Community Property and Separate Property

Community Property Defined: If you are contemplating (or in the midst of) a divorce in Snohomish County, you have probably heard these terms and wonder how they will apply in your case. I will try and explain that here.

In any state, the Courts are forced to divide up property among the divorcing parties in a fair and equitable way. As you might imagine, this is not the simplest thing in the world. "Fairness" is a measuring stick with a lot of different aspects to it. Different states have come up with different methods. Washington has adopted a method called the "community property" method. The distinction between community and separate property can be thought of as a starting point in divorces to analyze property (or debt) and see where it should be allocated when the parties separate.

If you want to get extremely technical, you can refer to Chapter 26.16 of the Revised Code of Washington (at least, as of this writing) and get the very nuanced definition of community and separate property, but for our purposes, we will keep it simple.

At its most basic level, it works like this: if property was acquired before a marriage occurs, it is considered separate property. This means that when the Court starts dividing up the property, it will least make a starting assumption that this property goes with its pre-divorce owner. Community property, on the other hand, is property acquired by the marital community (either spouse) after the marriage. Regardless of how the property is titled (say it is a house or a car with only one spouse on the deed), it is still considered community property, and will be subject to a division in a divorce. How much community property each party gets is based on their circumstances (see the discussion below), but generally this is the property that's on the table for division.

This "community/separate" distinction also applies to debts. If you incurred it before the marriage, it is generally yours. Debt from after the marriage is considered to be owed by both parties (at least in divorce courts - third party creditors and their rights in a divorce is a different blog post).

Examples: Common examples of how this work would be if a person purchased a car and paid it off before he got married. If he divorced a few years later, the car would be his separate property and would likely stay with him. Similarly, if someone amassed substantial student loan debt before getting married, this is separate debt and would generally go with her after the divorce, since it would be inequitable for the other party to pay for something they will not continue to enjoy any benefit from.

Exceptions to the Rule: Marriage doesn't automatically make everything acquired after marriage community property, though. For example, things like gifts or inheritances received after marriage are classified as separate property under the statute, under the rationale that the party who received these things did not do so through any effort of the marital community.

The process, then, is to take all the property and divide it up into what is a community asset, and what is a separate asset. Outside of any special circumstances, community assets will be divided up and separate assets will stay with their original owner. There are, however, certain circumstances that can take the court out of these "default" assumptions about what property is subject to division.

When the Community / Separate Distinction Doesn't Matter: Unfortunately, this community/separate distinction is just the starting point. Courts are empowered to divide all property, community and separate. The expectation is that they will look at all the relevant factors, such as the length of the marriage, the health of the parties, the earning capacity of the parties, and their contributions to the marriage, and they will come up with a separation of property that is fair in light of all those things.

In some cases, this dictates ignoring community/separate property distinctions to get to a fair result.

This is best illustrated through an example. Let's say a husband is a very successful doctor with a lot of money. Before the marriage, he purchased a large house, had several cars, investments, and substantial cash assets in bank accounts. These things are clearly his separate property. Throughout the marriage, he continued to earn $400,000 yearly. Let's say he married a social studies teacher, and stayed married to her for 10 years. She is lucky to make $50,000 yearly, and that is unlikely to increase in the future. The given would be that all the property amassed in the 10 years of marriage would be subject to division (because it is community property), but because of the massive financial disparity, the Court might force the doctor to dip into his separate property and pay some to the wife for a fair distribution of property. The rationale for this ability is that in some circumstances, the Court can disregard the community/separate distinction and still get a fair result. In this case, even if the Court gave the the social studies teacher thousands of dollars in separate property, the understanding would be that the doctor would continue to make $400,000 annually and replace it in short order.

Examining a particular couple's circumstances and determining how a court would likely divide assets is a complex question, because it requires knowing what assets are community, what assets are separate, and what the likelihood is that the Court will disregard this distinction to get the result it wants. Unfortunately, that requires a lawyer who understands these concepts well and has experience applying them in front of the judges likely to preside over a divorce.

If you are facing the portion of a divorce where you are about to mediate or go to trial, make sure you have a clear understanding from your lawyer of what property is community, what property is separate, and how likely those distinctions are to be upheld. Knowing these things will be essential to making informed decisions about your case and what truly represents a good result for you.