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<p class="MsoNormal"><a name="_GoBack"></a><span style="font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1F497D">Eric has give a very nice and thorough analysis as always!
<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1F497D"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1F497D">A simple solution for now is for mom to loan the money to the friend and the friend’s wife with a due on death or sale/transfer clause. The interest rate could
be set at the applicable federal rate with the friend and the friend’s wife as joint obligors. Mom could then bequeath the debt under the will to her son. <o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1F497D"><o:p> </o:p></span></p>
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<p class="MsoNormal" style="text-align:justify"><span style="font-size:10.0pt;font-family:"Arial","sans-serif";color:#1F497D">Marcus J. Fry<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Arial","sans-serif";color:#1F497D">Lyon, Weigand & Gustafson, P.S.
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</span><span style="font-size:10.0pt;font-family:"Arial","sans-serif";color:#1F497D"><o:p></o:p></span></p>
<p class="MsoNormal" style="text-align:justify"><b><span style="font-size:10.0pt;font-family:"Arial","sans-serif";color:#1F497D">Confidentiality:
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<p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1F497D"><o:p> </o:p></span></p>
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<p class="MsoNormal"><b><span style="font-size:10.0pt;font-family:"Tahoma","sans-serif"">From:</span></b><span style="font-size:10.0pt;font-family:"Tahoma","sans-serif""> wsbarp-bounces@lists.wsbarppt.com [mailto:wsbarp-bounces@lists.wsbarppt.com]
<b>On Behalf Of </b>Eric Nelsen<br>
<b>Sent:</b> Thursday, May 03, 2018 12:41 PM<br>
<b>To:</b> WSBA Real Property Listserv<br>
<b>Subject:</b> Re: [WSBARP] Inheritance question<o:p></o:p></span></p>
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<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1F497D">That's a difficult situation in which to preserve a separate property right. Actually, marriage in general is a difficult situation in which to preserve a separate
property right. :-)<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1F497D"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1F497D">Gift letter won't work by itself. That makes the money traceably F's separate property (SP) upon F's receipt of the funds, but then F messes that up by using
the funds to make improvements to community property (CP) real estate. The use of SP funds to make improvements to CP real estate does
<u>not</u> raise a presumption of gift to the community, but it <u>does</u> mean that
<u>at best</u>, F retains an equitable right of reimbursement for the SP contribution to CP improvements, and that right would be protected by an equitable lien on the improved real estate.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1F497D"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1F497D">Even that is not certain, though. The case law for equitable reimbursement almost always involves a reimbursement
<u>to the community</u> for use of CP funds to make improvements to SP real property--the exact opposite of this situation. The natural bias of the law is to be reluctant to allow reimbursement to SP out of CP assets; it's not an express legal rule, but the
court is reluctant to say a community should reimburse someone's SP contribution because the basic image of marriage under CP law is that both spouses contribute into creating a community estate of assets.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1F497D"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1F497D">And keep in mind, the judge in a divorce has jurisdiction over all property, both SP and CP, and makes a "fair and equitable" division of all property, which
can include in some circumstances the allocation of one party's SP to the other. So even if it's thoroughly documented that the money was SP, that doesn't mean F will get it back in event of divorce.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1F497D"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1F497D">Probably the best that could be done is a document signed by F and F's wife, in which they agree and acknowledge that F is contributed $X of SP funds toward
improvements on the house, and that F's wife agrees that the contribution is not a gift to the community. That provides firm evidence, later on, of the SP contribution if they divorce years later and other records are no longer available, or if one of them
dies and there is a dispute with their heirs concerning their interest in the house.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1F497D"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1F497D">You could consider adding a clause that specifies how it should be reimbursed in event of death, divorce, sale, whatever. But then you get into, what should
the reimbursement be? Just $X back, even if it's 30 years later? What about interest on it? Or should F get a portion of increased value of the real estate? But if you do that, then is the real estate "actually" becoming partly SP? Or is it more than F's wife
is entering into a contract with F to reimburse?<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1F497D"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1F497D">Also, is that a post-nuptial agreement that requires scrutiny of substantive and procedural fairness, and possibly separate counsel for F's wife if there is
any doubt about the substantive fairness? Or is it more in the nature of an agreement as to status of property, in which F and F's wife agree that the status of the house is X% community and Y% F's SP (or perhaps 100% community but F has an equitable right
to reimbursement for $$ protected by a lien)?<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1F497D"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1F497D">See WSBA Community Property Deskbook (4th ed. 2014), Ch. 3.4 "Right of Reimbursement: The Equitable Lien." It is pretty thorough.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1F497D"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-family:"Calibri","sans-serif";color:#1F497D">Sincerely,<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-family:"Calibri","sans-serif";color:#1F497D"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-family:"Calibri","sans-serif";color:#1F497D">Eric<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-family:"Calibri","sans-serif";color:#1F497D"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-family:"Calibri","sans-serif";color:#1F497D">Eric C. Nelsen<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-family:"Calibri","sans-serif";color:#1F497D">SAYRE LAW OFFICES, PLLC<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-family:"Calibri","sans-serif";color:#1F497D">1417 31st Ave South<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-family:"Calibri","sans-serif";color:#1F497D">Seattle WA 98144-3909<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-family:"Calibri","sans-serif";color:#1F497D">phone 206-625-0092<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-family:"Calibri","sans-serif";color:#1F497D">fax 206-625-9040<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1F497D"><o:p> </o:p></span></p>
<p class="MsoNormal"><b><span style="font-size:10.0pt;font-family:"Tahoma","sans-serif"">From:</span></b><span style="font-size:10.0pt;font-family:"Tahoma","sans-serif"">
<a href="mailto:wsbarp-bounces@lists.wsbarppt.com">wsbarp-bounces@lists.wsbarppt.com</a> [<a href="mailto:wsbarp-bounces@lists.wsbarppt.com">mailto:wsbarp-bounces@lists.wsbarppt.com</a>]
<b>On Behalf Of </b>Anthony F. Gibbs<br>
<b>Sent:</b> Thursday, May 03, 2018 11:50 AM<br>
<b>To:</b> WSBA Real Property Listserv<br>
<b>Subject:</b> [WSBARP] Inheritance question<o:p></o:p></span></p>
<p class="MsoNormal"><o:p> </o:p></p>
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<p class="MsoNormal">A friend's mother wants to contribute a lump sum of money to help with a remodel of a portion of the community home in which friend and friend's wife live. Friend's mother does not want the money to be subsumed into the community property
but to instead remain friend's separate property even after remodel.<o:p></o:p></p>
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<p class="MsoNormal"><o:p> </o:p></p>
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<p class="MsoNormal">Friend's mother wants that the lump sum contribution to the community home remain traceable and devisable through friend's estate and not be commingled with wife's estate.<o:p></o:p></p>
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<p class="MsoNormal"><o:p> </o:p></p>
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<p class="MsoNormal">Would a gift letter allow that lump sum to remain traceable and therefore allow him to, for example, give that "extra" lump sum according to his will? Or, would they be wiser to do a separate property agreement addressing the lump sum and
identifying it as separate property of H?<o:p></o:p></p>
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<p class="MsoNormal"><o:p> </o:p></p>
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<p class="MsoNormal">If it's complicated, I'd be happy to refer him.<o:p></o:p></p>
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<p class="MsoNormal">Thanks,<br>
Anthony<o:p></o:p></p>
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<p class="MsoNormal">----<o:p></o:p></p>
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<p class="MsoNormal"><o:p> </o:p></p>
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<p class="MsoNormal">Gibbs Law Offices<br>
Anthony F. Gibbs<br>
Attorney & Counselor at Law<br>
15600 Redmond Way<br>
Suite 101<br>
Redmond, WA 98052<br>
Ph: 206.734.4374<br>
Fax: 206.971.5053<br>
Email: <a href="mailto:gibbslawoffices@gmail.com" target="_blank">gibbslawoffices@gmail.com</a><br>
Web: <a href="http://www.gibbslawoffices.com" target="_blank">www.gibbslawoffices.com</a><br>
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