Seattle Attorneys Blog
A trial court in a Washington divorce case has broad discretion to justly and equitably distribute the property. The court must analysis the relevant factors as set forth in RCW 26.09.080. The court may distribute both community and separate property and does not need to find exceptional circumstance to support awarding part of one spouse’s separate property to the other. Additionally, it may be fair and equitable for the court to award one spouse’s separate property to the other spouse who has less earning capacity. A former husband recently challenged a division that awarded the former wife a share of his retirement and pension, including his premarital retirement assets.
According to the appeals court’s unpublished opinion, the parties were married for about ten years when they separated in 2019. In March 2021, the wife petitioned for legal separation, and that petition subsequently became a petition for dissolution. The trial focused on the property distribution. Although there was a prenuptial agreement, the trial court found it was unenforceable.
The wife had worked as a flight attendant and later became a stay-at-home mother after the children were born. She worked as an Amazon courier when the trial occurred. She had about $85,000 in her retirement account.
The husband had worked as an electrician throughout the marriage. His union membership gave him a pension and retirement account, which started accruing before the marriage.
The parties agreed to equally share the proceeds from the sale of the home. They also agreed to equally share the tax refunds they received and to deposit them into a shared account. They further agreed that the wife would get the entirety of her own retirement account.
The husband’s separate property was in dispute, however. The husband wanted to keep the contributions he made to his pensions and retirement accounts before the marriage as separate property. The wife requested the court divide the assets as of the date of the divorce instead of the date of separation. She also argued it would be inequitable for the husband to receive his premarital retirement assets. She asked for all of her own accounts, half of all community assets, and half of the husband’s separate assets. She pointed out she had difficulty finding full-time employment and with childcare during the separation while the husband’s retirement assets had grown.
The trial court divided the assets as of the date of separation, but otherwise adopted the wife’s proposed division. It also awarded her $20,000 in attorney’s fees.
The Husband’s Appeal
The husband appealed, arguing the trial court abused its discretion by awarding the wife half of the retirement assets he accrued before the marriage.
Earning Capacity
The court had found the wife had a lower earning capacity than the husband. It considered the parties’ community and separate property and each spouse’s economic circumstances at the time of separation. It imputed her income at full-time minimum wage. Pursuant to RCW 26.19.071(6), the court imputes income in the amount the court finds a parent should be earning if the parent is voluntarily unemployed or underemployed. The appeals court pointed out, however, the imputed amount was still significantly less than the husband’s approximate $115,000 annual income. The appeals court concluded there was no abuse of discretion in the court awarding the wife part of the husband’s premarital retirement assets in light of the difference in earning capacity.
Vagueness
The husband also argued the trial court’s order was impermissibly vague, such that it was “impossible” to tell if the court intended to award separate instead of community property. He pointed out the court’s final order did not adequately characterize the property. The appeals court acknowledged the trial court had not characterized the property, but noted there was no evidence characterization was in dispute or that the court was not aware of the property’s character. The appeals court reasoned that the trial court had adopted the wife’s proposal and it would therefore follow that it adopted her characterization.
The court adopted the wife’s proposal requesting half of the husband’s property, except it only awarded her a portion of the husband’s separate property acquired before the separation. The appeals court noted this change suggested the court had intentionally not limited the award to post-marital assets. The appeals court further concluded the language was not vague. The husband had argued in a motion for reconsideration that the award would result in the wife getting part of his separate property that had been earned before the marriage, indicating he understood the meaning of the order.
The appeals court found no abuse of discretion in the court’s award of half of the husband’s separate retirement assets to the wife.
Sole Beneficiary
The husband also argued the court abused its discretion by ordering him to name the wife sole beneficiary of his retirement accounts because it would give her rights to his future assets. He also argued the order was contrary to public policy.
Although retirement income may be divided in a divorce, the court generally may not divide future assets. Furthermore, public policy discourages divorces being handled in a way that would unnecessarily stress a future marriage.
The trial court placed no limitation on its order that the husband name the wife sole beneficiary of his retirement accounts and pension, meaning it also prevented him from naming children or a future spouse as beneficiary. The appeals court noted he was only 41 and likely have many more years of contributions. The appeals court determined the trial court abused its discretion in awarding the wife future assets.
The appeals court also rejected the wife’s argument that the order was reasonable because of the husband’s child support obligation. The wife cited life insurance policies in support of her argument, but the appeals court noted that life insurance is very different from retirement assets. The court further noted that the husband would only pay 12 more years of child support. Ordering him to name the wife as sole beneficiary for the rest of his life was not proportionate to the 12-year child support obligation. The appeals court remanded the case to the trial court with instructions to revise the order and strike the requirement the husband name the wife sole beneficiary.
The appeals court also rejected the husband’s argument there was insufficient evidence that the wife was entitled to a judgment for a portion of the tax refunds and his equitable estoppel claim.
The appeals court affirmed the distribution of separate assets and remaining tax refund, but remanded the case with instructions for the trial court to review the order and strike the requirement the husband name the wife sole beneficiary of his retirement account and pension.
Seek Skilled Legal Representation
If you are facing divorce with significant retirement accounts, an experienced Seattle family law attorney can help you fight for a positive outcome. Schedule a consultation with Blair & Kim, PLLC by calling (206) 622-6562.