How to Distribute Property
Absent a valid agreement of the parties on the division of property, the trial court must make a series of determinations. In determining the division of property in Washington State divorce, the court must first decide whether a claimed interest is “property” (as opposed to a mere “expectancy”). The court must then characterize all property as either separate or community property. The court must then value the property.
In the case of large and complicated assets such as businesses, professional goodwill, real estate and pensions, expert opinion will ordinarily be necessary. Then the court must distribute all of the property before it with both the character of the property and all other relevant factors (see discussion of factors below) in mind to achieve a “just and equitable” division.
In finality, property is not merely distributed along the lines of whether it is separate or community. For example, a spouse with a considerably larger separate property may receive all of that property, however, the disadvantaged spouse then may get a larger share of the community property to balance it all out. The court should make the decision regarding the distribution of property with any award of maintenance in mind.
Debt should also be characterized as separate or community. However, as with the division of property, the court may distribute separate or community debt to either spouse.
Contracts Between the Spouses
Spouses may by contractual agreement change their separate property into community or their community property into separate property. Some evidence in writing of the mutual intention of the parties to change the character has been required. RCW 26.16.050, .120. However, oral agreements may be sufficient in particular circumstances.
RCW 26.09.070 provides that the spouses, in order to promote amicable settlement of disputes at separation or upon filing for dissolution, may enter into a written separation contract providing for the maintenance of either spouse, the disposition of any property owned by both or either of them, and the parenting plan and support for their children and for the release of each from all obligation except that expressed in the contract. A separation contract (except for portions involving a parenting plan for children) is binding on the court unless the court finds, after considering the economic circumstances of the parties and any other relevant evidence, that the contract was unfair at the time of its execution. RCW 26.09.070(3). Division of property in Washington State divorce is a common way of settling a very thorny issue without litigation.
Any child support provided for in the contract shall be reviewed by the trial court for compliance with RCW 26.19.020, the Child Support Economic Tables. RCW 26.09.070(3). Any agreement between spouses waiving child support payments is not binding because it would violate the public policy of concern for children's welfare. However, an agreement to accept a lump-sum payment in lieu of periodic future child support is not against public policy. Babbitt v. Babbitt, 50 Wn. App. 190, 193, 747 P.2d 507 (1987).
A separation contract may provide that maintenance may not be modified. In the absence of such an agreement between the spouses, any maintenance award is modifiable and the trial court may not provide otherwise. In re Marriage of Short, 125 Wn.2d 865, 875-76, 890 P.2d 12 (1995).
In all cases, the parenting plan must be set out in the decree and the parties shall be ordered to comply with its terms. The remainder of a separation contract shall be set forth in the decree, filed in the action, or made an exhibit and incorporated by reference unless the contract provides to the contrary. RCW 26.09.070(5).
The terms of a separation contract that are set forth or incorporated in a decree may be enforced by all remedies available for the enforcement of a judgment, including contempt, and are also enforceable as contract terms. RCW 26.09.070(6).
Spouses may hold property as joint tenants or tenants in common. In a joint tenancy, each tenant has total ownership of the asset and at the death of one, the survivor takes the whole property. A tenancy in common does not have this incident of survivorship. The Supreme Court has held that a writing signed by the spouses is necessary to create a joint tenancy with community property. RCW 64.28.040 (all joint tenancy interests held by husband and wife are presumed to be community property). Either spouse may sever a joint tenancy and, in that case, the property is presumed to be community property whether it is held in the name of the husband or wife or both. RCW 64.28.040.
Community Property Agreements
Community property agreements may: change presently owned separate property to community property; change subsequently acquired separate property to community; change separate property to community property at the time of death; or effect all of these changes.
Community property agreements are particularly favored in Washington law and have been held to control over other inconsistent instruments, unless there is mutual intent to rescind the agreement.
Although community property agreements can only be “altered or amended” in the same manner as they are created (which is provided for in RCW 26.16.120), their complete recision or abandonment is not governed by this statute.
Community property agreements are treated as contracts, and the general rules on contract rescission apply. Mutual intent to rescind such an agreement must be demonstrated; unilateral acts inconsistent with the agreement are not enough. However, intent to rescind need not be expressly stated. Rather, mutual acts having the effect of rescinding the agreement are sufficient. Therefore, a mutually agreed upon subsequent conflicting contract rescinds an earlier agreement. Higgins, 123 Wn.2d at 168 (later mutual wills, each referring to the other spouse's will, act to rescind a prior community property agreement with which they conflict).
Separate Property Agreements
Spouses may also enter a “separate property agreement” and agree that existing and/or future acquisitions that would otherwise be community property will be separate in character. There is a high standard of proof for such an agreement because of the strong presumption of community property and separate property agreements must be fair.
A prenuptial agreement (also referred to as a premarital or antenuptial agreement) is a contract entered into by prospective spouses prior to marriage, but in contemplation of and in consideration thereof. From the agreement, the property rights of one or both of the prospective spouses are determined or are secured to one or both of them or to their children. Parties to a prenuptial agreement must exercise the highest degree of good faith, candor and sincerity in all matters bearing on the proposed agreement. Prenuptial agreements are contracts in derogation of what the law would otherwise provide and are very closely scrutinized. The courts insist on either a fair and reasonable contract or procedural fairness.
Please see more about prenuptial agreements in Celebi Law Office website blog pages.