Updated: Sep 1
One of the most common questions an estate planning attorney is asked is: Why would we need a Community Property Agreement ("CPA") if Washington is a community property state? While it is true that Washington is a community property state, Washington residents are also allowed to maintain separate property. So, what is community property? Community property consists of assets acquired during a marriage or assets that have been hopelessly commingled during your marriage. Separate property on the other hand, consists of assets that were brought into a marriage or assets received as a gift or an inheritance (even during a marriage), provided that they have not been commingled with community property assets.
Since Washington law allows an individual to have both separate and community property assets, Washington's presumption that assets are community assets can be rebutted. If your intent is to transfer all of your assets to your surviving spouse, a CPA can do this with minimal work, but only for community assets. Therefore, clarifying that all assets are, in fact, community assets is necessary for a CPA to work. A CPA allows the surviving spouse to transfer all of the assets (community and separate) that are in the deceased spouse's name to his or her name without going through the probate process. This document is only available to married couples and a Washington CPA only applies to assets in Washington State. Without a CPA, a probate may be required to transfer the deceased spouse's assets to the surviving spouse (or other beneficiaries).
If you have no concerns about estate taxes, how your spouse will use those assets, or how your spouse will provide for your beneficiaries, then a Community Property Agreement is a great tool. However, if your intent is to provide for the surviving spouse, but also address concerns about estate taxes, blended family issues, and protections for the surviving spouse, then other tools are available.
If you have any questions about Community Property Agreements or other Estate Planning tools, please call Rehberg Law Group at 206.246.8772 for more information.