that the court will balance the
  distribution of property so that each gets ½ of
  the total value

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Dissolution of Marriage

• In Washington, judges have a great deal of
  discretion to equitably distribute the property
  and give one spouse more or less than 50 of the
  community property
• For example, if the husband is a drug addict who
  has never held a job, the court may not grant him
  ½ of the community property accrued through the
  wifes labor

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Death

• Community property laws limit a spouses ability
  to dispose of property through a will at his or
  her death
• At death, a spouse may dispose of
• His or her separate property
• One half of the community property

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Community Property and Non-Married Couples

• Meretricious Relationships
• Relationships must be stable and marital like
• Duration of the relationship
• Cohabitation
• Pooling of resources
• Intent of the parties
• Purpose of the relationship
• Parties must know that they are not married

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Equity

• If a judge finds that a meretricious relationship
  exists, she will use her equitable powers to
  fairly distribute property based on community
  property principles