How the Marital Home and Retirement Accounts Factor into Property Division in Washington
In Washington State, if parties can’t agree to fair and reasonable property division on their own, the Family Court divides the property within the Judgment of Divorce.
Factors in Property Division
As a no-fault community property state, Washington family law seeks to divide all property and debt acquired between the beginning and end dates of the marriage, with no consideration given to marital misconduct. Factors in the property division in Washington can include the nature and extent of both the marital property and separate property, the duration of the marriage, and the financial circumstances of each spouse at the time of the division.
Marriage Duration as a Factor
If a marriage has lasted for a short time, courts try to restore the parties financially to where each was before the marriage. If a marriage has lasted long, courts try to equalize the finances of each spouse, which may actually result in one spouse receiving an unequal division of property. In a medium-length marriage, the court seeks to balance the financial needs of the economically vulnerable parties.
Marital Property vs. Separate Property
Before Washington courts appraise and divide assets and liabilities in a divorce case, the court categorizes the property as either marital or separate. All property acquired during a marriage is community or marital property. Property that a spouse owned before the marriage, or that he or she receives as an inheritance or gift is separate or immune property. When a property classification is in dispute, the claiming spouse must present clear, cogent, and convincing evidence that an asset qualifies as separate property.
Although Washington is a no-fault state when it comes to divorce, courts can factor in conduct that affects marital property when it divides property in a case. For example, if a spouse dissipates a major community asset—like gambling away the marital home—the court may compensate the other spouse for the asset as a consequence.
Two of the most substantial marital property assets that are divided in a divorce are the marital home, and pension and retirement accounts.
The Marital Home
The marital home contains an enormous amount of emotional weight at the time of divorce. It has defined the married couple’s physical space in the world, and in some cases it’s the place where they’ve expanded their family with children. Washington family law defines the equity of the marital home as the market value of the house less any debts or liens against it. Once spouses agree to the marital home’s market value, liabilities associated with the property like mortgage, taxes, and home equity loans are deducted.
After the equity is calculated—usually through a real estate appraisal—couples have a couple options. The two parties can sell the home and split those earnings, or one of the spouses can take an individual action. One spouse can refinance and buy out their ex-spouse. Or the spouse who’s a custodial parent can retain exclusive use and possession of the house for a certain period of time (often the amount of time it takes for the youngest child to reach an adult milestone, like high school graduation) then either buy out the other spouse or sell the home and divides the proceeds.
Pensions and Retirement Accounts
It may seem a bit less emotionally fraught to divide pension and retirement accounts in a divorce than a marital home. But these accounts present their own complications, which are best tackled with the help of a reliable legal professional.
Washington divorce law considers both vested and unvested pensions and retirement accounts as marital property. These accounts can be valuated in a couple of different ways. If spouses mutually agree on the value of a pension or retirement account, courts generally accept that valuation. If spouses are unable to agree, they or the courts may retain experts like accountants or pension valuators to determine the value of each account. The cost of these experts’ services increases the cost of a divorce.
In Washington, courts commonly include each spouse’s retirement benefits and plans in the marital asset category, which makes these plans available to be divided. Defined contribution plans like 401(k)s, 403(b)s and profit sharing plans are simple to valuate because their value can be defined at any given point. Defined benefit pension plans are much more complex, and often require an actuary to determine their exact values.
Spouses in Washington who share in each other’s retirement or pension plan need to complete a written Qualified Domestic Relations Order. This order instructs the plan administrator about the terms and conditions of the distribution, including payment amounts for each spouse, distribution schedules, payment methods and other details.
Getting Legal Help During the Property Division Process
Divorce is emotionally difficult enough without dealing with disputes in dividing marital assets. John L. Davis PLLC can leverage years of experience in property division cases to help you reduce the added anxiety of evaluating your material achievements during your marriage. Contact our Vancouver office today at (360) 597-4740 to schedule a consultation with an understanding and trusted divorce attorney.