When it comes to divorce, most people expect that their life will never be the same after the case is filed. In many ways, this is true. You are going through changes in the divorce that will touch many different areas of your life, from your finances to your children. Retirement savings, student loan debt, and even your small business will all play a role within the context of your divorce. While most people expect that their life will undergo some degree of change due to a divorce, many people have a question when they come to speak with one of our experienced family law attorneys about whether or not those changes will begin once the divorce starts.
Namely, I have had many people ask me how their lives will be different during the divorce itself. Are you able to spend money freely? Will you even have any money to spend given the possibility of spousal support, child support, and paying your attorney? Without a doubt, these are wise questions to ask since you will be undergoing a fairly significant amount of change in a fairly short period. Have you ever budgeted before? Maybe ever given any thought to what is divorce costs?
These are the questions that I would like to touch on with you today. Certainly, you should have many questions to ask about divorce before the case begins. It is much better to ask these questions now than to wait until your divorce begins and be put in a position where you have more questions and there is time to answer them. With that said, I would like to spend some time addressing a convenient question of what kind of spending can be done during a Texas divorce. Finally, I think a subject that is not discussed very much in Texas family law but is essential is setting a budget for yourself and your family. We will discuss this topic as well.
Spending money during a Texas divorce
We all know that going through a divorce is difficult. There is no real way to sugarcoat or gloss over the fact that a divorce is unpleasant. One aspect of a divorce that some people neglect to consider before entering into the process is how little of a divorce case you have direct control over. One area of your divorce case that you will have little control over is your ability to spend money as you choose. As adults, we are so used to spending and allocating money in the ways that we see fit; however, once you become involved in a divorce, that all changes to a significant degree.
Most of you reading this blog post does not have a problem with excessive spending or doing things that are nefarious or less than scrupulous with your money. Some of us may have problems with impulse control in things of the like, but none of it is excessive to the point where our families cannot pay bills or go about their normal lives due to our spending habits. This is a good thing and will ultimately benefit you and your family in the long run if you have your spending habits in check.
However, the family courts in Texas are concerned with two types of people who become involved in divorce cases regarding their finances. The first person is someone who cannot control their spending. You may have this type of person in your family, or you may be this type of person yourself. If you have money in your pocket, it will be out of there and spent on something by the end of the day. When you go to a store or go online, you cannot control yourself when it comes to spending money. Your impulses rule your habits, and for whatever reason, you cannot get a grip on keeping your spending in line with your income.
Frequently you may find yourself running low on cash before the end of the month kids there. Credit cards in other types of loans will be a part of your divorce, and your ability to develop a plan to attack these problems has not shown itself yet. However, there is time for you to learn how to address these topics in a divorce sort of acts as a trial by fire when it comes to doing that.
The other type of person that the courts are concerned with who becomes involved in divorce cases is who willfully and negligently spends money during a divorce to harm their spouse. I will not be so bold as to guess that you could be this person. In the world of Texas family law, the spending of money with reckless abandonment during the case itself is known as wasting marital assets. Rather than having a pathological or continuing problem with spending money, the person who engages in the wasting of marital assets does so purposely and with a plan to harm their spouse and reduce the total number of dollars in play during the divorce.
You may be asking yourself why a person would ever do this. After all, the money that is being spent is theirs and not solely their spouses. With this in mind, why would a person go to these lengths to harm their spouse and themselves? The best answer that I can provide to that question is that a divorce can make a person do extremely out of character. Most people are not so inconsiderate, spiteful, or anything in between to do something like this when they have a clear mind. However, a divorce can cause a person to do things out of character the wasting of marital assets is just an example of that type of behavior.
What is the most common type of marital asset wasting?
From my perspective, the most frequent type of marital property wasting is buying things on credit in the hopes that the debt will be split evenly in the divorce. For those of you who are not familiar with Community property law in Texas, this may seem like a strange bet for a person to make. However, I think that people who have a little bit of knowledge of Texas family law may get the wrong impression about how property and debts are split, which may lead to behavior like this.
In Texas, community property law is based on the equitable distribution of property and debt that came into being during your marriage. The idea is that if you went into the marriage with property or debt, that property or debt would remain your or your spouse’s separate property throughout the marriage and divorce. However, any income earned, property acquired, or debt in curd during your marriage is considered part of the community estate. Absent other circumstances, property and debt are typically split in a fairly even fashion during the divorce.
This is how I think most people decide to waste Community property assets during the divorce itself. This person may have gotten bad advice from someone in their life about how to spend or not spend money during the divorce. Certainly, it is possible that spending money in this way could get swept under the rug or not even noticed if there is enough play money or if the attorneys on the case are asleep at the wheel. However, it would help if you did not bet on either of these occurrences happening in your divorce.
You should be aware that wasting marital assets is looked upon very seriously in a Texas divorce. If a court determines that you have wasted marital assets, you are very likely to suffer a penalty from the judge. For example, your spouse may be awarded a disproportionate share of your Community property if it is found that you have wasted marital assets. A disproportionate share means that more than 50% of your community estate could be awarded to your spouse as far as the property is concerned.
On the other hand, any debt incurred by you during the divorce that is unreasonable or determined to waste marital assets could be your responsibility in the divorce. You may also suffer from having a larger amount of debt put in your name and may end up having to spend money on your spouse’s attorney’s fees and other costs. While good faith efforts that result in losses such as an investment gone bad do not count as wasting a marital asset, simply overspending or purposely causing harm to joint assets almost certainly would count as the wasting of marital property.
What are some examples of wasting marital assets?
Remember that your divorce in your circumstances is unique to you and your spouse. As a result, your case may involve different types of marital property wasting that are not covered here. However, I would like to take some time and discuss with you some fairly common types of marital property wasting that can occur in a divorce case.
One type of marital asset wasting that can occur in a divorce is spending money odd a girlfriend or boyfriend. This is an uncomfortable and unpleasant subject to discuss. Still, it does happen in divorce cases where infidelity not only acts as an issue within the marriage and divorce, but the spending of money and assets on that boyfriend or girlfriend acts as a second. If you suspect that your spouse is having an affair, you need to be very careful to pay attention to a bank account and investment activity to determine if any money is being spent on the relationship.
Not only could this type of paper trail make a difference when it comes to proving infidelity, but it is also essential for you to establish any degree of marital property wasting that occurs. For example, has your spouse purchased jewelry, electronics, or other expensive items for their boyfriend or girlfriend? If so, you need to keep track of any amounts that have been spent that you can determine based on your access to bank records and online statements through your bank or credit union.
Another way that I have seen people waste assets in a marriage is by purchasing a new vehicle during the divorce. Why a person would want to purchase a vehicle during a divorce is beyond me. Typically, I will chalk it up to not having all of your mental faculties working at full speed due to the stress and heartache associated with the divorce. Spending money can be seen as a way to call me yourself and put your mind at ease during a divorce. However, this type of spending will not only harm you in the long run but can also result in penalties during the divorce.
Although paying down debt is rarely a bad idea, it is typically frowned upon during a divorce. Many standing orders and eventually temporary orders in a divorce will bar you from using community income to pay down debt, whether it is your separate debt or community debt period; the reason is that courts want you to keep your money at your fingertips if a need to spend it on your case or the essentials of your life comes up.
Most people do not have much margin in the way above using money during a divorce to spend on debt Reduction. Even if you plan to reduce debt in your life, my advice would be to hang on to any money that you can save, see what is determined in the divorce, and how that income will be divided. Then you can make a lump sum payment towards your debt as soon as your divorce is over.
The bottom line is that you need to be able to prove that your spouse intentionally acted in a dishonest or underhanded manner to harm your community estate specifically. Although you may know your spouse’s heart and motivation better than anyone coming up with evidence to prove these things can be difficult. For that reason, it is very much recommended that you work with an experienced family law attorney to help you plan and build a case to prove marital asset wasting.
Working on a budget during a divorce
At first, glance, beginning to live on a budget and plan your finances out diligently and intentionally while going through a divorce may seem like the last thing you want to do. After all, creating a situation where you are doing homework through creating a budget does not sound like fun and even sounds restrictive. However, I would offer to you that creating a budget not only isn’t restrictive but it allows you a great degree of freedom in being able to spend money during your divorce and in your post-divorce life.
During the divorce case, you can spend money on essentials like your mortgage, rent, groceries, attorney fees, and necessary items for your children. The state of Texas does not want you spending a great deal of money on nonessentials or on frivolous things, the type of which we have already discussed today. A budget can help you to keep better track of your spending and prevent problems before they arise. Trick 2 in putting yourself in a situation where a budget can help is to start a budget in the 1st place.
Contrary to what many people think, creating and maintaining a budget does not have to be complicated. Simply sitting down at your kitchen table with a legal pad and a pen is a great start. Figuring out your monthly income, bills, expenses, and other responsibilities will allow you to determine how much money, if any, you have leftover at the end of each month. You may even be able to determine where you can make appropriate cuts in your spending so that you have more margin to pay bills and other expenses during the divorce. You may even feel like you got a raise after your first month or two of diligent budgeting.
Questions about the material contained in today’s blog post? Contact the Law Office of Bryan Fagan
if you have any questions about the material in today’s blog post, please do not hesitate to contact the Law Office of Bryan Fagan. Our licensed family law attorneys offer free of charge consultation six days a week in person, over the phone, and via video. These consultations are a great way for you to learn about the world of Texas family law and also about how the law could impact you and your family given your specific circumstances. I appreciate your interest in our law office. We hope you will join us tomorrow as we continue to share unique and interesting information about the world of Texas family law.
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