[WSBAPT] Divorce & Property Transfers

Thu Apr 27 13:57:25 PDT 2023

Jane,

My take is that you have two options:

1. Finish the job the parties and their lawyers apparently did not. Figure out what documents were signed or not; record the ones that should have been; obtain deeds or notes that never were drafted or executed; etc. But recognize that this sounds like “a fair bit of work” with all that you’re referencing below.

2. Draft a plan that gives your client’s interest in his/her property to whoever he/she wishes just as normal and make sure they understand that will mean “the devisee gets whatever is yours, and gets to figure out how to title and resolve that interest during probate.” (This is the “see how this all turns out during lifetime and hope it all just gets sold one day and converted to cash or something like that” option.) Obviously make darn sure the client has a rock solid property POA that will allow an agent to spring into action the random day in the future when the other spouse suddenly wants to “do” something and is demanding cooperation.

I would likely, if I opted for #2, simply do a will-based plan and not attempt to deed out to an RLT, because I suspect you’ll hit up against all manner of confusion, rejection, time wasting, etc. In my world, part of the point of funding an RLT is to “scrub clean” real property to ensure, as best one can, clean chain of title (by fixing things while the grantor is still alive, etc.). But that is option #1 above, so then this whole paragraph would not apply. 😉

Good luck! Best, Josh

From: wsbapt-bounces at lists.wsbarppt.com <wsbapt-bounces at lists.wsbarppt.com> On Behalf Of Jane Bitz
Sent: Thursday, April 27, 2023 1:26 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>
Subject: Re: [WSBAPT] Divorce & Property Transfers

Nick:
Thanks for your reply. The properties awarded to my client include the principal residence, but also include some separate and some community property investment properties and a community property business real estate.

In the “Exhibit A. Agreed Distribution of community and separate property to the Respondent spouse it says: “$418,000 equalization payment/disproportionate award of community property payable via deed of trust/promissory note as described in CR(2)(a) transcript filed herewith.” I don’t have that document.

In our search of the records online, we can’t find the “deed of trust/promissory note” recorded nor are there any Quit Claim deeds from the Respondent to the Petitioner to clear the title to the community property real estate that was awarded to him.

Just looking for some guidance on the proper course of action re: the real estate transfers.

Jane.

From: wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com> <wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com>> On Behalf Of Nick Pleasants
Sent: Wednesday, April 26, 2023 5:13 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com<mailto:wsbapt at lists.wsbarppt.com>>
Subject: Re: [WSBAPT] Divorce & Property Transfers

Jane,
Your statement that one spouse was awarded property in a divorce subject to an equitable lien for the other spouse’s community property interest does not sound right. The whole point of the divorce proceeding is to divide the community property. The result should be that the Divorce Decree spells out who gets what property, not subject to any lien for the other spouse, but possibly subject to a mortgage (although those often have to be refinanced within a period of time to get the other spouse off the mortgage obligation).
Let’s assume the Decree awarded the real estate to your client not subject to any liens. Then the ex-spouse would execute a quitclaim deed to your client.
If ex-spouse refuses to sign a quitclaim deed, you can (a) cite ex-spouse for contempt, or (b) request the court to appoint a commissioner (usually another attorney) under Ch. 6.28 RCW to convey the real estate consistent with the terms of the decree.
If the decree does have that lien language, then I’m not sure the divorce was really settled, as it appears something needs to be resolved as to what ex-spouse’s community property interest in the home is valued at.
Best,
Nick

Nicholas Pleasants | Shareholder

[OseranHahnAttyatLaw 8]

11225 SE 6th Street | Suite 100 | Bellevue, WA 98004
Main: (425) 455-3900 | Fax: (425) 455-9201 | E-mail: npleasants at ohswlaw.com<mailto:npleasants at ohswlaw.com>

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From: wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com> <wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com>> On Behalf Of Jane Bitz
Sent: Wednesday, April 26, 2023 2:35 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com<mailto:wsbapt at lists.wsbarppt.com>>
Subject: [WSBAPT] Divorce & Property Transfers

Hi All:

I have never practiced in Domestic Relations law. I now have an estate planning client who was recently divorced and awarded real estate in the divorce decree, subject to an equitable lien for the other spouse’s community property interest in the real property. When I research the properties on line, I see that the now divorced spouse is still on title for the properties. The divorce decree was granted in Stevens County and there are properties in both Stevens and Spokane counties that are still jointly in the names of the now divorced couple.

My questions are:
What is the best practice to put these properties into the client’s name?
Does the spouse who was not awarded the properties in the property division also have to sign a Quit Claim Deed?
Is there any excise tax issue if there is an existing mortgage on any of the properties?

Thanks for your input.
Jane.

Jane G. Bitz
Of Counsel | Wolff, Hislop & Crockett, PLLC
Helping Good People do Great Things!
12209 E. Mission Ave., Suite 5
Spokane Valley, WA 99206
(509) 927-9700 (Phone)
(509) 777-1800 (Fax)
jbitz at whc-attorneys.com<mailto:jbitz at whc-attorneys.com> [Email]
www.whc-attorneys.com<http://www.wolffandhislop.com/>

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