Property and Debt Division: Who Gets The Stuff?

The first thing to remember in dividing assets and debts in a dissolution or legal separation is that Washington is a community property state, which means that each spouse has an undivided one-half interest in assets and debts acquired during the marriage. Wages and salaries earned during the marriage are also community property, so if wages and salaries earned during the marriage are used to pay for an asset - even if the assets was originally acquired by one of the spouses prior to marriage - the assets will probably be wholly or partially community property.

However, not all property owed by the couple is considered community property. For example, any assets wholly owned by a spouse prior to marriage will be considered separate property as long as it was kept separate from property acquired during the marriage. Further, the income produced by a separate property investment is also separate property, as long as it hasn't been mixed together with community money. This mixing together is called ‘commingling.’ Also, property inherited from family or received as a gift exclusively to one spouse will also generally be considered separate property unless it was commingled with community assets during the marriage.

Even though the distinctions between community and separate property are important, Washington is also an “equitable distribution” state. This means that the court can divide assets without regard to separate or community status, with an eye toward doing what is fair or equitable. In deciding how to divide all property owned by a divorcing couple, the court will consider several factors, such as the length of the marriage, how much and what kind of community and separate property there is, the financial circumstances and earning potential of each of the spouses, the health of each spouse, and with whom the children will reside the majority of the time.

The spouses can work together to come with a fair distribution of assets and debts, and usually they are able to come up with something they can live with. However, if they can’t agree, the court must decide. That's why it's important to have complete and accurate information about all property, including when and how it was acquired, approximately how much it is worth, and how it was purchased. The same information is needed for debts, too. Collecting this information before you seek counsel can save you a lot of time and money. If you are in a dissolution or legal separation and have questions about your own financial situation - including property and debts - please feel free to contact us.