Uncontested Divorce by Mail

What is Community Property?

Community property is everything you acquire between the date of marriage and the date one party moves out of the marital home — or the filing of a Legal Separation or Divorce Petition. Exceptions: gifts, inheritance, and personal injury damages received during the marriage remain separate property.

The "Theoretical Right" to Separate Property

Christopher calls the right of married people to own separate property a theoretical right — because of a case in which the wife said to the husband about his inheritance: "You can have separate property or you can be married to me, but you can't have both." As a practical matter, separate property during marriage requires the consent of your spouse.

The Four Unities Required for JTWROS

Strategic note: If it is possible to avoid a QDRO by giving home equity or other assets to the other spouse instead, that may be preferable to being saddled with reduced retirement income for the rest of your life. This is worth discussing carefully before finalizing the asset distribution.

Asset Division & Cost Basis

• Transfers are tax-free at the time of transfer — Under IRC §1041, transferring assets between spouses — or former spouses incident to a divorce — does not trigger capital gains tax at the time of transfer.
• Cost basis carries over — The receiving spouse inherits the original cost basis of the asset and assumes the potential tax liability when they later sell it.
• Unequal after-tax value — Two assets with the same current market value may have vastly different after-tax values. An asset with a low cost basis will result in a larger capital gains tax when sold — making it less valuable than an asset with a higher basis.
• Home sale — $500,000 exclusion — If the marital home is sold before the divorce is finalized, both spouses may qualify for a $500,000 capital gains exclusion filing jointly. After divorce, each spouse can typically only exclude $250,000 individually. Selling in the tax year before the divorce is finalized preserves the full exclusion.
• Buyouts are not taxable events — If one spouse buys out the other's share of the home, the selling spouse does not owe capital gains tax on the buyout — it is treated as a property transfer, not a sale to a third party.
• Retirement accounts require a QDRO — Division of 401(k)s and pensions requires a Qualified Domestic Relations Order to ensure a tax-free transfer. IRA assets can be transferred tax-free through a trustee-to-trustee transfer specified in the divorce decree.
• Early withdrawal penalties — Taking a cash distribution from a retirement account as part of a settlement triggers income tax and a 10% early withdrawal penalty — except for certain QDRO-related distributions before age 59½.

Alimony & Child Support — Post-2018 TCJA Rules

• Alimony is no longer deductible — For divorce or separation agreements executed after December 31, 2018, alimony is no longer tax-deductible for the payer and is not taxable income for the recipient. This is a significant change that affects cash flow and should be central to settlement negotiations.
• Child support has never been deductible — Child support payments are not tax-deductible for the payer and are not taxable income for the recipient — this rule has not changed.

Filing Status & Dependency Exemptions

• Year-end marital status controls filing status — A taxpayer's marital status on December 31 determines their filing status for the entire year. If divorced by year-end, clients must file as Single or Head of Household. If not yet divorced, they may file Married Filing Jointly or Married Filing Separately.
• Head of Household — Filing as Head of Household offers a higher standard deduction than Single and is available to separated individuals who pay more than half the household costs and have a qualifying dependent child.
• Child tax credits — The custodial parent is typically entitled to claim child-related tax benefits. Parents can agree for the non-custodial parent to claim the child, but the custodial parent must provide a signed IRS Form 8332 every year.

How RCW 11.07.010 Works

• Automatic Revocation — The statute automatically revokes provisions in written instruments made before a divorce that favor a former spouse for the payment or transfer of nonprobate assets at death — without any action required by the divorced spouse.
• Legal Fiction — It operates under the legal fiction that the former spouse died at the time of the dissolution decree. The nonprobate asset passes as if the former spouse had not survived the decedent.
• Applicable Assets — Covers life insurance policies, pension plans, payable-on-death (POD) bank accounts, annuities, and individual retirement accounts (IRAs) — any nonprobate asset with a beneficiary designation.
• Exceptions — Automatic revocation does not apply if: (1) the written instrument expressly states otherwise; (2) a divorce settlement agreement governs the disposition of the asset; or (3) the former spouse is redesignated as beneficiary after the divorce.

Action required after every divorce: Even though RCW 11.07.010 provides automatic protection for Washington nonprobate assets, you should still update every beneficiary designation after your divorce is final — especially on ERISA-governed retirement accounts, which are not covered by the statute. Christopher reviews beneficiary designations as part of every post-divorce estate plan.

What Imputed Income Means in Court

The court concludes that a party has an earning capacity greater than their current income, and uses that higher figure when calculating support payments — regardless of what the party is actually earning.

• Voluntary unemployment — Quitting a high-paying job for a lower-paying one without a valid reason, or refusing available work entirely.
• Voluntary underemployment — Intentionally reducing work hours, declining a promotion, or accepting a position well below your demonstrated earning capacity.
• Failure to seek work — Failing to make diligent efforts to find new employment after a job loss — particularly when the job market supports re-employment.
• Hidden or unreported income — Failing to disclose income sources, assets, or cash compensation that would otherwise be included in the support calculation.

Why Divorce & Financial Distress Are Linked

• Financial stress and marital conflict — Money problems are a leading source of marital stress and a common driver of divorce.
• Two households, doubled expenses — Divorce means creating two separate households — doubling rent or mortgage payments and often reducing overall household income at the same time.
• Community property debt division — Washington is a community property state. Debts incurred during the marriage to support the marital community belong to both spouses. Dividing those debts can be complex and contentious — particularly when refinancing is not an option.
• Impact on credit scores — Joint accounts and co-signed loans can damage both parties' credit scores during and after divorce, especially if one spouse stops making payments. A lower credit score makes it harder to qualify for new loans and further destabilizes finances.
• Legal and court fees — The divorce process itself adds to financial strain — attorney fees, court costs, and filing fees all accumulate.
• Child support and alimony obligations — For the paying spouse, these obligations can significantly reduce disposable income and make it difficult to cover basic living expenses.

Timing of Bankruptcy — Before or After Divorce?

The timing of a bankruptcy filing relative to a divorce can significantly affect the outcome of both proceedings. Filing before the divorce can simplify debt division and potentially make the divorce process smoother — but the right answer depends on individual circumstances.

• Means test and family size — The bankruptcy means test compares income to the median income for a household of the same size in Washington State. A family of four has a higher median income threshold than two families of two, a single person, or a family of three. Filing before or after divorce changes the household size used in the calculation — which can determine eligibility for Chapter 7 vs. Chapter 13.
• Joint filing before divorce — Spouses can file a joint bankruptcy petition before divorcing, potentially discharging shared debts together and simplifying the subsequent divorce. This eliminates the need to divide many debts in the divorce decree.
• Filing after divorce — Filing individually after divorce allows each spouse to address their own financial situation separately, but community property debts may still affect both parties even after the divorce is final — in the eyes of the creditor, the divorce decree does not eliminate their right to collect from either spouse.