Grace and Henry are married and hold their Olympia home as community property with right of survivorship. Grace inherits $80,000 from her mother and uses the entire amount as a down payment on a second property in her name only, titled as her separate property. Henry later claims that the second property is community property. Under Washington law, which statement is most accurate?

Correct Answer

B) The second property is Grace's separate property because it was purchased entirely with inherited funds, which are separate property

Under RCW 26.16.010, property acquired during marriage by gift, bequest, devise, or descent is the separate property of the spouse who received it. Because Grace used her inherited funds (which are her separate property) to purchase the second property, and she can trace the funds directly to the inheritance, the second property is her separate property. The ability to trace separate property funds to a newly acquired asset is key to maintaining separate property status in Washington.