For Married Couples:
Community Property Agreements
Married couples in Washington State commonly use community property agreements to transfer property to the surviving spouse when the other spouse dies. This method of transfer is popular largely because it is done without probate.
To understand community property agreements, you will need to know the difference between community and separate property. In Washington, property acquired by either husband or wife during the marriage will generally be community property. Property acquired by one of the spouses before marriage, or by gift or inheritance during the marriage, will generally be that spouse’s separate property.
The Washington community property statute allows us to change separate property to community, or vice versa, if the spouses agree in writing. The statute also permits a transfer of the community property at death to the surviving spouse.
Before you sign a community property agreement, you should be aware that community property agreements have limitations:
- They will not pass property from the surviving spouse to a third person.
- They are not effective if both spouses die together.
- They can be extremely troublesome if the marriage is not stable.
- They are unreliable for transfering title to land in other states.
- They may unintentionally increase creditor’s rights.
- They may cause estate tax problems in larger estates.
A community property agreement is a marvelous tool for the simple transfer of property from one spouse to another. Many surviving spouses have stayed out of the probate court by use of the community property agreement. However, such agreements are not the beginning and the end of an estate plan. Community property agreements should be considered as one part of a married couple’s comprehensive estate plan.
This information is general in nature and should not be relied upon for your specific circumstances. For information, questions, or comments, please contact Douglas J. Engel or Kathryn S. Kumar.