## Facts

- John and Shauna Mueller married in 1983 and lived in Brazil; both worked full time, with John earning more.
- In 1985, their child was born; Shauna took leave from her job to provide childcare.
- In 1986, the spouses reached an oral arrangement that John’s wages would first pay joint expenses and that the remaining funds would be divided so each spouse could control a “share.”
- The arrangement was never reduced to writing, and the spouses disputed details of the discussion forming it.
- Over the marriage, the spouses followed the arrangement inconsistently, with variations in how funds were divided and used.
- After approximately 19 years, John petitioned for dissolution.
- John asserted the arrangement converted (transmuted) divided portions of his wages from community property into each spouse’s separate property; Shauna contended it was only a household money-management practice.

## Issues

1. Whether John proved by clear and convincing evidence a valid agreement that converted community wage income into separate property when divided between the spouses.
2. Whether John proved by clear and convincing evidence that the parties mutually and consistently observed the alleged transmutation agreement throughout the marriage, sufficient to overcome the presumption that property acquired during marriage is community property.

## Decision

- The Court of Appeals reversed the trial court’s characterization of the divided wages as separate property under a transmutation agreement.
- The court held John failed to overcome the strong presumption that wages earned during marriage were community property.
- The court remanded for further proceedings requiring recharacterization of the disputed property as community and reconsideration of the dissolution property distribution under that characterization.

## Legal Principles

- Property acquired during marriage is presumed community property, and overcoming that presumption requires clear and convincing evidence.
- Spouses may contract to change community property into separate property, but the proponent must prove by clear and convincing evidence:
  - the existence of an agreement to convert the property’s character; and
  - that the spouses mutually observed the agreement’s terms throughout the marriage.
- An arrangement that allocates spending authority or divides community income for budgeting purposes does not, without clear proof of intent and consistent observance, change the legal character of the income.
- The fact that spouses place funds under separate control or in separate accounts does not by itself determine whether property is community or separate.

## Conclusion

The court rejected treating an oral, inconsistently followed wage-division arrangement as a transmutation of community income into separate property, reversed the trial court’s separate-property characterization, and remanded for redistribution of property based on community-property characterization.


In re Marriage of Mueller, 140 Wash. App. 498, 167 P.3d 568 (Wash. Ct. App. 2007)