The division of marital assets in a Texas divorce can be a difficult process, especially if you and your spouse are unable to come to an agreement. In most cases, the courts will divide the assets in a way that they believe is fair for both parties involved. If you are going through a divorce, it is important to understand what to expect during the asset division process. In this blog post, we will discuss some of the most common factors that are taken into consideration when dividing assets. We’ll also discuss specific assets which might require some special consideration for which you’ll want to make sure you have some solid legal and financial experts on your team. Finally, since most couples have debts in addition to assets, we’ll also get into how those are treated in a Texas divorce.
What is (and isn’t) Community Property
In Texas, the courts use a concept known as community property to divide assets (and debts) during divorce. Under community property law, all assets that are acquired during the marriage are considered to be owned jointly by both spouses. This includes income, property, and debt. When dividing assets in a Texas divorce, the court will first determine which assets are considered to be community property. Once this has been established, the court will then divide the community property between the two spouses in a just and right manner.
There are some exceptions to this rule, however. For example, if one spouse has significantly more income than the other spouse, the court may award a larger portion of the assets to the lower-earning spouse. Similarly, if one spouse was responsible for incurring most of the debt during the marriage, the court may award a larger portion of the assets to the other spouse.
It is important to note that not all assets are considered to be community property. Some assets, such as inheritances or gifts, may be classified as separate property. This means that they are not subject to division in a divorce. If you have any questions about whether an asset is considered to be community property or separate property, you should speak with an experienced divorce attorney.
Exceptions to Community Property
Another factor that is often taken into consideration during the division of assets in a Texas divorce is the needs of each spouse. For example, if one spouse has primary custody of the children, the court may award them a larger portion of the assets. This is because they will likely need to use these assets to support their children. Additionally, if one spouse is unable to work or earn an income, the court may award them a larger portion of the assets. This is because they will likely need to use these assets to support themselves.
Finally, the courts may also consider any agreements that were made between the spouses during the marriage. For example, if the spouses had a prenuptial agreement in place, the court may take this into consideration during the division of assets in a Texas divorce. Similarly, if the spouses had a postnuptial agreement in place, the court may also take this into consideration.
Special Treatment for Specific Assets
The House
In general, the courts in Texas apply the concept of community property to asset division in divorce. However, there are some specific assets that may require some additional consideration. The house is often the biggest asset that a couple has and deciding what to do with it can be one of the most difficult decisions to make. If you have children, you may want to keep the house so that they can have stability and continue living in the home they are used to. Alternatively, you may want to sell the house and split the proceeds so that you can each start fresh in a new home. There are pros and cons to both options, and it is important to discuss with your divorce attorney what is best for your individual situation.
Retirement Plans
Another asset to consider is retirement plans, such as 401Ks, IRAs, and pension plans. To split some of these assets, a Qualified Domestic Relations Order may be needed. This document ensures that the money in the retirement account can be divided without any penalties or taxes being incurred. These funds can then be transferred or re-invested in separate plans.
Businesses
Businesses can also pose a unique challenge when going through the division of assets in a Texas divorce. If you and your spouse own a business together, you will need to figure out what to do with it. You may want to sell the business and split the proceeds, or one spouse may want to buy out the other spouse’s share.
If you have a sole proprietorship, your business may be considered part of your personal property and will be subject to division in a divorce. If you have a partnership, the partnership agreement may specify how the business will be divided in a divorce. If there is no agreement, the court may divide the business based on the financial contribution of each partner.
The value of your business will also be taken into account when dividing assets in a divorce. The court will consider the fair market value of the business, as well as any debts or liabilities associated with the business. If you own a significant portion of the business, you may be entitled to a greater share of the value of the business. An expert may be required to help value the business.
What About Debts?
Now that we’ve covered asset division, what about debts? When a divorce is finalized in Texas, all debts that were incurred during the marriage must be divided between the spouses. This includes both secured and unsecured debts, as well as any debt that is in one spouse’s name but was incurred for the benefit of the family.
The first step in dividing debts is to determine which debts are marital and which are individual. Marital debts are those that were incurred during the marriage, regardless of which spouse is named on the account. Individual debts are those that were incurred before the marriage or after the date of separation.
Once marital and individual debts have been identified, they must be divided between the spouses. This can be done through negotiation and agreement between the spouses, or it can be ordered by the court. If the court orders the division of debts, it will consider a number of factors, including:
– The relative ability of each spouse to pay the debt;
– The relative needs of each spouse;
– The relative income and earning capacity of each spouse;
– The impact of the debt on each spouse’s credit rating;
– The nature and character of the debt (e.g., secured vs. unsecured); and
– Who incurred the debt and for what purpose.
The court will also consider any other factor that it deems relevant to the division of debts. Once the court has made its determination, it will order one spouse to pay certain debts and absolve the other spouse of responsibility for those debts.
Mortgage debt is another thorny issue that may complicate your divorce. This can be a complex issue, as there are many different ways to approach it. You’ll need to consider the value of your home, the amount of debt you have, whose named on the debt, and how much each spouse can afford to pay. There are also tax implications to consider. Ultimately, you’ll need to come up with a fair and equitable solution that works for both parties. If you’re not sure where to start, it’s important to consult with a qualified family law attorney. They can help you understand the law and find the best way to divide your mortgage debt in a divorce.
Conclusion
It is important to keep in mind that each divorce case is unique, and the court will take many different factors into consideration when dividing assets. It is important to speak with an experienced divorce attorney so that you can be sure you’re getting the best financial result possible in your divorce. Our experienced Dallas divorce attorneys at Alexandra Geczi, PLLC often work with the best financial advisors, and CPAs in Texas to deliver the best possible results for our clients. Fill out the contact form below to see how we can help you protect your assets in a Texas divorce.