Community Property For Unmarried Couples


Let me ask you a very simple and timely question. If an unmarried man and woman split up after living together for many years, the woman has no community property rights to the man's business, right?

Wrong! The State Court of Appeals has said that the woman may very well have a right to half of all of the assets, including the business, just like community property rights in a marriage. [Lindemann v. Lindemann, 960 P.2d 966 (Wash. Ct. App. 1998).]

Summary of Facts

The unmarried couple in question actually had been married in 1978, and divorced in 1982. In 1982, the man started an auto repair business out of his garage. Things got better. He and his ex-wife began living together again in 1985, but never did get married. They stayed together for another 10 years, raised their two children, and basically acted like a married couple with their friends and relatives. The woman held down a job, and the man kept working away at his auto body business. In 1995, they split up again and the woman filed a petition with the court asking that the court divide their property and liabilities in the same way as if they were married. The man pointed out that they were unmarried, the business was in his name, and the woman had never worked for his auto body shop. He said that she had no right to any part of the business, and her petition should be dismissed.

Trial Court Award of One-Half of Business

The couple could not come to any kind of agreement, so the case was assigned to a judge for trial. Snohomish County Superior Court Judge Kathryn Ross ruled that the woman should be awarded one-half of the value of the business, or $109,362.75. The trial court placed a lien on the business of $109,362.75 and gave the man eight years to pay it off.

Washington Appellete Court Agreed

The man appealed to the Washington State Court of Appeals. The Court of Appeals noted that the State Supreme Court has already held that when a man and woman separate after living in a stable relationship, property accumulated by the couple should be treated like community property. The Supreme Court reasoned that the woman often gives the same sacrifice and labor of a married woman to her marriage. Unless the courts apply community property rules to these relationships, unmarried women who help their partners succeed can end up being dumped without any financial reward for their contributions.

There still is a difference in the way that the courts will treat married and unmarried couples. When a marriage breaks up, the court has the power to make a fair division of all property, both separate property and community. When an unmarried couple breaks up, however, the current rule is that the court has jurisdiction only over property that the co-habitating couple acquired during their relationship. The separate property of the man and woman cannot be considered by the court for equal distribution.

In the Court of Appeals case that mentioned above, the man started his auto body repair shop after his marriage ended, but before the couple began living together again. The court decided that the value of the auto body shop prior to their living together should not be divided by the court. However, the court stated that it should figure out the increased value of the business during their living together, and divide that up.

After hearing all of the evidence at the trial, the judge decided that when the couple moved in together in 1985, the auto body business was worth only about $10,000.00. The man had only his clothes and a motorcycle, and the auto body business was still basically on a start-up basis. He could not afford tools for his shop, owed back taxes, and had a very small amount in his checking account.

Living Together Allowed the Business to Prosper

The auto body business actually did not start to prosper until 1991, when the man overcame a drug addiction and became more effective and productive. From that time until the couple separated for the second time in 1995, he put in about 65 hours a week.

During the 10 years that the man lived together with the woman, his auto body business became a going concern and was worth $218,725.51 at the time they separated.

The Court of Appeals stated that the man's ability to overcome his drug problem and concentrate on his business were directly related to the fact that he had a home and the support of the woman. In other words, if he had not had the stable home (and presumably the cooking, cleaning, child care, laundry and other work often delegated to women in this society), he couldn't have put in all those hours at work, and his business would never have prospered.

Conclusion

Under Washington law the auto body business was separate property and not subject to division because of the quasi-marital relationship. However, the increase of that business was attributable to the community labor of both partners and that increase could be divided. The court had reasoned that the couple had a marital-like relationship, thus just by not getting married is not protection of assets if the court can find that both parties contributed to the value or increase in value of the property.