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Protecting your finances in a divorce is just as critical as managing the emotional fallout—if not more. While the emotional strain may fade over time, financial missteps can have lasting consequences. In Texas, where community property laws apply, it’s essential to know what qualifies as shared assets and how debts are divided. Protecting your finances in a divorce starts with early planning, understanding your legal rights, and making informed decisions about property, accounts, and obligations. Every financial move you make during the process can shape your long-term stability, so take action now to safeguard your future.
Understand What Texas Considers Community Property
Texas follows community property rules. This means all income, assets, and debts acquired during the marriage usually belong equally to both spouses, even if only one earned the money or made the purchase.
Community property includes:
- Income from wages or self-employment
- Homes, cars, and personal property purchased during the marriage
- Retirement and investment accounts
- Business profits
- Debts like loans or credit card balances
Separate property stays with the original owner. This includes assets acquired before the marriage, gifts, and inheritances. But proving what is separate and what is shared often leads to disputes.
Start collecting financial records early. Gather documents like bank statements, property deeds, tax returns, and retirement account information. This makes it easier to show what belongs to you and what falls under community property.
Open Separate Financial Accounts
Once divorce begins, joint accounts can become risky. One spouse may withdraw money or rack up debt without the other’s knowledge. To protect yourself, open new accounts in your name only.
Suggested steps:
- Open a checking and savings account under your name
- Set up a new credit card to start building independent credit
- Update direct deposit and automatic payments
- Track any activity in joint accounts for unusual spending
Talk to your attorney before making large withdrawals. Courts in Texas may issue standing orders that restrict changes to financial accounts during divorce.
Track and Protect Marital Assets
It’s common for property or money to go missing once a divorce starts. Some people sell items, hide funds, or transfer ownership to family or friends. Courts consider this misconduct, but you need proof to act on it.
Protect yourself by:
- Taking an inventory of all major assets
- Photographing valuables like jewelry, electronics, or artwork
- Checking recent bank and credit card activity
- Freezing joint lines of credit if needed
If you suspect your spouse is hiding assets, your lawyer may request financial discovery or work with a forensic accountant.
Understand How Debt Will Be Handled
In Texas, debt taken during the marriage is often split. Even if only one spouse’s name is on the credit card or loan, both may be responsible. This can create problems if your ex refuses to pay their share.
To reduce risk:
- List all joint and individual debts
- Request a credit report to spot unknown accounts
- Close joint credit cards if possible
- Pay off smaller debts before the divorce finalizes
Courts can assign debt responsibility, but creditors don’t always follow court orders. If your name is on the account, the creditor may still come after you. Try to refinance joint loans into one name when possible.
Create a Realistic Post-Divorce Budget
Divorce changes your household income. Many people go from two incomes to one and face new expenses like rent, childcare, or legal fees. Planning a budget helps you avoid future stress.
Include:
- Housing costs
- Utilities and food
- Child support or spousal maintenance
- Insurance and healthcare
- Transportation
- Retirement contributions
Don’t rely on support payments that haven’t been ordered yet. Base your budget on what you can control. Use conservative estimates to avoid surprises.
Don’t Hide Income or Inflate Expenses
Courts use financial disclosures to calculate child support, spousal support, and property division. Falsifying income or hiding assets may damage your credibility. The judge could sanction you or give your spouse a greater share of the property.
Be honest about your earnings, debts, and expenses. If your spouse submits false information, your lawyer can challenge it in court with documentation or witness testimony.
Protect Your Credit Score
Divorce won’t directly affect your credit score, but unpaid debts and missed bills will. Many couples forget to pay off or close joint accounts, which can hurt both parties’ credit.
To protect your score:
- Pay all bills on time
- Monitor your credit report monthly
- Avoid late fees or overdrafts
- Rebuild your credit with a new card in your name
A strong credit score helps you qualify for housing, car loans, or new accounts once you’re financially independent.
Consider Temporary Support During the Process
Divorce cases can take months to finalize. In the meantime, one spouse may need financial help. Texas courts allow temporary spousal support during the divorce, especially if one spouse lacks income or needs help covering rent or childcare.
You or your lawyer can request a temporary hearing for financial relief. This helps protect your stability while the case moves forward.
Know How Divorce Affects Retirement
Retirement accounts like 401(k)s, pensions, and IRAs are often split during divorce. Even if only one spouse contributed, the portion earned during the marriage is usually community property.
Texas courts may divide these accounts with a Qualified Domestic Relations Order (QDRO). This allows funds to transfer without tax penalties. Make sure the division is clear and properly filed.
If you earned less during the marriage or stayed home to raise children, you may receive a share of your spouse’s retirement. Keep track of account balances and request plan statements early in the process.
Update Your Legal and Financial Documents
After divorce, your legal documents should reflect your new life. Failing to update these can cause problems later.
What to update:
- Will and estate plan
- Beneficiaries on life insurance and retirement accounts
- Medical power of attorney
- Emergency contacts
- Financial planners or account advisors
Leaving an ex-spouse as your beneficiary can cause legal confusion if something happens to you.
Hire a Divorce Attorney Who Understands Financial Protection
Divorce law can be overwhelming. An attorney helps you understand your rights, protect your money, and deal with court deadlines. A good lawyer can also spot financial red flags and suggest tools like subpoenas, temporary orders, or restraining notices.
Even if your case starts peacefully, money often creates tension. Having legal guidance protects you from financial mistakes you may not see coming.
Final Thoughts
Protecting your finances in a divorce is about securing your future—not just ending a relationship. Financial missteps during this time can have lasting consequences, from drained savings to overwhelming debt. In Texas, where community property laws apply, assets and debts are typically divided fairly—but not always equally. The court’s decision depends on the evidence and details you provide. That’s why protecting your finances in a divorce requires proactive steps: safeguarding accounts, documenting property, managing shared debt, and planning for post-divorce expenses. With preparation, transparency, and smart strategy, you can move forward with financial confidence and long-term stability.
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 contained 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 consultations six days a week in person, over the phone, and via video. These consultations are a great way for you to learn more about the world of Texas family law as well as about how your family’s circumstances may be impacted by the filing of a divorce or child custody case.
Other Related Articles:
- Navigating Divorce Finances- How to Fund Your Divorce
- Mastering Finances: How to Manage Your Credit During a Divorce in Texas
- Getting Yourself and Finances Together at the Start of a Divorce
- Questions About Talking to Your Child About Finances and Divorce
- Finances for the New, Post-Divorce You
- How to Handle Divorce Finances: Protecting Your Assets in Texas
- Finances Involved in a Texas Divorce
- Finances and Divorce for Texans over the age of 50
- How can you protect your finances in a divorce?
- Breaking Bonds, Splitting Debts: How to Manage Family Finances in Texas Divorce
