How Are Assets Divided in Divorce in Washington State?

The division of marital property is the only divorce term that applies to every divorce universally, and it has the potential to become the most contentious divorce term. The assets that you and your spouse acquire while you are married – regardless of who purchases what and whose name is on what – are considered community property (or marital property) in the eyes of the law, and upon divorce, they must be divided equitably, which means fairly – once all the relevant variables are factored in. While your separate property – that you bring into the marriage with you and that you keep separate throughout – will remain your own, keeping separate property separate is often more complicated than you may realize. If you and your divorcing spouse are able to negotiate a division of marital property that works for both of you, you won’t need the court’s intervention on the matter. If not, however, you’ll need the court to weigh in, and it will make its decisions based on exacting legal standards. 

Your Marital Property

When you think about marital property, your home may spring to mind, but there is a lot more to it than that, including:

• Your vehicles, including any recreational vehicles
• Funds in your bank accounts, including checking and savings
• Trusts, stock options, investments, and other financial tools
• Retirement accounts and pensions
• Any business interests held by either of you
• Any other real estate you own

It is important to recognize that, in addition to the financial value of the item in question, there can be considerable emotional or sentimental value attached, which can make the equitable division of these assets that much more complicated. Further, even if some of the assets listed above are separate property, any increase in their value since the time of your marriage will very likely qualify as marital property.

Is It Marital Property?

The question of whether Items A, B, and C are marital property or separate property is an important question, so let’s take a closer look. If you acquired the asset or debt during the course of your marriage, it is marital property – regardless of whether you or your spouse made the purchase and regardless of whose name is on the title or lease. There are, however, exceptions to this rule, and they include:

• If, while married, you received a gift in your name alone, it is your separate property.
• If, while married, you received an inheritance in your name alone, it is your separate property.
• If, while married, you received a personal injury settlement, it may – under certain circumstances – remain your separate property.

It is of special importance to note that, in order for separate property such as these to remain your separate property, you must keep them separate throughout your marriage, which means they should not be mixed and mingled with your marital financials. This can be a very high bar.

The Value of Your Marital Assets

Before your marital assets can be divided equitably, you’ll need to carefully inventory them, and once you know everything that you’re working with, you’ll need to assign value to each asset. This is where a very complicated matter can become that much more so. While this valuation can be a straightforward process for many of your assets, it can be far more nebulous for others. For example, if you own a business, coming up with a value – that you are both willing to sign off on – can be extremely challenging. Further, if the item has sentimental value, it can make assigning a value for the purposes of your divorce difficult at best.

Separate Property

That property that you bring into the marriage with you is your separate property, but if it becomes intertwined with your family’s other assets, which is not uncommon, it can negate or partially negate the separate nature of the property. Examples include:

• If you use your personal credit – which amounts to your marital credit – to grow your separate business, it can move the business closer to community-property status.
• If you work at your separate business but don’t compensate yourself accordingly, your marital assets are deprived of that compensation, and it can move the business closer to community-property status.

Further, even if you keep your separate property legitimately separate throughout your marriage, there is the matter of growth in value to consider. Take a look at the following:

• If you own a separate business that grows in value while you are married, that increase in value is likely marital property.
• If you bring a valuable retirement account into your marriage with you, it’s separate property, but any increase in value will not be.

It bears repeating that it is, indeed, complicated.

The Division Process

The division of your marital property begins with identifying what it is you have, which can be a process in and of itself. Taking an inventory and gathering documentation should be your first step. If you are less involved in your family’s finances, this can be off-putting, but taking a careful step-by-step approach will help you get there. Keep all of the following in mind as you create your inventory:

• Your mortgage
• Your car titles and/or car payments
• Your insurance policies, including home, health, life, and car
• Your household expenses, including groceries, cosmetic items, clothing, out-of-pocket medical costs, extracurricular activities, repairs, and every other expense that goes into running a home
• Your financial portfolio, including all investments, stocks, bonds, and other financial tools
• The cost of your children’s education and/or childcare
• Your retirement accounts
• Other properties owned
• Items of value owned, including jewelry, art, recreational vehicles, collections, and more
• A family or separate business

Once you have an accurate accounting of what you have, it’s time to separate the property that belongs to one of you alone from the community property, and next up is assigning values to these properties. Ultimately, if you and your divorcing spouse are able to hammer out a mutually acceptable division of your marital property – regardless of how much professional legal guidance you require in the process – you won’t need the court to intervene on your behalf.

How Are Debts Divided in a Washington Divorce?

In the State of Washington, debts are divided in exactly the same way that assets are. If you acquire the debt while you are married, it is classified as marital, and it will play a direct role in the division of your community property – by offsetting the assets that must be divided equitably between you. It’s important to note, however, that, in Washington, debts can also be classified as separate debts (if they follow either of you into the marriage and are kept separate throughout).

When Do Debts Belong to Both Spouses in Washington State?

If either spouse incurs debt during the course of their marriage, it is considered marital debt, and it will be addressed directly in the division of marital assets in the event that the couple divorces. If one spouse decides to make a major purchase and he or she alone signs off on the financing, the debt remains marital. If, however, a spouse brings debt into the marriage with him or her – such as a student loan – the debt will likely remain that spouse’s alone.