...

How Does a Judge Divide up Community Property in a Texas Divorce?

The most common word that I will hear associated with the main goal of a divorce from a potential client is “fair.” Most people want the outcome of their case, especially in a Texas divorce property division, to be a fair one. Not one sided, not so over the top as to favor him or her to complete exclusion of their spouse. Something right down the middle that treats both parties well, bearing in mind whatever circumstances are in play.

That’s all well and good, but if you and your spouse cannot agree upon a settlement to your divorce that likely means that you all do not see eye to eye at all. As such, your definition of fair and your spouse’s definition of fair may not resemble one another by a long shot. The judge’s consideration of your arguments versus those of your spouse will significantly impact the ultimate decision of your case. Just what will a judge be looking for in your case when it comes to dividing up your community estate?

A just and right division is what a court must pursue in your trial

The Texas Family Code requires that Texas family court judges approach the division of marital estates with the aim of achieving a just and equitable outcome. This provision offers judges considerable discretion in determining specific issues in family law cases, drawing on their own judgment and ethical compass.

Typically, judges lean towards an equal split of marital property between spouses, though this may vary based on factors such as the distribution of separate property and discrepancies in earning capacity. Considerations including instances of family violence, the types of property involved, fault in the divorce, the health of both spouses, and other relevant factors further influence the judge’s decision. While judges begin with a neutral stance, both spouses can present arguments to sway the division of assets in their favor.

In my experience handling divorces in Texas, it’s rare for the scale to tip beyond a 60/40 division. Although extreme circumstances may arise, the court typically expects a nearly 50/50 split in community property division. Starting with the notion of fairness, the court often deems a 50/50 division the most equitable outcome.

Some property may disproportionately go towards you or your spouse

Depending on your preferences or your post-divorce situation, the judge may choose to allocate different types of property to you. For example, if your spouse will need more liquid assets (cash) immediately after the divorce to find a new place to live, buy furniture, etc., the judge may award him most of the cash in your bank accounts. Likewise, if you can continue living in your family home and have a job that allows you to quickly recover funds, the court may grant you less liquid assets such as property or investment accounts.

Dividing up retirement accounts in divorce cases

During the marriage, retirement accounts become community property, irrespective of the account holder’s name, whether owned by you or your spouse. As your attorney, the main challenge we face is determining how to divide each account between you and your spouse.

A Qualified Domestic Relations Order (QDRO) serves as the legal mechanism for dividing retirement accounts. The administrator of your retirement plan, whether it’s your own or an external company, will review the QDRO to ensure that its language permits the division of the account as ordered by the judge. The administrator must clearly outline specific details such as the marriage and divorce dates, length of employment with the employer, and the division of funds. Once the administrator approves the plan language, they will proceed to split the account accordingly, ideally before the judge signs the order.

Consider an example to better illustrate these points: You’ve worked at a company for twenty years, with ten of those years spent in marriage to your spouse. The final decree of divorce mandates an equal 50/50 split of your retirement account with the company. Your plan administrator will then need to calculate the division of your retirement account into separate and community property portions.

Your spouse can choose to do a number of things with her 50% portion of the community property share. She can receive that money immediately, and it will be taxed as income upon receipt. Next, she could decide to roll it into an Individual Retirement Account (IRA) with a company that does such things. In that case, no taxes or penalties would apply. Your spouse can decide to do whatever she wants but must state her intention in the QDRO.

Dividing real estate in a Texas divorce

The next big ticket item that we need to cover as far as property division in a divorce is concerned is that of real estate. Whether we are talking about your home, rental properties, the location that houses your small business or raw land that you own out in east Texas, real estate is possibly your and your spouse’s largest portion of your net worth.

Real Estate Division in Divorce

The number one most relevant question when it comes to real estate in a divorce is what will happen with your family home. Most of you reading this blog post own home with your spouse. You will either sell the house or one of you will retain it individually, with the other moving out. If you choose to sell, you’ll need to divide the equity between both of you.

Of course, you may desire to keep the home, but you must demonstrate that you can afford the payments. Suppose you are a mother who will determine the primary residence of your kids. Just because the kids will be living with you on a full-time basis does not mean that you also get to keep the house. If you can afford the mortgage payments, taxes, insurance and other costs of maintaining a home a judge may award you the property. If not, the house will likely be sold.

Divorce Mortgage: Refinancing Considerations

Next, if your name and your spouse’s name both appear on the mortgage then it will behoove the person staying in the home to refinance the note into their name only. Keep in mind that just because a final decree of divorce states that it is your spouse’s responsibility to pay the mortgage moving forward, does not mean that your legal liability to pay ends. That mortgage company doesn’t care what your divorce decree says. You signed up for the mortgage and you will continue to be responsible to pay. Missed payments on the loan by your spouse can spell doom for your credit.

In your divorce, if you’re selling the houses, you’ll need to establish how your spouse plans to divide the responsibility for paying for repairs, upgrades, etc., to enhance the house’s marketability. We all have parts of our home that need work to a lesser or greater degree. The decision to paint the back of the house, replace siding, install a new A/C unit and re-grout the guest shower all have costs associated with them. You and your spouse can negotiate these costs in mediation and them ratify them in your final decree of divorce.

Choosing a Realtor in Divorce

Finally, you’ll need to choose a realtor to market the home and establish communication with them. These may seem like little issues, but they can quickly become important if there is miscommunication going on. In what could be the most important financial transaction that occurs in conjunction with your divorce you want to make sure that there are no misunderstandings.

Selling the family home before your divorce is over with

You and your spouse are free to discuss the sale of your home before the divorce is even over with. In some markets, it may not make sense to wait to get the house ready for sale and to hire a realtor. In a “hot” market, listing the house for sale early may result in receiving better offers. Most of the time I would advise that you and your spouse have an agreement in place as far as splitting the equity is concerned. However, if you haven’t finalized an agreement, your attorney or your spouse can hold the money in trust until reaching an agreement.

What happens if you get the house but cannot refinance the mortgage?

Suppose that as a part of your divorce you were awarded the family home. This is great because you also are the primary caregiver for your kids and you really do not want to force them to have to relocate immediately following a tough divorce. The mortgage bears the names of you and your spouse. However, after attempting to refinance the mortgage to remove your spouse’s name you were denied. Is this a problem that could potentially sink the divorce agreement that you and your spouse had in place? Or can something be done to assist you all in these circumstances?

This is an important question that I have been asked many times by clients and potential clients alike. Since it is so important I am going to wait until tomorrow in order to answer the question given the limited amount of space we have remaining in today’s blog post. Please join us tomorrow to discuss the topic of property division in a divorce further, and to learn more about what could happen in this scenario.

Questions about divorces in Texas? Contact the Law Office of Bryan Fagan

If you have any questions about the material that we have covered today please do not hesitate to contact the Law Office of Bryan Fagan. We offer free of charge consultations six days a week with our licensed family law attorneys. These consultations allow you to ask questions and receive honest feedback from lawyers who work with folks like you in courtrooms across southeast Texas. For more information about our office and the services that we provide, a consultation will lead you towards the knowledge that you seek.

Our attorneys and staff take a great deal of pride in being able to represent and advocate on behalf of people in our community who have their own family law related issues. We place our client’s interests above everything else and work tirelessly to live up the high expectations of ourselves and our clients.

Ebook

Adobe Stock 62844981[2]If you want to know more about what you can do, CLICK the button below to get your FREE E-book: 16 Steps to Help You Plan & Prepare for Your Texas Divorce

Divorce Wasting Assets[4] If you want to know more about how to prepare, CLICK the button below to get your FREE E-book: 13 Dirty Tricks to Watch Out For in Your Texas Divorce, and How to Counter Them” Today!

  1. What Every Entrepreneur Needs to Know About Community Property Division
  2. What is community property in Texas?
  3. Community property issues in Texas divorces: Wasting of assets by spouses
  4. Community Property in Texas: What you need to know before you get divorced
  5. What happens if you and your spouse mix community and separate property?
  6. Characterizing your assets as community or separate property through tracing
  7. Community Property Essentials for Texas divorces
  8. Community Property and Credit in Texas Divorces
  9. Community Property Law in Texas
  10. Family Law Cases in Texas: Marital Property and the community presumption
  11. Reimbursement of the Community Estate: Continuing the Discussion on Divorce
  12. Texas Divorce Overview: Dividing Community Property and Debts
  13. Dividing community property in mediation: What can be done to settle your divorce in Texas
  14. The community estate in a Texas Divorce: Where is all of our stuff going?
  15. Distinguishing between Community and Separate Property in Texas divorces

Frequently Asked Questions



Share this article