Financial Considerations for Divorce in Washington State

You may have a few financial considerations if you’re contemplating divorce in Washington State. This emotionally and financially complex process can have long-lasting impacts on both parties. Understanding the different types of divorce available, as well as common financial issues, can be helpful for those going through a divorce. 

As financial advisors, we can help clients navigate the financial intricacies of divorce. Whether it’s a court battle, mediation, or a do-it-yourself approach, how you divorce can significantly influence the financial outcomes. Each option presents its own set of challenges and benefits, and making the right decision requires careful planning. 

Types of Divorce in Washington

Did you know that in Washington, a divorce takes at least 91 days? This is due to a mandatory cooling-off period preventing people from getting quick divorces during brief fits of anger. For those who make it three months (plus) and still decide to part, the divorce can take various forms, each affecting the process and financial outcomes differently.

Contested Divorce (Court Battle)

A contested divorce arises when a couple cannot reach an agreement on the issues involved in dissolving their marriage. This leads to a court trial, where a judge makes the final decisions. This option is often the most expensive and time-consuming due to attorney fees and court costs — around $13,50O on average in Washington  — and it can significantly prolong the emotional toll of divorce. 

Financially, contested divorces often involve detailed documentation of all assets and liabilities, which may lead to additional costs as both parties attempt to protect their financial interests in court

Mediated Divorce

A mediated divorce allows couples to work with a neutral third party outside of court. Rather than litigating through the court system, mediation allows a couple to work with a trained mediator who can facilitate constructive conversations between the two parties to reach an agreement.

This process can save time and money, as it encourages cooperation rather than litigation. However, there is the caveat that both spouses must be willing to compromise for mediation to work. Financial advisors often assist during this process by helping each spouse understand the long-term financial impact of their decisions. For example, mediation offers a greater degree of control and flexibility. The parties collaborate on solutions that best meet their individual needs and circumstances.

Uncontested Divorce (Do-It-Yourself)

In an uncontested or DIY divorce, both parties agree on all terms and file the necessary paperwork themselves. This is the quickest and least expensive option. Sources note that in Washington State, the cost typically ranges from $350 to $500. However, it can be higher and reach up to $1,000–$3,000 depending on the complexity of the marriage (kids, assets, property, etc.).

While it is cost-effective, an uncontested divorce may not always be the best route if you have significant assets. Financial advisors can help clients review the settlement terms to ensure they fully understand the long-term financial implications before finalizing the agreement​

Your advisor is a great resource for helping you examine your financial considerations before deciding which method of divorce to use in Washington State. 

Role of a Financial Advisor During Divorce

For financial advisors, divorce presents unique financial considerations and challenges. In Washington State, once divorce proceedings begin, an advisor may need to decide whether to continue working with both spouses or disengage from one to avoid conflicts of interest.

At Northern Lights Advisors, we let our clients decide which spouse should continue working with us during the divorce. If both spouses are long-term clients, it’s crucial to ensure impartiality is maintained during the process. However, if necessary, we may recommend disengaging from both parties to avoid any ethical issues.

Some financial issues that commonly arise during divorce include:

Divorce often brings a range of complexities that need careful consideration to ensure both parties’ financial well-being is protected. Some of the most common issues include:

• Asset Division: Advisors help assess and divide assets equitably. In Washington, all property acquired during the marriage is considered community property and is subject to division.
  
• Retirement Accounts: Careful planning is needed when dividing retirement assets, as mistakes can lead to costly tax penalties. Financial advisors can guide clients through the process to ensure these funds are split appropriately.
• Tax Implications: Divorce can have significant tax consequences, including changes to filing status, deductions, and tax liabilities. Advisors work to mitigate these impacts by structuring settlements that are tax-efficient for both parties.

An advisor can help ensure you make informed decisions, especially regarding financial considerations around your divorce. 

Talk to your financial advisor about divorce

Divorce is complex, especially when financial matters are involved. For our clients experiencing divorce, Northern Lights Advisors will do our best to advise actions that support a secure financial future, regardless of the type of divorce chosen. Whether it’s through court, mediation, or DIY agreements, each spouse’s financial future is at stake. 

At Northern Lights Advisors, clients have the flexibility to decide which spouse remains working with us for the duration of their divorce to ensure the best financial outcomes for all involved. Afterward, we can work with both individuals independently, should they choose to do so. Our client-first approach helps reduce the financial strain during such a difficult life event, ensuring that your clients remain confident in their financial plans post-divorce. 

Are you considering divorce but concerned about the financial impact? Schedule a consultation today to learn how we can help you understand the financial considerations surrounding your divorce. 

Northern Lights Advisors is a fiduciary, fee-only Registered Investment Advisor (RIA) firm based in Seattle, Washington. The information in this article is not intended as tax, accounting, or legal advice. Read the full disclosure here.