Getting divorced in Washington means more than splitting the sheets. Under Washington law, all assets acquired during the marriage are subject to division (with limited exceptions), and some assets acquired prior to the marriage may be on the table as well. In order to protect your assets to the greatest extent possible, you need to know (i) which assets are subject to distribution (and which are not), (ii) the value of your assets that are subject to distribution, and (iii) what constitutes an “equitable” distribution under the circumstances of your divorce.
Step 1: Which Assets are Subject to Distribution in Washington?
Under Washington law, a couple’s “community” assets are subject to equitable distribution during the divorce process. Community assets are distinguishable from “separate” assets, which generally are not subject to distribution.
When preparing for the property-related component of your divorce, one of the first steps is to prepare an inventory of your community assets. It is important for this inventory to be entirely comprehensive, as overlooking assets during the divorce process can lead to unnecessary, contentious, and potentially-costly disputes down the line. In most cases, a couple’s community assets will include:
- Real estate holdings (including, but not limited to, the family home)
- Vehicles and boats
- Retirement and brokerage accounts
- Checking and savings accounts
- Furniture, appliances, and electronics
- Artwork, jewelry, tools, and other personal property items
- Digital assets (such as music libraries, photo libraries, and social media accounts)
- Privately-held businesses
Since the date of marriage is the dividing line between classification as separate and community property (in most instances), it is important to note the date of acquisition of individual assets as well. While this may be a non-issue for assets that were recently acquired, particularly in the case of a long-term marriage, it is not unusual for the date of acquisition to become an issue for certain items of real and personal property. Various other issues can create additional complexities (for example, if you established your retirement account before you got married), and establishing a definitive list of community assets can require significant time, effort, and attention to detail. Also, remember that if you and your spouse signed a prenuptial agreement, then the terms of your agreement may override Washington’s default community property principles.
Step 2: What is the Value of the Assets that are On the Table?
Once you have identified the assets that are subject to division in your divorce, then you need to determine their present value. Without a clear understanding of what your community assets are worth, you will not be able to make informed decisions regarding the equitable distribution of your marital estate. Oftentimes, spouses will disagree over the appropriate valuation of assets such as real estate and privately-held businesses, and it will be necessary to engage the services of a neutral third-party appraiser to provide a valuation. One particular valuation issue that routinely comes up during the divorce process is how to value IRAs, 401(k)s, pensions, and other retirement assets. These assets are supposed to appreciate over time, and the current dollar value of an account may or may not be entirely dispositive. As noted above, additional complexities can arise if an account was established prior to the marriage, as this can result in separate portions of the account being deemed separate and community property.
Step 3: What Constitutes an Equitable Distribution in Your Divorce?
After identifying and placing an appropriate valuation on your community assets, you can then turn your attention toward formulating an equitable distribution. Washington law requires a “just and equitable” distribution of assets that takes into account:
- The nature and extent of community assets;
- The nature and extent of each spouse’s separate assets;
- The duration of the marriage; and,
- “The economic circumstances of each spouse . . . at the time the division of property is to become effective, including the desirability of awarding the family home or the right to live therein for reasonable periods to a spouse . . . with whom the children reside the majority of the time.”
Critically, while community assets are deemed to be owned equally by both spouses, an equitable distribution does not necessarily mean an equal distribution. There are various factors that may justify something other than a 50/50 split, and divorcing spouses have a significant amount of flexibility to structure mutually-agreeable distributions. Additionally, while dividing individual assets is one option (to the extent practicable), oftentimes, divorcing spouses will agree to give up their rights in certain community assets in exchange for exclusive ownership of others. For example, rather than dividing a retirement account, the spouses may agree that one spouse will keep the entire account in exchange for giving up his or her rights to other assets of equal value. Or, rather than dividing ownership of a business (which can present a variety of issues for both spouses), the spouse who runs the business might retain sole ownership while the other spouse takes another high-value asset such as the family home or vacation property.
With these considerations in mind, when preparing for a divorce, it is a good idea to begin thinking about prioritization. The divorce process is designed to ensure a fair outcome, and this inherently involves compromise on the part of both spouses. Which assets do you absolutely want to keep? Which assets is your spouse likely to prioritize? Where are you likely to find common ground? These are all important questions to consider now so that you can make informed and confident decisions during your divorce.
Speak with an Experienced Divorce Attorney in Tacoma, WA
If you are thinking about filing for divorce, or if think your spouse may be preparing to file for divorce, we encourage you to contact us for a confidential initial consultation. Our attorneys can assist you with the process of identifying your community assets and developing a strategy to protect what matters most in your divorce. To schedule an appointment at our law offices in Tacoma, WA, please call 253-272-2997 or send us a message online today.