326-20-048  <<  326-20-049 >>   326-20-050

Personal net worth.

(1) Each individual owner of a firm applying for state certification, whose ownership and control are relied on for certification, must fill out a personal net worth statement and sign a declaration that his or her personal net worth does not exceed 1.32 million dollars. If any individual's personal net worth exceeds 1.32 million dollars, the individual's presumption of economic disadvantage is rebutted and the individual does not meet the criteria for certification.
(2) The office may require additional financial information where necessary to accurately determine an individual's personal net worth.
(3) In determining an individual's personal net worth, the office will use the following criteria:
(a) Exclude the individual's ownership interest in the applicant firm;
(b) Exclude the individual's equity in his or her primary residence. The equity is the market value of the residence less any mortgages and home equity loan balances;
(c) Not use a contingent liability to reduce the individual's net worth;
(d) With respect to assets held in vested pension plans, individual retirement accounts, 401(k) accounts, or other retirement savings or investment programs in which the assets cannot be distributed to the individual at the present time without significant adverse tax or interest consequences, include only the present value of such assets, less the tax and interest penalties that would accrue if the asset were distributed at the present time;
(e) Include any assets the individual has transferred within two years prior to the application or renewal to:
(i) An immediate family member;
(ii) A trust where the beneficiary is an immediate family member; or
(iii) The applicant firm for less than fair market value.
(f) The assets described in (e) of this subsection will not be counted toward an individual's personal net worth if:
(i) The applicant demonstrates that the transfer is to or on behalf of an immediate family member for that individual's education, medical expenses, or some other form of essential support; or
(ii) The transfer is consistent with the customary recognition of special occasions, such as birthdays, graduations, anniversaries, and retirements.
(g) For the purposes of this section, "immediate family member" means father, mother, husband, wife, son, daughter, brother, sister, grandfather, grandmother, father-in-law, mother-in-law, sister-in-law, brother-in-law, and domestic partner and civil unions recognized under state law.
(4) If an individual's personal net worth does not exceed 1.32 million dollars as described in this section, the office may rebut an individual's presumption of economic disadvantage if the statement of personal net worth and supporting documentation demonstrates that the individual is able to accumulate substantial wealth. In making this determination, the office may consider factors that include, but are not limited to:
(a) Whether the average adjusted gross income of the owner over the most recent three year period exceeds three hundred fifty thousand dollars;
(b) Whether the income was unusual and not likely to occur in the future;
(c) Whether the earnings were offset by losses;
(d) Whether the income was reinvested in the firm or used to pay taxes arising in the normal course of operations by the firm;
(e) Other evidence that income is not indicative of lack of economic disadvantage; and
(f) Whether the total fair market value of the owner's assets exceed six million dollars.
[Statutory Authority: RCW 39.19.030. WSR 17-13-020, ยง 326-20-049, filed 6/12/17, effective 8/1/17.]
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