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Some things you may need to know for a divorce in Seattle/Washington State

Posted by Elizabeth Steen | Aug 12, 2020 | 0 Comments

People tend to ask questions about the same odd little areas of Washington family law, so we've collected some facts and links below for anyone who's curious about how to get ready for a divorce in Washington State:

  1. Where do I find "child support owed" to my ex partner or spouse in my paperwork? Your support worksheet doesn't give you an amount for "child support owed." There are three places where each parent will have a number labeled "child support owed," but this number is meant to be a guideline for what the parents should be spending on their child. It's not a payment to the other spouse. The payment to the other spouse is an equalization payment that is the difference between the two "child support owed" numbers for each parent. The idea is that the parent who makes a higher income pays enough to the parent who makes a lower income so that both households will be spending roughly the same amount on the children. You can read more about the child support calculation here
  2. I want to transfer retirement funds to my ex-spouse, can I do that tax free? Yes. But only if you do it correctly. If you're dividing a retirement account, you will need an order signed by the judge or you will owe taxes and penalties and fees in the range of 8%. Here's a link to some general information on the QDRO and the rules around it. 
  3. I bought my house before we were married - do I need to make the house part of the divorce, or is it separate? A home that you bought before you were living together or married is separate property, but you still need to list the house, or any other separate property such as an inheritance from your family, or retirement accounts freom before you were married. If you don't disclose your separate property to the court at the time of your divorce, then your separate property could later be considered community property in some circumstances, and you would have to pay your ex-spouse half its value. 
  4.  What kind of expense usually counts as "child support" - can you give me a list of expenses that qualify? There is no list or designated expenses for child support, although there are expenses parents can elect to share after their divorce. Generally, the state wants you to keep your children as comfortable as your income allows, at a standard of living that's typical for someone with your income. If you make $30,000 a month, then the court would want you to keep your children roughly in line with other families who have the same income. If you make $30,000 a year, then the court expects the same. The court doesn't just give parents a list of what children need. Here is a link to the child support table for Washington State. The table changes every year or so. You'll notice it tops out at $12,000 a month combined income for both parents. If you make more than $12,000 a year, there are other rules that apply. 
  5. Should I tell the bank I'm getting divorced and ask to have my spouse removed from the mortgage? Removing one party from a mortgage, leaving the other partner with the debt, is called an "assumption." Unsurprisingly, banks tend to be very reluctant to reduce the number of people they can pursue to pay back a large debt. Banks tend to say that people asking for an assumption "could qualify," and then for whatever reason the assumption doesn't usually happen. There's always a bank rule that the bank can follow that keeps both people liable for the debt. So normally you will have to refinance your house to remove your ex from the mortgage. And the court will require you to remove the spouse as soon as possible if you are divorcing. This can complicate your life in a divorce. If you try to refinance your house or buy a new house before you are divorced, the bank will still be very leery of lending you money, because they don't know what your post-divorce income will be (and they are worried you're about to spend $40,000 in legal fees or otherwise run up a debt in litigation). And the banks will check court records to see if there is an open case as part of your credit check. Banks will often help you out of this bind with a Settlement Agreement. A Settlement Agreement will give the bank a clear picture of your post-divorce income and financial obligations. A Settlement Agreement can be a way to short-cut the divorce process, if you need a home or other arrangement and don't want to have to wait for a divorce to be final. 
  6. Can I transfer funds or property to my partner before we are divorced, to avoid paying taxes on the transfer? Yes. Gifts between spouses are tax free. Transfers, including deeds, as part of a divorce are also generally tax-free as well, although stock transfers can get a little bit complicated. Transfers should occur within one year of your divorce, and other relevant rules are available at this link. It's also generally a good idea to consult a tax lawyer or CPA as part of your divorce. 
  7. My company awards RSU's (Restricted Stock Units) as part of my compensation, is this separate property or do I have to pay some to my ex spouse? Generally you would split the portion of RSU's earned during your marriage, but you would not split RSU's earned after the date that you separate, and future RSUs are not really property to be divided since earning the stocks depends on your continued employment. 
  8. Are my RSU's (Restricted Stock Units) valued at the date they vested, or the date I sold them, or some other date? All of the above. As you know, you pay taxes on your RSUs on the date that they vest. The taxable value is the amount they are worth on that date. Then you may either keep the shares, or sell them. If you sell them right away, then the value they have is the amount you received from the sale. If you keep the RSUs, then the value can be set at any date that you and your partner agree. This could be the date of separation. The date your divorce is final. Or any other date that makes sense to you. Obviously stock prices will vary from day to day, so most people choose the date of separation so they can have some certainty on the value before they divorce, without having to track the stocks during the process and possibly risk a surprise drop in the market. 

Feel free to contact Divorce Without Court with any other questions, or for a free consult. 206-747-3029. 

About the Author

Elizabeth Steen

Elizabeth Steen is licensed in Washington State, After work she enjoys running with her rescue dog and spending time with family.

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