Most divorces include the division of property. In some cases, especially those with limited assets, this can be a very simple, straightforward process. However, in cases involving complex assets, especially those of high-value, the process can be much more complicated. In these more complicated cases, it may be necessary to hire experts and obtain formal appraisals. Continue reading
The Seattle Times recently published an article stating that house prices in Seattle have finally rebounded to (and surpassed) house values before the market crash of 2007. This is good news for homeowners. This includes most homeowners facing dissolution proceedings. Here are a few ways the increase in house values may affect your dissolution case.
- Real estate will be viewed as an asset not a liability. For the past seven years we have been dealing with houses that have little or no equity, and as such are often viewed as a liability not an asset. Instead of leaving the house and equity to the less-economically-advantaged spouse, the house was often left to the more-economically-advantaged spouse, because in many cases that was the only spouse that could afford the house and the debt (and it would not be possible to sell the home for the amount owed on the home). Now, with more homeowners having equity, it will be more likely the court will award the home to the spouse most in need of the equity – or the place to live.
- Refinancing will be easier. Prior to 2007 it was common to have a property settlement agreement or decree of dissolution require that whoever received the home refinance and remove the other spouse from the mortgage on the property. After 2007, this became more difficult. In many instances, homes were worth less than the loan and requests for refinance were refused. This meant that some former spouses were required to continue being responsible for debt on a property that no longer belonged to them.
After separation, many people want to discuss with their lawyers some of the immediate issues that need resolution: temporary child support, temporary parenting schedules, and who gets to live in the house. As part of these discussions (especially the one regarding which spouse gets to live in the home), they also want to talk about how to divide the household furniture (both during the temporary phase, and the final division). They want to know whether they can take the bedroom set to furnish their bedroom at their new apartment, or whether they can keep the kids’ beds.
In many cases, we encourage our clients to sort these issues out with the other party directly. (We would never encourage this in cases where allegations of domestic violence are at issue whether our client is the accused or the victim/accuser.) The reality is, we know that in many cases the furniture being argued over is not worth spending your legal fees on. The court will often attribute a value to the furniture based on what the furniture could be sold for at a garage sale. This means that many of the things you want to fight over will be worth just pennies on the dollar. Furthermore, the court will often look favorably on the party that is willing to negotiate regarding the small assets and not waste the parties’ resources (and the court’s time) on low-value items.
As such, we often encourage separated spouses to figure these things out based on necessity. For example, the spouse moving out of the family home will often take a guest room bedroom set for their new master bedroom. The party who has the kids the majority of the time often takes the kids furniture. Also, in many cases the parties both have items that were purchased to meet their specific needs and it often makes the most sense for that party to take these items with them (or keep them at the house as the case may be).
Prior to dividing marital property during the dissolution process, a judge must characterize the marital property as community or separate. Even when a judge is not involved (in the case of private settlement or mediation/arbitration), attorneys for both parties will likely want to know what property is held as community, and what is held separately by the parties. Let’s start with a definition of community property. Community property is all property acquired during the marriage that is not separate property. RCW 26.16.030. Separate property is property received prior to (or after) the marriage and/or property received during the marriage by gift, bequest or inheritance (etc.) to one spouse only. RCW 26.16.010. Rents, issues and profits from separate property are also considered separate property, while rents, issues and profits from community property are considered community.
Why does this matter? It matters because of how it affects a spouse’s right to manage property during marriage, as well as potentially affecting how property will be divided upon divorce. Per RCW 26.16.030, separate property may be managed during the marriage as if the party owning the property was unmarried. Community property management is limited in some regards (ex. gifting of property, transferring of real property) by a requirement that both members of the community be involved.
At the time of dissolution, the court considers the character of property (i.e. community or separate) when determining how it is to be awarded. Even after property is characterized as separate, equity may require the court award separate property of one spouse to the other spouse. In other words, just because property is deemed separate property by the court does not mean it cannot be awarded to the other spouse.
In most divorces, property has to be divided. Oftentimes, a divorcing couple’s most valuable asset (or greatest liability) is their real property (i.e. their house). As such, special attention must be paid to this property both during and after dissolution of a marriage. The New York Times recently ran an article about real estate agents who have found a niche helping people that have recently divorced (or are in the process of divorcing) market their real property. The article provides useful tips for parties in this situation.
The article is also of interest for its proposition regarding families choosing to live close together after divorce to make co-parenting easier. In our experience, for families that have decent communication skills and can tolerate being around each other, this can be a good option. It allows frequent visitation with each parent, allows both parents to attend the child(ren)’s events, and minimizes transportation time for the kids.
Read the article here.
In the article “Navigating the Gray Divorce with Dignity,” attorney Andrea Vacca, discusses the increase in what she refers to as “gray” divorces and the issues facing clients in this type of divorce. Gray divorces, Vacca explains, are divorces between people age 50 and over. Vacca says that while overall divorce rates have declined, gray divorces have increased. She also says that many of her clients in gray divorces are facing different and unique issues compared to their younger counterparts.
We share Vacca’s experience that clients divorcing after the age of fifty encounter different issues than those divorcing in their twenties, thirties or forties. Instead, of worrying about child support and parenting plans, many people over fifty are most concerned about their financial futures. People of this age have less time to recover from financial loss prior to retirement age, and/or may be facing the prospect of living on a fixed income. In these circumstances, it is especially important to think about how to best prepare financially for life as a single person. Divorce does not have to mean financial ruin. We are prepared to help you through this process and will do our best to ensure your financial security.
We also share Vacca’s experience regarding the increased interest in alternative dispute resolution among older divorcing spouses. For many of our clients there are many options for avoiding court. We are committed to providing you the personalized advice and representation you need. If you want to avoid protracted litigation and costly legal battles we will use whatever means possible to achieve your goals.