Washington is a community property state, which means that property acquired during marriage is generally considered the property of the couple as a unit, but property acquired before the marriage is separate. In a divorce, however, the court is required to make a fair division of all property, and separate property may be handed from one spouse to another. Although this rarely happens, a recent case from the Court of Appeals confirms that the court does not need to rule that the community property is insufficient to make a fair division before awarding separate property.
The husband was an early Microsoft employee who obtained substantial holdings of Microsoft stock both before and during the marriage. When the couple divorced, the combined community and separate property exceeded half a billion dollars. The trial court awarded the wife all of the community property, worth $131 million, her separate property, worth abut $670,000, and $40 million of the husband’s separate property in stock and cash, for a net of about $181 million. It awarded the husband $357 million separate property and assigned a community debt of about $30 million to him, for a net of about $32 million.
The husband was not satisfied, and appealed. He argued that if the community property was enough to provide amply for the wife, the court was not allowed to order him to contribute additional separate property, and that the purpose of allowing the courts to redistribute separate property was to prevent spouses from falling into poverty. The Court of Appeals disagreed, ruling that a 1949 change in the law effectively overruled the two late-1940’s cases that had suggested the “ample provision” rule, and that the same law was equally available to the rich and the poor.
Overall, the Court of Appeals ruled that the trial court had general discretion in its property award so long as it took into account four factors set out in the statute: the community property, the separate property, the length of the marriage, and the economic circumstances of the parties at the time of the distribution. The marriage had been a long one, and both parties were in excellent economic health, but the wife had not worked during the marriage and was not likely to be employable. The court ruled that the distribution was generally fair.
As I mentioned above, Washington courts usually do not order transfers of separate property. This case, however, confirms that the possibility is available in a broader range of cases than most lawyers might think. It may be advisable to talk to your lawyer if one spouse had a substantial pile of separate property and the marriage lasted a reasonable length.