How to Legally Separate Finances Before Your Divorce is Final in King or Pierce County

Ending a marriage is a monumental life event. A wedding is a milestone that many people experience, and the decision to pursue a divorce is also a big undertaking for those who find that walking away from this long-term romantic relationship is the best way for them to achieve their goals and live their lives in the way they want. Even couples who agree that pursuing a divorce is their best option can become overwhelmed by the sheer number of critical decisions they must make in order to ensure that both parties can move forward on relatively equivalent financial footing. One of the most time-consuming and potentially contentious aspects of the divorce process in Washington state is dividing up the assets and property in a “just and equitable” manner. In order to ensure that these discussions and negotiations proceed as smoothly and productively as possible, the divorcing parties will need to establish a comprehensive catalogue of both their community property and any separate property that each individual may have. 

Depending on how many years the couple has been married and how much commingling of property they have, the division of property timeline can vary considerably from case to case. Certain considerations, such as how separate property in a Washington state divorce is handled (particularly when it comes to inheritances), can be confusing to navigate without the clear guidance of a highly experienced and dedicated Seattle divorce attorney. Let’s take a look at some strategies for navigating situations involving inheritance and divorce in Washington state and how enlisting the support of a caring and trusted Seattle family law and divorce lawyer can give you the clarity and confidence you need to move forward into a bright and secure post-divorce future.

Understanding Community vs. Separate Property in a Washington State Divorce

First, it’s helpful to recognise that Washington is what’s known as a community property state. As defined by RCW 26.16.030, “Property acquired after marriage or after registration of a state-registered domestic partnership by either domestic partner or either husband or wife or both, is community property.” This means that the majority of assets that either spouse earns or purchases during the course of their marriage legally belong to both of them, regardless of which spouse actually earned or obtained it. For instance, the incomes of both working spouses are typically considered community property during the duration of the marriage. In contrast, separate property refers to any assets that an individual receives before the marriage or property they receive after marriage that is “acquired by gift, bequest, devise, descent, or inheritance, with the rents, issues and profits thereof.” In other words, if one spouse receives an inheritance from a deceased family member while they are married, Washington state usually considers this asset to be separate property (i.e., belonging to that spouse alone). Should the marriage end in divorce, the inheritance will likely stay with the spouse who was the beneficiary. 

Negotiating a Just and Equitable Division of Assets During a Divorce in Washington State

It’s worth noting that the process of dividing assets during a divorce is far from straightforward. A common misconception is that a “just and equitable” distribution of property means an even fifty-fifty split. The reality is that the spouses, their legal representatives, and the court (if necessary) will work to ensure that both parties are able to walk away from the marriage on relatively similar financial terms. For instance, one party may retain the marital home while the other assumes possession of a rental property and the vehicle of greater value. Once you and the other party have created a list that distinguishes community property from separate property, you can begin to move through these negotiations and work to obtain a just and equitable outcome. In cases where you and your soon-to-be ex-spouse cannot agree on how to divide up the property, you can take the matter to mediation, arbitration, or litigation to obtain a resolution.

The Complications of Commingled Assets in Washington State

While separate property is typically left out of the property division negotiation process, there are circumstances in which assets that one party assumed would be viewed as separate property may be treated as community property (and, therefore, subject to division during the divorce). A notable risk involves the commingling of funds, where both parties place assets into a joint banking or financial account. For example, if one spouse receives an inheritance after a relative passes away and places these assets into a joint account, the other spouse may be entitled to claim these funds as community property in the event of a divorce. In other situations, a spouse that inherited a considerable amount of wealth may use these funds to pay for community expenses (such as purchasing a shared home), which can reclassify the inheritance as community property if the couple moves through the divorce process. If you have specific questions about dividing inheritance during divorce in Washington state, consider discussing your concerns with a highly experienced and trusted Seattle divorce attorney today. 

How to Protect Inherited Funds During a Seattle Divorce

There are steps you can take to protect an inheritance from becoming community property during a Washington state divorce. Below are just a few strategies you can use to keep your inheritance safe, even if your marriage ends. 

Keep Inheritances in a Separate Account

The best way to clarify that the inheritance belongs to you (and not to your spouse) is to place these funds in a separate account that is in your name only. If you deposit the funds from the inheritance into a joint banking or other financial account, you risk having these assets reclassified as community property. If you receive an inheritance while you are married, play it safe by keeping these assets separate from any jointly owned accounts or other property shared with your spouse.

Maintained Detailed Records 

In any divorce, documentation matters. Bank account statements, financial records, and other documents help to guide property division considerations and negotiations, as the involved parties can use these details to distinguish between community property and separate property. If someone passes away while you are married and names you as a beneficiary, be sure to keep detailed records that trace the inheritance back to the decedent’s estate and clearly show that you were the named beneficiary of the inherited property. 

Do Not Commingle Inheritances With Other Joint Funds

An inheritance should be treated as a distinct asset that belongs to the beneficiary only. To that end, it’s essential that the beneficiary keeps the inheritance funds in a separate account and away from all jointly owned assets, trusts, and bank accounts. If you are worried about your spouse attempting to access these funds in the event of a divorce, it’s important to avoid making any joint purchases or investments (such as real estate) with these funds.

Proving Separate Property During High Asset Divorce Cases in Washington State

So, how can you prove that specific assets should be considered separate property and not community property? Below are a few strategies to help you move through the asset division process more confidently while protecting your separate assets from becoming subject to these negotiations.

Clear and Detailed Records

Those who claim that a specific asset should be classified as separate property must be able to prove that it remained a separate asset during the course of the marriage. It’s worth noting that even separate property (like an inheritance) that was deposited into a jointly held account may still be viewed as separate property, as long as you can provide clear documentation that traces the asset back to its original source (i.e., the decedent’s estate). 

Forensic Accounting

In cases involving high asset divorce and inheritance, expert witnesses (such as forensic accountants) can use their expertise to analyze complex assets and valuations. These professionals can help to distinguish separate property from community property and trace certain assets back to their original sources, especially in complicated and contested cases.

Prenuptial Agreements

Couples who have put a prenuptial agreement in place before the marriage began can use this legal document to clarify confusion about whether certain assets should be classified as separate or community property. Many prenuptial agreements are used to define separate property and set forth clear instructions as to how these assets should be handled in the event of a divorce.

Frequently Asked Questions (FAQs) About Divorce and Inheritance in Washington State

Will I Have to Split My Inheritance With My Ex? 

Not necessarily, as long as you have taken steps to keep the inheritance in a separate account and you have avoided commingling of separate property with jointly owned assets during the marriage.

What if the Inheritance Was Used to Buy Our Home?

Your ex may be able to claim joint ownership of real estate that was purchased with your inheritance funds, but each case varies depending on specific factors. Reach out to a skilled and experienced Seattle divorce attorney today to learn more.

Reach Out to Seattle’s Client-Centered Divorce Law Firm Today

Several questions arise during the divorce process in Washington state, and you want to trust that the guidance you receive empowers you to make informed decisions with greater certainty and confidence. At the Hemmat Law Group, our team of dedicated and experienced Seattle divorce and family law attorneys is ready to provide you with the customized legal support you need to walk away from your marriage and into a bright future. Please reach out to our office today by calling (206) 682-5200 to get started.