Marriage and relationships trigger concerns, including how to live with a romantic partner (or partners), how to share expenses and income, how to share or separate assets, and how to treat your partner(s) for a lifetime. These concerns are the start of a complicated process (a relationship) that is even more complex if either partner has substantial family or personal assets, substantial debts or other liabilities, a business or other valuable property, additional partners, or children from prior relationships (or just children).
Washington law expresses certain interests in individuals and ensuring they have certain needs met and/or do not engage in certain actions. Washington law can irrevocably alter each of the relationship concerns listed above by determining how assets and relationships are managed during life and at death.
Prenuptial agreement discussions often bring to mind contracts, negotiations and business, rather than love and relationships. However, prenuptial agreements (or other property status agreements, such as postnuptial agreements and cohabitation agreements) foster an understanding of each partner’s financial goals and expectations, and how partners want to treat each other – promoting full honesty and understanding in the relationship. These agreements are contracts, but specifically, contracts designed to outline how partners and spouses will care for each other during life, at death, and if there is a separation. It also allows the parties to navigate, other partners in the relationship, any family members, and partners’ intentions to follow or change standard Washington rules about relationships, income, and assets.
Washington is a community property state. Although this creates a presumption that spouses own assets jointly in undivided 50% interests, spouses can also have substantial separate property. Separate property includes the assets owned by an individual prior to marriage, and any gifts or inheritances given to that individual (before or after marriage), plus income and growth in value of those separate assets.
Washington’s community property rules define community property as property that is not separate property and is acquired after marriage. This typically includes earned income, such as a salary. Using salary to increase the value of separate property assets such as 401(k) contributions, new roof on a separately owned house, capital calls to a company, etc., puts community property into that separate asset and can create a right to reimbursement for the marital community. If the comingling of assets becomes significant enough (or confusing enough in a court’s eyes), it can lead to converting separate property into community property. In addition to property / asset rights during lifetime, married partners are entitled to certain additional rights, such as rights to all community and some separate property of a deceased spouse with no will, income tax basis step up, estate tax deferral through the unlimited marital deduction, rights to request a family support award from the deceased party’s assets, and an equitable distribution of assets in a separation (not equal, and possibly less/more than half of the marital assets).
Separate from marriage, Washington recognizes community property created between partners that live in a marital-like relationship that rises to the level of a committed intimate relationship (CIR). Courts look at continuous cohabitation, length of the relationship, purposes of the relationship, pooling of resources and services for joint projects, and the intent of the parties to determine if a CIR exists. A CIR can be created between two partners even if one partner is married to a third individual. If two individuals live together in a relationship that creates a CIR, one partner could request a legal separation with distribution of assets in an equitable manner as if the partners are legally separating a marriage.
Prenuptial agreements are contracts and can feel very transactional and businesslike, but they allow individuals to understand how Washington law governs their relationships, create a safe place for partners to be fully honest about their assets and income, allow people to discuss how they want to live and die as partners – from creating and keeping separate property, creating and keeping community property, paying ongoing living expenses, encouraging each partner in their lifetime goals, determining how to balance financially supporting children or other family members with supporting a partner, setting guidelines for separation and death to ensure each partner (or all partners) receive sufficient protections for comfort in the relationship or at the end of a relationship.
While Washington law governs these concerns, prenuptial, postnuptial, and cohabitation agreements (property status agreements) allow couples to create customized rules that feel secure and mutually beneficial, reducing the need for state intervention and preventing courts from imposing standard relationship terms.
— By Kristi L. Richards
Would you like to learn more about Salish Elder Law? Contact us here:
51 W Dayton St, Suite 204
Edmonds, WA 98020
425-492-7212
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