How Is Property Divided in a Texas Divorce?

April 24, 2023

Property and debt are divided after a divorce in Texas. However, separate property is not included in this process. One of the complex issues for many people is how their shared assets will be divided. Depending on what is decided, it can impact how effortlessly you feel you can move forward in your life.

If you feel as if you didn’t receive your reasonable share, it could lead to financial struggles that don’t end with the dissolution of the marriage. Instead, it could take years to get yourself back to a stable place where you feel comfortable. But it goes beyond finances. You should walk away from a divorce feeling you could keep the things that are most important to you.

The current economic environment has caused people across Texas to fall into debt. A divorce can’t be completed until court orders are issued and preparations have been made in terms of how debt will be handled between you and your ex. Depending on how this is resolved, you may be required to pay your own debts and those of your spouse.

Most people will do anything to protect their assets. They don’t want to end up having things they care about sold or given to their ex in divorce proceedings. This is one of the reasons it’s crucial to have a fantastic divorce lawyer in Texas. They can answer your questions and represent you so you get a fair shake in terms of property division.

How Are Assets Divided in a Texas Divorce?

Texas law assumes that when you are married, all property you collect doesn’t belong just to you but also to your spouse. If the property is acquired during the marriage, it’s considered to be a part of the marital estate.

When two people divorce, the marital estate no longer exists. All of the property that was held between the two of you can be divided in court. The division of community property in Texas is called “just and right.” This means that it may not always be a simple 50/50 split between both spouses. Instead, several factors will be considered. Some of the factors the courts may think about include:

  •       Each person’s abilities and capacities
  •       Which helps a not-at-fault party would have experienced if the relationship had not ended
  •       Business prospects
  •       The physical conditions of each party
  •       The financial condition of each party
  •       Any difference in age between the two people
  •       What kind of property is in question
  •       The disparity in earning abilities and income between both parties

You might wonder what kind of property is subject to just and right division after divorce. These include some pensions and retirement plans, financial accounts, personal property, real estate, and some employment benefits. This means all of these items can be divided during divorce. However, if any asset or property is considered the property of an individual, it will not factor into this process.

Understanding Separate and Community Property in Texas

If you or your spouse acquire assets while in a marriage, those items are legally the property of both of you. It doesn’t matter if one person has their name on the title while the other does not. When someone is considered a community property, it can be divided during a divorce. This includes everything from retirement accounts contributed to during the marriage, the family home, and other personal possessions.

On the other hand, if you had a piece of property before marriage, it will be considered separate property. However, there are things to be aware of even for these items. If the separate property increases in value during the marriage, that increase might be divided. For example, this might occur with a business. In addition, one person might have a partial claim to the separate property of their spouse if they made investments or did work to increase the value.

How Do Community Liabilities Factor In?

Similar to assets, Texas assumes that debts and other liabilities incurred while the couple was married are part of the community estate. This means both spouses are responsible for the marital debts. These marital debts are divided by the court between spouses during divorce.

On the other side of things, a spouse who incurs separate debts doesn’t cause liability to the community estate. At the same time, there are exceptions to be aware of. Separate property of the spouse may be used for the debts below:

  •       Debts the other person took on to gain health care, clothing, shelter, food, and other necessities of life
  •       Obligations the other spouse assumed while acting as an agent to their spouse

For example, let’s say that one person has a great deal of debt because they needed to have an important medical procedure at the local hospital. A creditor could reach out to the other spouse about the separate property to satisfy that debt.

Liability can occur due to lawsuits alleging tortious conduct or from valid contracts. For example, acquiring a mortgage creates a contract where you are required to pay the interest and principal on the loan used to buy a home. In addition, Texas law can also hold you liable for damages as compensation for creating losses if you are at fault for someone’s injuries by causing a car accident.

If a liability is created from a contractual agreement, it is a community liability if the spouses were married when the requirement to pay came into effect. Regarding liabilities related to tortious conduct, these are community debt if the spouses were married when the right to recover damages became available.

How Are Pensions and Employment Benefits Divided?

When a married individual gains interest in profit-sharing, retirement, pension, or other employee benefits, the interest is community property and can be divided at divorce. If one spouse must pass part of their retirement benefits to the other, a document called a Qualified Domestic Relations Order is prepared by an attorney and sent to the employer. The court will order them to split benefits based on the court order.

For cash account items, such as 401(k), the funds will typically be disbursed from the employee in 30 to 90 days. If there are benefits paid on retirement, such as a pension plan, the court order will provide the employer with a calculation of the percentage that should be applied when payments start. The employee will be required to send the payments to the other person as noted in the court order.

As with other assets shared between both spouses, the court does not need to equally divide pension and retirement accounts. So if both people have a pension or retirement account, the court might simply award each with their own account if both are similar or other awards make up most of the difference.

How Do Texas Courts Divide Businesses in Divorce?

As with other assets, a judge must consider all the aspects of a spouse’s professional practice or business when deciding on the value of the property and dividing it between the two of you. If someone develops or starts a business while married, there are community property interest considerations that the court will address during a divorce.

The most complicated and time-consuming part of determining the value of a business is in terms of valuing the “goodwill.” This is an intangible factor that businesses have based on their established reputation or name. Even if the business wouldn’t sell on the market, it still has a goodwill value which must be determined during the divorce.

Divorcing couples with businesses will often hire business appraisers and public accountants to decide on the value of a professional practice or business. The appraiser or accountant will look over the records and books of the practice or business and create a written report.

Reasons to Bring on an Experience Family Law Attorney for Property Division

Divorces can be very stressful and most people do not have all the information needed to get the best outcome for themselves. This is one of the reasons that it’s highly recommended that spouses hire a reputable Texas divorce lawyer to assist with the process. Your attorney can advocate for you, which is especially useful where shared assets are concerned.

In addition, the right attorney can help you better understand the divorce process. There is often legal jargon or even steps in the process that are challenging to understand. This can lead to mistakes if you don’t have someone knowledgeable in your corner. You can be sure you respond correctly to protect your interests.

Many divorcing couples find it challenging to communicate with each other. You might feel sadness or anger, which is normal but can make it challenging to move forward. Good communication is essential in a divorce and a lawyer can handle that for you. They’ll remain professional in all conversations and help you handle conversations in the same way.

Speak with an Experienced Texas Divorce Lawyer Today

Now that you have an idea of how property division works in a Texas divorce, you need to make sure you’re prepared for every aspect of the process. Working with a highly experienced attorney will ensure everything goes smoothly, both in terms of your property and assets as well as the divorce as a whole.

The experienced family law lawyers at the Aberdeen Law Firm are here to assist you. We have years of experience helping people just like you with divorces in Texas. Our attorneys are committed to advocating for you in court. If you’re going into a divorce, get in touch with us for a free consultation. You can reach us at 855-593-1497.

Related Content: 10 Documents You Should Prepare to File for Divorce in Texas

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