Dividing substantial wealth is a difficult process. Hidden costs, such as future taxes or limited asset liquidity/marketability, might complicate what looks like a simple split. Understanding where negotiations can go wrong helps you avoid oversights that may reduce the value of the settlement.
How Washington state divides your assets
Washington state is a community property state, meaning that most property acquired during a marriage belongs to both spouses equally. However, in a divorce, courts do not automatically split everything 50-50. Instead, state law requires judges to divide property in a way that is fair, taking into account all relevant factors such as the economic circumstances of each spouse and the duration of the marriage.
When full disclosure falls short
Warning signs that financial information may be incomplete include:
- Sudden decreases in reported business income despite no apparent operational changes
- Large cash withdrawals or wire transfers to unfamiliar accounts in the months before filing
- Reluctance to provide access to tax returns, bank statements or business records
- A lifestyle that does not align with reported income and disclosed assets
Disclosure violations can lead a judge to order the deceptive spouse to pay your legal fees or award you a larger share of the marital properties. In extreme cases, the court may reopen a finalized divorce if one spouse uncovers significant hidden assets, though this is generally subject to strict time limits.
When taxes become an afterthought
The following tax traps might catch you off guard:
- Unequal after-tax values
- Capital gains on appreciated assets
- Retirement account penalties
- Loss of home sale tax exclusion
Overlooking tax consequences can make what looks like an equal split far from fair. A spouse who receives assets with built-in tax liabilities may ultimately receive tens of thousands of dollars less once those taxes are paid.
How legal guidance helps keep negotiations balanced
Attorneys serve as the central coordinators in high-asset divorce proceedings. They use formal discovery tools to request complete financial documentation and can subpoena records directly from banks, employers and other financial institutions when voluntary disclosure is not enough.
Your legal counsel can ensure that you have access to the right experts when needed, whether that means forensic accountants to verify complex financial records or tax professionals to calculate real asset values. They can also structure creative solutions, including installment payments, deferred distributions or asset swaps that address both parties’ priorities.
