Misconceptions About Asset Division in Washington State

Myths About Dividing Assets in Divorce

Who gets the house? What happens to the family business? And who keeps the engagement ring? These are just a few concerns when dividing assets in a divorce. This complex process can become even more complicated if either party has misconceptions about the divorce process and Washington laws.

This blog will debunk common myths and offer you the truth. Whether you're considering divorce or in the midst of it, this blog aims to equip you with the knowledge you need to make informed decisions about your financial future and assets.

Myth: Community Property is Split 50-50.
Truth: Community Property is Divided in a “Just & Equitable Way.

Washington State adheres to a community property system for dividing assets during divorce. This means that all income and property acquired during the marriage by either spouse is considered community property and is generally divided equally between the spouses.

However, equally does not mean 50-50. The court considers a range of factors when deciding what is fair, including:

• The extent of each party’s separate assets
• The extent of each party’s community property
• The length of the marriage
• Each party’s economic situation after the finalization of the divorce

Myth: Separate Assets Will Never Be Divided.
Truth: Separate Assets Can Become Community Property.

Separate property, like inheritances or pre-marital possessions, can become community property through a process called commingling. This occurs when separate funds are deposited into joint accounts, used to pay off marital debts, or invested in marital assets without clear documentation of maintaining separate ownership.

If commingling is substantial and the separate nature of the asset is difficult to prove, a court may deem it community property subject to division during divorce. To protect your separate assets in Washington, it's crucial to maintain clear records and separate accounts whenever possible.

Myth: Everything Obtained After Marriage Is Community Property.
Truth: Certain Assets Are Exempt from Division.

While assets obtained during a marriage are considered community property and are subject to division, there are important exceptions.

One significant exception concerns gifts and inheritances received by one spouse during the marriage. These gifts and inheritances are considered the receiving spouse's separate property and are not subject to division during a divorce. The rationale behind this lies in the separate origin of the asset. An inheritance or gift is bestowed upon a specific individual.

Another exception involves personal injury settlements. Initially, the court ruled that personal injury settlements were considered community property (see Hawkins v. Front St. Cable Ry. Co.). However, this decision was overruled. Now, while compensation for lost wages, property damage, and injury-related expenses are still considered community assets, compensation for pain and suffering remains the separate property of the injured party.

Myth: Pet Custody is Divided Similarly to Custody of a Child.
Truth: Pets Are Considered Property in Washington State Divorces.

The courts do not have custody laws that govern who will get to have physical “custody” of pets. The state and law view pets as property, and when couples cannot agree on pet ownership, the court will consider the following factors:

• Who initially purchased the pet
• Who primarily takes care of the animal and pet-related expenses
• Whether the pet was a gift
• Who has custody of the children that have a close relationship with the pet

Read our blog, “Pet Custody in Washington,” to learn more about who can retain ownership of pets after a divorce.

Myth: Knowing the Accurate Value of Assets Isn’t Important.
Truth: Property Valuation Can Help Ensure the Division Process Is Fair.

Accurate asset valuation is vital for several reasons, including but not limited to:

• It prevents one spouse from getting a windfall while the other is shortchanged.
• It helps establish a clear financial picture for both parties moving forward.
• It minimizes future disputes arising from disagreements about the value of assets at the time of the divorce.

It is important to note that you cannot solely base the value of an asset on its original purchase price. While the original purchase price holds some weight, professional valuation reports are crucial for determining the asset's current fair market value.

This is especially true for complex assets like businesses, fine art, or collectibles. Financial professionals come into play here. They use various methods to assess the asset's worth, considering factors like current market trends, depreciation, potential future earnings (for businesses), and comparable sales of similar items.

Imagine a couple owns a restaurant that they purchased years ago. The original price might not reflect its current value due to renovations, a shift in the neighborhood's popularity, or changes in the restaurant industry. A financial professional would consider these factors, along with recent sales of similar restaurants, to determine a more accurate valuation.

Myth: Cheating Has No Bearing on Asset Division.
Truth: Cheating that Involves Wasteful Dissipation Is Relevant.

Washington is a no-fault divorce state. However, while you can file for divorce without having to prove fault, infidelity can still impact your divorce, including the property division process. How?

If a spouse uses marital funds for improper purposes unrelated to the marriage's needs, it can be considered dissipation. When such dissipation is proven, the court may consider it when dividing the remaining marital assets.

While RCW 26.09.080 outlines the factors the court considers when dividing assets in a divorce and says the court will make determinations “without regard to marital misconduct,” the court is allowed to consider a spouse’s conduct (i.e. adultery, gambling, addiction, etc.) if it led to the diminishing of marital property (see In re Marriage of Williams, 84 Wn. App. 263, 271, 927 P.2d 679 (1996)). In the context of adultery, dissipation can occur when a spouse spends marital funds on their affair partner.

Examples include:

• Using marital funds to purchase expensive gifts or vacations for the extramarital partner.
• Maxing out credit cards held jointly in the name of both spouses for personal expenses related to the affair.
• Withdrawing significant sums from marital accounts to support the affair partner.

Formidable Legal Representation in Divorce & Property Division Cases

For over three decades, McKinley Irvin has been helping our clients understand the legal intricacies of their cases and make informed case-related decisions.

Our team of family law attorneys is experienced in the valuation of assets and the division of property and debt in divorce cases, including cases with considerable or complex assets, such as retirement accounts, investments, real estate, and other property that may be subject to division in a divorce.

For more information or to schedule a consultation, contact us.