§68.02 Personal Property Transfers

• Jurisdiction: Washington

§ 68.02 PERSONAL PROPERTY TRANSFERS

RCW 26.09.080 provides a nonlimiting list of factors for the disposition of property and liabilities in a dissolution of marriage, domestic partnership, legal separation, and declaration of invalidity proceeding. The trial court's duty is to dispose of all property and liabilities, as the parties have the right to have their respective interests definitely and finally determined in the decree. Shaffer v. Shaffer, 43 Wn.2d 629, 631, 262 P.2d 763 (1953). The court can only leave the parties as tenants in common when the decree fixes each spouse's share of the asset and provides for a sale within a fixed period of time. In re Marriage of Sedlock, 69 Wn. App. 484, 499, 849 P.2d 1243 (1993). However, the parties may contractually agree, pursuant to RCW 26.09.080, to hold property as tenants in common for as long as they desire. Byrne v. Ackerlund, 108 Wn.2d 445, 450-52, 739 P.2d 1138 (1987).

Once the division has been decided by the court or agreed on by the parties, the decree should dispose of each asset and liability by specifying to whom the asset or liability is awarded and the mechanism, if necessary, that will be used for the transfer. It is advisable to include a provision about which party will be responsible for drafting the transfer documents, presenting the documents to the court, or performing the specific action necessary to effectuate the transfer. Otherwise, issues regarding who is responsible for effectuating the transfer can cause unnecessary cost and delay. If there is a cost associated with the transfer, it is also wise to detail who is responsible for that transfer cost, or a specific proportional division thereof for each party. You should include language in the final decree that each party will cooperate in the transfer, including timely performance of any necessary acts to effectuate the transfer and a contingency if a party does not comply.

Practice Tip: When performing discovery, include questions and request documents that will be necessary to effectuate transfer of the type of property at issue in the transfer, so the need for or lack of this information does not become an issue after the discovery cutoff has passed. Discovery cannot be performed once final orders are entered absent express agreement of the parties or a signed order from the court. To expedite the process of entry of final orders and conclusion of a case, it is important to conduct thorough discovery.

If the personal property to be divided includes items such as holiday decorations, family pictures, or other items where a fair and equitable division is required, a specific date and procedure should be set forth, including the inspection date, time, and location (possibly in the presence of a neutral, agreed-upon third party), including instructions that the parties are to compile a list of disputed items, including an accounting for items that are either "lost" or "damaged." Then the parties can engage in a distribution of these items that is fair, equitable, and timely.

Practice Tip: You should anticipate disputes regarding division of these types of personal property, particularly if the division is not expressly detailed in the decree. The decree may appoint an arbitrator or other third party to decide and resolve these disputes and manage the transfer of the personal property. Such provision in the decree should expressly state the arbitrator's authority, the process by which to access that authority, and how the arbitrator should be compensated for services.

If real property is to be sold or transferred, it may be necessary to have a special master appointed to arrange the sale or obtain a "commissioner's deed" transferring the property. See Chapter 6.28 RCW for the applicable statutes and laws related to the process of conveyance of real property by special master.

[1] Transferring Specific Types of Personal Property

This section will enumerate the most common types of property transfers; however, there can be specific problems that will arise depending on the uniqueness of the property. See § 68.02[2], below, for some examples.

[a] Retirement Accounts

The Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. ch. 18, governs most employer-sponsored defined benefit and defined contribution plans. Both types of retirement plans have different requirements when being transferred between spouses in a decree. Transfers of qualified retirement plans between spouses are nontaxable events pursuant to I.R.S. § 1041.

Types of ERISA qualified plans include but are not limited to I.R.C. § 401(k), Solo § 401(k), § 403(b), § 457(b), and pension plans. An I.R.C. § 457(f) plan is a non-ERISA qualified deferred compensation plan that allows eligible employers to contribute funds on a pre-tax basis for key executives. Individual Retirement Accounts (IRAs), Roth IRAs, Simple IRAs, SEP-IRAs, Self-directed IRAs, and government employees are not governed by ERISA or the specific requirements enumerated therein.

Specific statutes regulate other retirement benefits, such as the Railroad Retirement Pension Plan, which is governed by 45 U.S.C. §§ 231-231v, providing for vesting of benefits to a spouse in a marriage lasting 10 years or more. See 45 U.S.C. §§ 231a(c)(4), 231a(d)(1)(v), 231m. Other statutes cover federal employees employed in particular branches of the government, such as the Forest Service, the Federal Aviation Administration, or the Armed Services. (See Chapter 33 (Federal Pensions) of this deskbook.) Finally, other retirement benefits can be established under tax-deferred plans such as KEOGH plans set up by self-employed individuals or partners, Employee Stock Ownership Plans (ESOPs), Individual Retirement Accounts (IRAs), or Simplified Employee Pensions (SEPs), which are IRAs to which employers can make deductible contributions that are excludable from employee income.

The usual method of transferring an ERISA qualified plan is through a Qualified Domestic Relations Order (QDRO) pursuant to 29 U.S.C. § 1056(d). Pursuant to the law, the "participant" spouse transfers an interest to the "alternate payee," who is a spouse, former spouse, or dependent. It is always advisable to contact the plan administrator to find out the specific procedure they have implemented regarding entry of a QDRO. For example, due to the commonality of...