Some of us are tinkerers, do-it-yourselfers. We buy things, we work on them, we fix them up—things like cars and homes. Often, we do this for fun or to pass the time. However, this sweat equity is also often a factor in divorce settlements.
What Is Sweat Equity in Divorce?
The topic of sweat equity comes up fairly often when discussing shared homes.
For example, you purchase a house, do improvements, and ultimately increase the worth. Your sweat equity makes these items more valuable.
Who does this increased value belong to? Does it belong to one spouse or the other? Or both?
Is there a way to protect your investment of time and effort?
The short answer is, it belongs to both, and there isn’t really a way to shield them. It is, of course, more complicated than that, as most things are in divorce.
Related Reading: How Is Debt Divided During A Divorce?
Community Property
Washington is a community property state. This means the courts generally view assets acquired during a marriage as marital property belonging to both spouses. Because of this, the court will most likely view them as a shared asset to divide in the divorce.
Even if you own something before marriage and it’s separate property, the court may still consider it community property. It depends on the situation.
For example, if one spouse bought a car before tying the knot but later used marital funds to make improvements—for parts, paint, or that sort of thing—then that added value becomes a shared asset.
The presumption is that even while working, the spouse is also there, providing material support. As such, it also becomes community property.
Related Reading: Can You File For Bankruptcy During a Divorce?