March 2014 Bar Bulletin
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March 2014 Bar Bulletin

Commingling Assets: When Mine Becomes Ours

By Kim Schnuelle

 

Sarah, a potential client, walks into your office seeking a divorce. She married Eddie in 1999. Prior to the marriage she owned a home in Bellevue. A year after the marriage, in July 2000, she sold the home for $500,000 and deposited the funds in their joint account where the funds stayed for two months, until September 2000, when she bought a vacation property in Kauai for $450,000.

She was careful to purchase the vacation property in her name only. In 2001 and 2002, she subsequently spent an additional $30,000 renovating the Hawaiian property, taking these funds from the joint account. In addition, Sarah inherited $100,000 in 2012, which she also deposited in the same joint account.

That joint account now contains only $20,000. Sarah has read a little about separate and community property and is worried that she has made a muddle of her funds by blending them with Eddie's in a joint account. She wants to know if the Hawaiian property can be designated her separate property and also whether she can recoup the $100,000 inheritance and remaining $50,000 from the sale of her Bellevue home - the difference between the Bellevue home sale price and the Hawaii home purchase price - as her separate property funds.

One of the largest areas of contention in many dissolution actions is the division of debts and assets. Under RCW 26.09.080, the court must, without regard to misconduct, dispose of both the separate and community property and liabilities of the parties in a manner that is just and equitable.1 In so allocating, the court shall consider four primary, but not exclusive, factors:

1. The nature and extent of the community property;

2. The nature and extent of the separate property;

3. The duration of the marriage or domestic partnership; and

4. The economic circumstances of each spouse or domestic partner at the time the division of property is to become effective.2


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