Seattle Attorneys Blog
The court in a Washington divorce case must make a just and equitable division of the marital estate, considering certain statutory factors. Those factors include the nature and extent of community property and separate property, the length of the marriage, and the economic circumstances of each party when the property division becomes effective. RCW 26.09.080. A former wife recently appealed the property division in her divorce.
According to the appeals court opinion, the parties married in 1978 and separated in 2014. The wife was a teacher, but became a stay-at-home parent after the parties’ children were born. She returned to work after 10 years. When the parties separated, she was working full-time as a school counselor, earning about $59,600 per year. By trial, she had voluntarily gone part-time.
The husband was also a teacher for most of the marriage, but had been a principal for the last four years. He earned $95,972 per year at the time of trial. He also earned money fishing in Alaska in the summers, averaging a net profit of $62,372.
The parties’ primary assets were the marital residence, bank accounts, retirement accounts, an annuity, a commercial fishing boat and permit, and future social security benefits. Both accrued debt and received inheritances after they separated.
The court awarded the wife the home, the annuity, and her retirement account. It awarded the husband his retirement plans, his defined benefit plan, the fishing boat he got after the separation and his fishing permit. Each party kept the inheritances they received. The court divided the shared Roth IRAs equally. It did not consider the parties’ failed business venture or place a value on the fishing boat that sunk while the parties were married.
The court concluded the husband owed the wife about $66,300, but offset it by the $56,000 she owed him, and ordered him to pay her the difference.
The court granted the wife’s motion for reconsideration in part, and ordered the husband to pay her another $65,000 to address the unintended disparity in the property division.
Disproportionate Property Division
The wife appealed, arguing the trial court abused its discretion by awarding the husband a disproportionate share of the marital estate. The husband argued the wife was actually awarded a greater share of the estate.
The appeals court stated the wife’s calculation of the award had improperly relied on the husband’s social security benefits and counted his inheritance three times. The court may consider social security benefits in evaluating a party’s economic circumstances, but it cannot actually award future social security benefits to a party as an asset. According to the appeals court, the wife suggested the court had awarded the husband $400,000 in social security benefits. The appeals court rejected this argument, pointing out the court had instead acknowledged the husband would get more benefits over time and awarded the wife a larger share of the community property as a result.
The husband received an inheritance worth about $105,000. He used the first payment and his post-separation income to buy a fishing boat. He still had $85,215 from his inheritance and post-separation savings in December 2019.
The wife included the inheritance, the fishing boat, and the remaining balance in her calculations of his property award. The appeals court noted the balance and fishing boat were both elements of the initial inheritance and, by counting them again, the wife had overstated the husband’s award.
The appeals court found no abuse of discretion in the trial court’s property division, which it said actually provided the wife with more than half of the community property.
Characterization
The wife also argued the trial court had mischaracterized certain investments as community obligations. She argued they were exclusively in the control and management of the husband. The husband argued those investments were not assets available for distribution at trial.
Courts may consider dissipation of marital assets in the property division in addition to the statutory factors. A party alleging waste or dissipation has the burden of proof. Waste may occur if a party’s conduct willfully destroys or recklessly damages an asset. The court may consider if a party has depleted assets and apportion them fewer assets or a higher proportion of the debt.
The husband invested in a failed business venture in 2006. He also bought a fishing boat that sank. The wife argued the court should have considered these investments as a dissipation of cash because they were both uniquely in the husband’s control and management.
The funds and boat were not before the court for distribution, however. The appeals court also concluded the wife had failed to prove waste.
She alleged she was not aware of the investment, but also testified she thought it was a “good idea.” The appeals court determined her testimony did not indicate “negatively productive conduct” constituting waste by the husband. She also argued the husband committed waste by failing to obtain a promissory note, but the record did not show a promissory note would assure the husband would recoup his investment. The appeals court pointed out that failure of the business venture was not sufficient to show waste.
The appeals court also determined the husband’s failure to reinsure the boat was not reckless damage or willful destruction. There was evidence he tried to reinsure it after he filed an insurance claim, but had difficulty doing so. The wife argued he could have insured it through a reserve pool, but he testified he did not know about it before the boat sank. The appeals court also pointed out the wife also had a duty to avoid waste of a community asset and could also have insured the boat.
The court did not abuse its discretion by characterizing the failed investment and fishing boat as lost community assets.
Spousal Maintenance
The wife also argued the court abused its discretion by denying her spousal maintenance. The appeals court pointed out, however, the court had considered the statutory factors in RCW 26.09.090.
The wife argued the court’s primary concern should have been placing the parties in roughly equal financial positions for the remainder of their lives. She argued the court could not have failed to award maintenance if it had properly considered the factors. She noted the parties were married 41 years, the husband earned more than twice as much, and she was out of the workforce for 25 years during the marriage.
The appeals court pointed out the trial court had recognized the “long-term marriage,” and awarded each party approximately equal amounts of community property. The court also acknowledged the husband would probably receive more social security benefits than the wife and granted her a larger share of the community property. The appeals court determined the trial court had considered the statutory factors in deciding not to award maintenance and therefore had not abused its discretion.
The appeals court affirmed the decree.
Seek Legal Advice
As this case shows, not all loss of assets constitutes waste. If you are facing divorce, an experienced Seattle divorce attorney can advise you and help you protect your assets and seek a fair share of the community property. Call Blair & Kim, PLLC, at (206) 622-6562 for a consultation.