Common Questions About Asset Division
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What happens to the family business during divorce?
A family business during divorce will likely be considered a marital asset and, therefore, subject to equitable distribution. There are several potential ways to handle the family business, but be forewarned: the heated emotions and reactive tendencies couples have during a divorce can cloud sound judgment about the enterprise and other assets.
As hard as it is to stay focused during the turmoil of your dissolution, it’s important to the future of your joint business to keep an open mind about what’s best for the company, not what’s best for egos, spite, or reprisal. You may want to consider hiring an outside manager or business consultant to come in and handle some of the day-to-day affairs until you’ve reached a settlement agreement.
Potential Ways to Handle the Marital Business during Divorce
Approximately 90 percent of all small and large businesses in the United States are family-owned, according to the U.S. Small Business Administration. And because couples often decide to marry sans prenup, it’s quite common for couples to be at a loss as to how to deal with the family business during asset division when divorce is imminent.
The first thing you’ll need to do is obtain a professional assessment of the enterprise to determine its value. You may need to hire an appraiser or certified public accountant to evaluate the company and determine if you should split your investment or approach it another way.
Once the value of the enterprise has been calculated, there are a few ways to approach the family business; which route you and your ex decide to go with depending on your goals and leverage.
- Buyout: If you didn’t have much involvement with the business, you might want your ex to buy you out. Your ex may be able to provide you with a lump sum, you can arrange for a payment plan, or you and your ex may devise a trade agreement that works for both of you, e.g., you keep the business and he keeps the house.
- Sell it: If there is little to no liquidity and little power to borrow or trade, the company may need to be downsized or sold to divide the assets equitably.
- Co-ownership: If both you and your ex remain interested in running the company and you want to maintain ownership, you can create an agreement to make that work. Although continuing to co-own and co-manage a business post-divorce is rare and somewhat complicated, it can be done. Some couples work much better as business partners than marital partners.
Getting Legal Counsel for Asset Division during Divorce
If you own a family business and are getting a divorce, it’s vital to get professional help to protect your financial interests. For a lawyer in Washington with the substantial field experience which takes a thoughtful, creative approach to divorce and asset division, call the Law Offices of Molly B. Kenny for a consultation: 425-460-0550.
How do we decide who gets the timeshare in a divorce?
Like most property questions in a divorce, splitting a timeshare will take careful consideration. While real estate may have been considered a valuable asset in the past, a collapsing housing market means that any property you gain in the divorce might not necessarily carry a high value. After considering the value of the mortgage, land, and house itself, you and your spouse may be better off selling your real estate holdings than saving them for either one of you.
But if you and your spouse own a timeshare, the question of who gets the land becomes more complex. You may have both purchased the property and given a considerable amount of communal funds to the purchase, but cannot find a buyer that will allow you to get back your investment. For this reason, it can be difficult to estimate the value of the timeshare—should you receive half of what you paid for it, or only half of the amount when it is sold?
Discussing Your Timeshare Options With a Mediator
If selling is not an option, there are a number of ways you and your spouse can split the property. If you are going through a mediated divorce, you may be more likely to reach a solution that works for both of you. For example, if you have children, you may share the use of the property. This may involve drafting a schedule for use (alternate weekends, holidays, etc.) of which parent will take the timeshare on a given day. As this requires ongoing cooperation, this solution will work best for couples who are on friendly terms and do not have trouble interacting with one another.
To find out more creative solutions to splitting your assets, we encourage you to read the related links on this page or click the contact link above to ask us a question about your case.
Should my husband and I split our investments in a divorce?
You may be tempted to split everything down the middle in a divorce: house payment, furniture, even the money in your bank accounts. But when it comes to splitting your investments, there are many ways you can be led to believe you are getting an even swap, only to be left working for 10 more years because the market went south.
Here are a few things to consider before you agree to keep or trade any investment accounts in divorce court:
- Your investment returns are not guaranteed. Your spouse may attempt to “play up” the value of a certain stock because it is currently on the rise. However, investments will always carry more risk than liquid assets such as land, houses, or cars, so you should get an unbiased professional opinion on the value of an investment before accepting.
- Examine your pension benefits. There are two main types of retirement accounts: defined benefit plans (DBP) and defined contribution plans (DCP). The first a monthly pension that your employer pays to you after you retire. The second plan—which includes 401k accounts—bases the amount of your monthly benefits on how much you have contributed to the fund over the years. An accountant can help you determine what each account is worth today, helping you decide on a fair share.
- Consider how your financial accounts relate to each other. It can be tempting to divide your assets one at a time, but many investment accounts are linked and interact with each other. For instance, each carries tax implications, capital gains, early withdrawal penalties, and other fees that can affect the value of the asset.
- Think about your life-long financial security. Don’t sign an agreement just to “get it over with.” The decisions you make about your finances now will affect you for the rest of your life, and you will not have another chance to get a fair portion once you sign an agreement.
If you do not fully understand your investment accounts, you should have a CPA or attorney look over the details to make sure you are agreeing to a fair and sustainable amount. Learn more about preparing for a divorce in our free divorce guide for women in Washington. Click the link on this page to begin reading your copy.
How will a judge decide who gets what, if there is a property dispute in our divorce?
Couples are encouraged to use attorneys or a mediator to help decide who gets what in a divorce. However, if a couple is not able to agree on a particular point, they may submit their property dispute to the court for a judge to make a final decision.
Property Can Be Classified in Three Different Ways
Under Washington state law, all property belonging to a married person can be classified in one of three ways:
- Community property – Most items in a divorce are considered community property, such as earnings, purchases, and assets acquired during the course of the marriage. This also includes debts incurred during the marriage. In the event of a divorce, community property may be divided, sold, or split equitably between the spouses.
- Separate property – Individual property may include gifts, inheritances (where one party was solely named as inheritor), court settlements (where one party was solely awarded funds), and pension funds. In addition, any property purchased with separate funds will remain that spouse's separate property. Property that each spouse possessed at the beginning of the marriage is generally considered separate property, although there may be exceptions. In most cases, each party will keep his or her own separate property in a divorce.
- Combined community / separate property – Sometimes property may be considered both community and separate, such as when an investment made by one spouse grows in value during the marriage. Property purchased using individual and joint marital funds may be part community and part separate property. If separate property is mixed together with community property, it is generally considered community property.
It is common for judges in property disputes to assign a total value to the property, and then award each spouse a percentage of that value. It is important to note that you may not necessarily be awarded 50 percent of the property value, but a percentage based on the judge’s assessment of your portion of the property. The resolution is not a cash settlement; each spouse will be ordered to receive assets and items worth the amount of their percentage—including any shared debt between the spouses.
If you would like to attempt to divide your property in mediation before taking it to a judge, send in the brief contact form on this page so we can get in touch with you as soon as possible.
Who Will Get The Family Car In My Washington State Divorce?
Keeping the family car in a divorce—or securing enough funds to purchase a new car—can be vital during your Washington State divorce, especially if you need a vehicle to get to work, get to the grocery store, or get your kids to school. But how does a judge decide who keeps the car after a divorce if you share a vehicle with your spouse?
First, the judge will consider whether the car was purchased before the marriage, given as a gift, or inherited from a family member. If the car was purchased together by the couple—and if the car’s upkeep and repairs are also shared by the couple—the judge will examine who uses the car and for what purposes. If you use the car to commute to work or if you use the car to secure necessities for your family, you may have a better chance of retaining the car.
It is important to remember that if you don’t win the family car in the divorce settlement, you will likely be compensated, either with other types of property from the divorce or with the funds to secure a new or used vehicle. If the car specific to your case has a special value that goes beyond its use as a form of transportation (for example, if it has sentimental value or is a collector’s item) make sure that is clear when discussing this item during property division.
A Seattle divorce attorney can help you better understand all aspects of your divorce settlement—and make sure you get what is rightfully yours. To speak to a family lawyer today, call the Law Offices of Molly B. Kenny at 425-460-0550.
How is property divided in a Washington State divorce?
Depending on the state you live in, property is divided in two different ways during a divorce: community property or non-community (separate) property. Non-community property states use a “fair instead of equal” approach to property division in which assets are dealt with equitably instead of equally. Washington State, however, is a community property state, which means that the court considers that each spouse owns half of any property acquired during the course of the marriage.
Generally, in community property situations, a judge will split most property and assets 50-50, regardless of who may have technically earned or acquired it–and regardless of who owns the property according to a title. Debts are shared in the same way: no matter which spouse acquires the debt, both husband and wife are equally responsible for paying it. The philosophy behind the community property division is that both husband and wife are part of a single family unit and both presumably make different but equally important contributions to the relationship.
There are two major exceptions to community property jurisdiction: gifts to one particular spouse and when one particular spouse inherits money or property from someone else.
Do you have a question about how your property, assets, and debts will be divided during the divorce process? Speak to a Seattle divorce lawyer at the Law Offices of Molly B. Kenny today to schedule a private consultation: 425-460-0550.
What is considered a property or asset during a Washington divorce?
When you file for divorce, you and your spouse must separate your lives and your finances. This can be particularly difficult if you have been married for a significant number of years or if you have a significant number of properties and assets. But what is considered an asset when you divorce?
An asset is essentially anything of value – from a car that you use to get to work to a piece of art that you bought together to a 401K that you have been contributing to for the last decade. Even the most amicable divorces can be strained during the division of property, which can include the consideration of the following assets:
- Retirement plans and pension plans
- Stocks and investments
- Homes, vacation homes, land and other property
- Cars, boats, and other vehicles
- Checking and savings bank accounts
- Some businesses, such as a family business
- Art, antiques, jewelry, and collectibles
- Cash and bonuses
- Any other item or account of value
Browse our legal articles about asset division for an in-depth look at how to divide these assets.
Especially if you have a considerable number of properties or assets, and even if you are splitting just a few important items such as your home and vehicle, it is important that you receive your fair share during the divorce process. A Seattle divorce attorney can help you better understand the division of property and how to secure the assets that are most important to your future and comfort.