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Washington State is among the few states that follow a communal property approach to debt and asset division in the event of a divorce.
In a community property state, it’s believed that all marital assets are jointly owned so they must be jointly split should you get a divorce. Most often, the main assets that need to be divided include real estate, personal property, savings, retirement accounts, and debts.
Understanding Asset and Debt Division in Washington
The 3 Main Steps of Asset Division
Dividing assets can be very complex; however, this is a general breakdown of how the process is approached.
- First, all assets are listed and labeled either “community” or “separate.”
- Then each asset is valued. Assets can be appraised by an expert (jewelry and homes), using the dollar value (in the case of savings and checking accounts), or a value can be agreed on by the couple (sentimental or personal items).
- Lastly, assets are divided between both parties.
Community vs. Separate Property
Generally speaking, community property includes all assets earned or acquired during the course of the marriage. Common examples of community property include money sitting in a joint bank account and the house a couple purchased together.
Separate property includes assets earned or acquired before the marriage took place. Common examples of this may include properties purchased exclusively by one party before the marriage and student loan debts.
Exceptions to Community Property Laws
Asset division laws are rarely black and white. There are some instances when a person is exempt from community property laws. A person might be able to maintain full ownership of a property if:
- It was given to one spouse as a gift.
- One spouse inherited it during the marriage.
- One party received the property through a trust fund or relative’s will.
- The property was acquired while the spouses were legally separated and living separately.
Debt Division
Because divorcing couples must split all assets that were acquired during the marriage, they must also split their debts. In a community property state like Washington, debt is often treated similarly to other assets — if it was acquired before the marriage, it’s separate, and if it was acquired during the marriage, it’s community.
However, there are some unique exceptions to debt division. If the debt was acquired secretly and did not benefit the marriage, it may be treated as separate property, even if it was accrued while you were both married.
For example, say a husband opens a credit card account and frivolously spends the couple’s money. If the wife had no knowledge of the card or purchases, and never benefited from what was bought, the courts may find that her husband is solely responsible for paying back that debt.
Can a Prenuptial Agreement Protect my Assets?
Before getting married, “prenups” are agreements made by a couple that outlines how financial assets should be divided in the event their marriage one day ends. One of the many benefits of a prenup is that they can protect your assets by overriding community property laws.
However, it’s important to note that prenups must be valid in order to be effective. They also can’t violate state and federal laws.
Have an Attorney on Your Side
Property division is rarely as simple as it sounds. With both parties often wanting to retain as many assets as possible and complex laws regarding how assets are categorized, it’s imperative that you have an attorney on your side. The results of your divorce will have a major impact on your future. Don’t leave such an important outcome up to chance.
At our Seattle family law firm, we believe in high-quality counsel that comes at reasonable rates. Everyone deserves exemplary legal care, and that is what you will find at Wakefield Legal, PLLC. Help is always just a call away! Request your case evaluation online or call (206) 966-6933.