Limitations of a Washington Community Property Agreement
Before you sign a Washington CPA, be sure that you understand all the consequences of using it.
In Washington state, a community property agreement (CPA) provides couples a simple way to:
- leave everything to their spouse or partner, and
- avoid probate.
However, CPAs aren’t right for everybody, and you should understand the limitations of a CPA before you make one.
Learn more about how Washington Community Property Agreements work and how to make one on Nolo.com.
A CPA Overrides Your Will and Other Documents
If your community property agreement conflicts with other arrangements you’ve made—for example, a joint tenancy, your will, or the designation of a beneficiary to inherit a pension plan or retirement account—your community property agreement will trump the others.
Elisa owns a vacation house with her sister Marge in joint tenancy. Under this arrangement, the property automatically passes to Marge if Elisa dies. However, Elisa also signs a CPA with her husband Steve that states that on her death, all the property she owns will become community property and will go to Steve.
When she dies, there is conflict. Should Elisa’s half-interest in the vacation house go to Marge according to the joint tenancy, or to Steve according to the CPA? Washington law is clear that the CPA would override the joint tenancy. Her interest in the vacation house would go to Steve, making him a half-owner with Marge.
A CPA Does Not Avoid Probate for the Surviving Spouse
A community property agreement avoids probate when the first spouse dies. At that time the CPA ends, and the survivor will have to make a new plan to avoid probate. If you want to make a plan that avoids probate for both spouses, look into making a shared living trust. Read more about Living Trusts on Nolo.com.
A CPA Remains in Force if You Separate
If you get divorced, your community property agreement will have no effect. However, it will remain in effect until the divorce is finalized, which could be months or even years after you separate. If you and your spouse or partner ever decide to split up, you will have to remember to revoke your CPA as soon as you separate.
If you want a CPA that remains in force if you separate, see a lawyer for help.
A CPA Doesn’t Work If You Die Simultaneously
A simple CPA is ineffective if both people die at the same time or so closely together that it’s impossible to know who died first. This is one of several good reasons to have a basic will as well as a CPA. If both of you die at the same time, the CPA will be revoked, and your executor can probate your will, assuring that your wishes will still be met. Learn more about Wills on Nolo.com.
If you want a CPA that works if you die simultaneously, see a lawyer for help.
A CPA Does Not Allow Gifts to Children
Couples who use a community property agreement must agree that all of their property will go to the other person. If a couple has children, a CPA is appropriate only if you are comfortable with no property going directly to your children when the first spouse dies. Couples with children from previous marriages may want to leave property directly to those children, meaning you shouldn’t use a CPA.
If you want a CPA that doesn’t leave all property to your spouse or partner, see a lawyer for help.
Out-of-State Real Estate May Still Go Through Probate
If you own real estate in another state, your Washington CPA will not affect that out-of-state property, and it may need to go through a probate proceeding in that state’s courts. If you want to keep it out of probate, you will need to make a separate plan for it.
Inheriting Property May Affect Eligibility for Government Benefits
If you or your spouse or partner relies on government benefits (such as SSI or Medicaid), be cautious before you leave everything to each other, whether you use a community property agreement, will or trust. If eligibility for those benefits depends on the recipient owning little or no property, receiving all of the deceased partner’s property could severely affect eligibility for benefits. In this situation, you may want to use another estate planning device, such as a special needs trust, which allows the survivor to benefit from the deceased person’s property without affecting eligibility for benefits. See a lawyer for help or check out Special Needs Trusts, by Stephen Elias and Kevin Urbatsch (Nolo).
You can make a simple, straightforward CPA (with the limitations discussed in this article) using Nolo’s Washington Community Property Agreement.
To make a more complicated CPA, see a lawyer for help. To find an estate planning lawyer in your area, try Nolo’s Lawyer Directory.