The issue of labeling for categorizing property, into either community property or separate property, often arises in divorces in Spokane County. This categorization of property can make a substantial difference on how the court will allocate assets and liabilities to the parties who are seeking a final dissolution or a legal separation from their spouse.
The law in Washington states that all property acquired prior to the marriage, and its rents, issues, and profits, is considered separate property. In addition, property that is acquired during my marriage from gifts, inheritance and its rents, issues, and profits will be considered separate property. The issue with this is that often the parties will commingle community property with separate property. Then would be unable to tell which property or asset is completely 100% separate at the time of the divorce. Community property in Spokane is categorized the same way.
If they are able to show that the character of the property never changed (i.e. a bank account that was never touched), then the asset will continue to be separate property. This often causes issues because typically parties will take their savings and invest into a community investment, and thus most likely commingling the funds and rendering the entire investment a community asset.
One defense to commingling is the direct tracing theory. As noted above, if a party can show, with bank statements, testimony, checks, and or other writings, that the funds were never mixed, that party may be able to keep the asset or the value of the asset from distribution.
To make matters worse, in a Spokane County and the entire state Washington, a Superior Court judge has the ability to the label property (community or separate property) and then distribute the assets in a just and equitable manner. Community property in Spokane thus must be categorized by a Superior Court judge, then divided as the judge deems fair and equitable.