How are property and debts divided?
In a divorce all property is to be divided in a manner that is fair and equitable. That means that the judge has wide discretion in deciding the proper disposition of assets and liabilities.
Separate property and debts will usually be awarded to the party that acquired them, while community property and debts will normally be divided equally. However, in order to achieve an overall fair result, the court can award one party a larger share of the community property and even the separate property of the other spouse. The relative incomes of the parties may be considered in deciding what is an overall fair result.
Generally individual assets and liabilities are not split in two more than is necessary, but rather some are awarded to one party and others to the other party. There is often one asset that is divided between the parties in percentages that balance the overall division.
What do we do about community property?
Washington is a community property state. Community property belongs to both parties. Community property is property that was acquired during the marriage that was not gifted to or inherited by one party. However, if the couple lived together before the marriage that may also be considered part of the community period.
Property that is not community is the separate property of one of the parties. Property will generally be presumed to be community if you cannot prove that it is separate. Property can also be partly separate and partly community, such as with an IRA that was contributed to both before and during the marriage.
Community property is generally divided between the parties, although where the court deems it appropriate a larger share may be given to one spouse, particularly where that spouse has a significantly smaller potential income than the other spouse.
What if I need to purchase a new residence?
Once the divorce has been started, most lenders are very wary of making a new home loan because of the uncertainly as to what assets and support obligations you will have coming out of the divorce. However, many lenders will be willing to proceed with a new loan once there is a settlement contract in place, even if the divorce itself has not been finalized.
A second issue arises when your spouse will be keeping the family home but is not able to refinance the old mortgage in to their sole name. If your name is still on the old mortgage, but the settlement agreement specifies that your spouse will be solely responsible for paying that mortgage, our experience has been that at least some lenders will not hold that prior mortgage against you in qualifying you for the new loan.
Can I keep the information about my assets and debts out of the court file where anyone can find it?
Rather than listing your assets and debts in the Decree of Dissolution itself, we can put them into a separate settlement agreement that is not filed with the court, but is simply referenced in the Decree. This helps protect that information from prying eyes. However, if there is a child support order, we may not be able to keep information about your income out of the court file.