Special situations when dividing property in a Washington state divorce
Are inheritances community property?
Inheritances are typically not considered community property in Washington state, even if you receive them during marriage. However (and this is important), how you handle that inheritance can affect whether it stays separate property.
For example, if you inherit $100,000 and keep it in a separate bank account that only you use, it remains your separate, personal property. But if you deposit that inheritance into a joint account with your spouse and use it to pay for family expenses, it might become community property through transmutation / commingling.
Who gets the house in a Washington divorce?
One of the most emotionally charged questions in any divorce is what happens to the family house. In my years as a mediator, I've found that the answer depends on your unique situation and several key factors we need to consider together.
First, we need to determine whether the house is community or separate property. This affects what options are available to you. We also need to think about any children involved - maintaining stability for kids is often a top priority in these decisions, especially when child support is a factor. Another crucial factor is whether either spouse can realistically afford to keep the house, considering mortgage payments, maintenance costs, and other expenses. Finally, we look at what other assets and debts are available that might be used to offset the house's value.
When it comes to the family home, I've helped couples find several creative solutions. Many choose to sell the house and split the proceeds - while this is often the cleanest solution, it's not always what works best for everyone. Another common approach is to get the property valued and for one spouse to buy out the other spouse's interest, which can work well if there are enough assets or financing available to make it happen. Some couples, especially those with children, opt for a deferred sale arrangement where they continue co-ownership for a set period, often until their children graduate from high school. And sometimes, we can arrange a trade-off where one spouse keeps the house in exchange for other assets of similar value.
How do support payments affect property division?
When working through property division, it's important to consider how spousal maintenance (alimony as it's commonly called) might impact the overall settlement. The division of assets and debts often interplays with support obligations, as one spouse's economic circumstances may affect their ability to maintain their standard of living post-divorce. A fair division of property which has a couple's property divided in a "fair but not necessarily equal" manner, might help reduce or eliminate the need for ongoing spousal maintenance in some cases. In mediation we call this a lump sum alimony buyout.
How are business interests handled?
Business ownership often presents unique challenges in property division. If you or your spouse owns a business, we need to consider several factors. We'll look at when the business was started - was it before the marriage or during? We'll examine how much the business grew during your marriage, and whether both spouses contributed to its success, either directly or indirectly. These factors help us determine what portion of the business is community property and how to fairly address it in your property division.
What about retirement accounts?
Remember before when we talked about split characterization? Retirement accounts are a prime example of this. While the portion of retirement benefits earned during your marriage is considered community property, any portion earned before marriage remains separate. This often leads to some complex calculations, and couples will typically need to use a special court order called a Qualified Domestic Relations Order (QDRO) to divide these accounts properly without triggering unnecessary taxes or penalties.
How do taxes impact our divorce settlement?
While transfers between spouses during divorce are usually tax-free, there are still important tax implications to consider. For instance, if you're selling property, you'll need to think about potential capital gains taxes. When dividing retirement accounts, we need to carefully consider how future distributions will be taxed. Understanding these tax implications helps us make more informed decisions about how to divide your property fairly.
Why is mediation your best option for a fair property division agreement?
When negotiating property division in a Washington divorce, you have several options available to you: you could litigate in court, negotiate through attorneys, or work with a mediator. After years of helping couples through this process, I've seen firsthand how mediation consistently produces the most satisfying results for both parties.
Mediation puts you in the driver's seat of your divorce. Instead of leaving crucial decisions about your future in the hands of a judge who doesn't know your family's unique situation, you and your spouse work together to create solutions that make sense for both of you. This control over the outcome often leads to arrangements that work better in the real world than court-imposed solutions. After all, who knows better what's in your mutual best interest than the two of you?
The practical benefits of mediation are significant as well. The process typically costs far less than litigation, and we can usually reach agreements much faster than going through the court system. Call it two to three months versus two to three years! But perhaps more importantly, mediation's collaborative nature helps preserve relationships - something that's especially crucial when you have children together or shared business interests that will continue after divorce.
I've found that couples who go through mediation tend to be more satisfied with their property division in the long run. This makes sense when you think about it - rather than having a solution imposed on them, they've actively participated in creating arrangements that work for their specific situation. This ownership of the process often leads to better compliance with agreements and fewer post-divorce disputes.
Final thoughts
Understanding community property in Washington state doesn't have to be overwhelming. While the legal framework can seem complex, working with an experienced mediator can help you navigate the process efficiently, create fair and lasting agreements, save money compared to litigation, maintain better relationships, and achieve outcomes that work for everyone.
Remember, while Washington law provides a framework for property division, you and your spouse have the power to create a division plan that works for your unique situation. Through mediation, you can develop creative approaches that address both parties' needs while ensuring compliance with Washington state law. Whether you're dealing with complex assets or simple property division, mediation provides a path to resolution that's typically faster, less expensive, and more satisfying than going to court.
