[WSBAPT] Two Questions About Community Property Agreements

[Eric Reutter]

Hi listmates,

I am working on a blog exploring the nuances and potential applicability of
Community Property Agreements to clients. I would love to hear some
practitioner input on two nuanced issues I have been unable to resolve by
research alone.

*1) Disclaimer Provisions in Community Property Agreements*
I have seen disclaimer provisions in community property agreements that
allow a surviving spouse to disclaim any amount (some CPAs specify that the
disclaimed amount shall pass according to the deceased spouse's Will). Is
this disclaimer practice as simple as it sounds (i.e. build the disclaimer
provision into the CPA and build a disclaimer trust provision into the
decedent's Will), or are there any traps here for the unwary?

*2) Converting to Community Property At Time of Agreements vs. At Time of
Death*
This issue has interested me the most, perhaps because I have not found any
clear guidance on this issue yet. The background is that I have seen some
community property agreements that declare all property owned by spouses to
be community property at the moment of the agreement (I believe that these
are the typical "three pronged" agreements), and then I have seen other
agreements that do not effectuate the conversion of property until the
death of the first spouse to die.

My gut reaction is to use the language that converts property at death of
the first spouse, rather than at the time of the agreement, for three
reasons. First, I have seen blog posting from local family law attorneys
that warn about the potential negative effects of CPAs on division of
property at divorce. Second, the relevant statute, RCW 26.16.120 only
explicitly addresses transfers to take affect "upon the death" of either
spouse. Third, I cannot think of a benefit of converting property at the
moment of the agreement, if such a conversion will take place upon death
regardless.

I feel like I must be missing something on this issue, since I see so many
agreements structured to convert property at the moment of the agreement.

I know you all are busy, and I appreciate any practitioner's insight on
this issue, as traditional research has failed to yield me satisfactory
answers to these questions at this point.

Best regards,


*Eric Reutter, *Partner
*J.D., LL.M. Taxation*
14205 SE 36th Street, Suite 100
Bellevue, WA 98006
*(425) 298-7110* | *appelgatereutter.com <http://appelgatereutter.com/> *



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