When a CPA immediately converts all property into community property, the biggest concern is divorce. If there is property that you don`t want your spouse to get a share of during the division of the property phase of the divorce, a CPA will make things more difficult. A CPA can only be revoked by mutual agreement between the two parties, so you will likely have to negotiate with your spouse about the desired asset or property. An experienced family law lawyer ensures that all property is properly identified so that the property is divided in the event of divorce. Many states follow common law rules to determine who owns assets or property after marriage, but this is not the case in Washington State. In Washington State (and eight other states as well), the “Community Property Act” is used to determine property rights after marriage. Essentially, community property law compares marriage to a business partnership. If you are a sole proprietor, work for yourself; If you have a partner, work for the partnership. Before marriage, your job, income, and the things you buy all belong to your separate estate. However, once you get married, your income and the things you buy with it belong to the marital community. Just as a partner in a company works on behalf of the partnership, the married person now works on behalf of the conjugal community. With a few exceptions (listed below), all property that a person and their spouse or partner registered by the state1 acquire during their marriage or state-registered domestic partnership – while living in a state that recognizes community property (such as Washington) – is community property.2 This includes real estate such as land and buildings, as well as income from salaries and other contractual benefits.
such as stock options, insurance, pension plans, etc. Both spouses or life partners each have an equal half share of all their community assets. In addition, certain forms of income are considered property in Washington State. Acquired shares (or other derivative securities) paid under a compensation plan are considered property in Washington State. The income of a licensed professional (doctor, lawyer, CPA, etc.) is often perceived in part as “professional goodwill” and should be identified as a common good and divided into divorce. The courts assume that the property is community in nature, unless proven otherwise. It is important to remember that a property may lose its status as a separate property if it is mixed with community funds, especially if the separate property is difficult to identify as such. 15) Mortgage payments on the family home. For characterization purposes, judges generally do not know who pays the mortgage on the family home.
Like some of the other rules listed above, this principle makes more sense in context. Persons who are not married or who are not in a domestic partnership registered by the State, including divorcees, widows or widowers, do not own common property. Property that was community property at the time of a marriage or domestic partnership registered by the State becomes separate property when the marriage or domestic partnership registered by the State is legally terminated (e.g. B by issuing a dissolution order by a family court). (9) De minimis exception. The court tends to ignore small improvements in the characterization of assets. This is called a de minimis exception. De minimis is a Latin term meaning “the effects are small enough to be ignored”. There is no formula for how a court weighs all these factors. Each divorce judge will endeavour to take into account all the circumstances when determining a fair distribution of property. Since this is necessarily a subjective exercise, it can be difficult to predict exactly what a court will do.
13) On behalf of whom. For characterization purposes, it does not matter whether an asset or debt is in the name of one spouse, in the name of the other spouse, or both. For example, the court will usually ignore the name that appears on the title of a car. Similarly, courts pay little attention to the name on a deed, bank account or mortgage. Indeed, spouses often put assets and debts in the name of what made practical sense at the time, rather than as an indication of who should receive the property in a divorce. You could cancel the house to the woman to get a better interest rate for mortgage refinancing. Or the husband could put the family cars in his name for the sake of simplicity. The court usually looks beyond the names and applies the other rules mentioned in this article.
1) Basic definitions. As the name suggests, community property is what the spouses own together as a conjugal union, and separate property is what each spouse owns individually. An exception to separate ownership is when you bring your separated belongings into a marriage and “mix” them with community property. This means that it can no longer be identified as your separate property and has effectively become common property – so your spouse is entitled to fifty percent. For many assets, such as checking accounts or retirement accounts, value is determined simply by looking at the balance on a bank statement. 7) Mixing. “Mixing” is the opposite of tracing. Mixing occurs when the spouses mix their joint and separated property in such a way that the separated property is no longer comprehensible.
When this happens, the entire mixture becomes the property of the community. A Community Property Agreement (CPA) is a powerful estate planning tool available to all married couples. This is a legally binding agreement that can convert any property you or your spouse owns into community property, including what was once your separate property and any assets acquired during the marriage. The agreement may take effect immediately or only on the death of a spouse […].