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Dealing with debt and assets in a divorce

On Behalf of | Mar 22, 2021 | Family Law |

One of the complex issues you may have to work through when you are getting a divorce is assessing the value of debts and assets and figuring out how to divide them. Since Washington is a community property state, shared property is supposed to be divided equally, but this does not mean that every asset and debt must be split 50/50.

Creditors and divorce

First, it is important to understand how debt works after a divorce. If the debt is in your name, the creditor will consider you responsible for it even if your divorce agreement says that your ex-spouse will pay all or part of it. Essentially, as far as the creditor is concerned, the divorce agreement is irrelevant in terms of who is specified as responsible for what debts.

Splitting assets and debts

Therefore, it is important to divide debts and assets in a way that accounts for this. One way might be to put the debts into the name of the person who has agreed to pay them. Another might be for one person to take more of the debts and more of the assets as well.

Understanding the value of assets

However, there are a couple more things that you should be wary of. First, when you are looking at the value of assets, you should make sure that you account for any costs or taxes associated with the asset. For example, you should note if a retirement account will be taxed on withdrawal. You should also make a point to separate yourself financially from your ex-spouse so that you do not run into problems later. In some cases, this could mean selling a house or other assets at a loss, but it might be worth it to completely financially disentangle from your spouse.

You should also be aware of any tax implications of selling or transferring property. It might be a good idea to work with a financial professional as well as an attorney to be sure that you fully understand the money issues and can ensure your financial security.