One of the topics that grab a great deal of attention in a divorce is asset division. Most divorce cases have some degree of assets that need to be divided. In a situation like this, you need a plan on how to approach this subject. It is not as easy as just drawing a line down the middle of your bedroom. Rather, assets incorporate physical as well as intangible property. For some of you reading this blog post, that process becomes quite complex. Developing a plan related to asset division is crucial to your long- and short-term success.
Where do you start, though? There are so many moving pieces in a divorce. Many of you reading this blog post have minor children involved in a case. With that in mind, you must battle through child custody and asset division issues. Oh, yeah- there are debt division issues that pop up in divorces, too. Don’t forget about figuring out credit card debts, that HELOC on the house, and the first mortgage itself. How are you and your spouse going to allocate these assets and debts?
Don’t sit there and stew about it all. You have time and an opportunity to learn more about divorce assets. What you need to do is act intentionally and move towards the knowledge. The Law Office of Bryan Fagan is going to help you today. This blog post contains much of the basic and intermediate knowledge you need to begin that journey toward knowledge. Stay with us to build a foundation geared towards divorce success.
Take steps to better yourself every day
Before we get into the specifics of asset division in a Texas divorce, I wanted to share some other information with you. No doubt, the divorce is going to be difficult. There are no two ways about this. We know from experience that families who make it through divorce ok do so because of a plan. Being intentional means that you happen to your case, not the other way around. Sure, some things happen to you in a case that are uncontrollable. However, there is a lot that happens that you can prevent by acting with a plan in mind.
We know that people approach divorces with different strategies. At the Law Office of Bryan Fagan, we see that every day. Your strategy needs to be geared towards achieving specific goals. Specific goals within a specific time frame. Measurable goals where you can assess where you are in achieving those goals. Don’t make your goals general. Get into the habit of setting goals that are manageable and specific. From there, working with an experienced family law attorney helps.
The attorneys with the Law Office of Bryan Fagan have the heart of a teacher. This means that we do not dictate things to our clients. Rather, we work to inform clients with information like a teacher would. From there, we let you spread your wings and fly. Take that information and set your course. Our attorneys are here to support you in working to achieve the goals you set.
Dividing property in a divorce- where to begin?
This is a more complex subject than many people understand. Look around your house. The property in your room is subject to division in the divorce. Now think about all the property you can’t see now. That, too, is subject to division. All of a sudden, your world gets more complicated. The property division is not just about picking out silverware and dividing it up. Rather, there is a lot more at stake here than meets the eye.
Here is where the trouble comes in for many unprepared people. The people who tend to do the best in a property division case are those with a plan. We aren’t just talking about a general plan, either. An idea is not a plan. A plan is a specific method that you intend to employ to achieve a goal. Specific steps are involved. A measurable goal. All these things are relevant in the context of goal setting.
Now we know you need to have a goal to succeed when it comes to dividing property. That’s all good and well. However, first, we need to climb over this massive pile of “stuff.” How to begin? Well, let’s first understand how property is divided in Texas. Our laws on property division are somewhat different than most other states. This is relevant if you recently moved here from another state.
Community property in a Texas divorce
I mentioned earlier that all the property in your life is subject to division in a divorce. This is true, at least at the beginning of the case. Texas is a community property state. This doesn’t mean much to us right now, but it is about to be an important point. For starters, the community property presumption takes hold of your property at the beginning of the case. All property owned by you and your spouse is presumed to be community property. Since community property can be divided by a judge this puts all your property on the chopping block.
Community property principles, generally, tend to be more equitable. There is no his or her property under community property. Rather, all property purchased or acquired during the marriage is community property. Simple, right? Not so fast. Some property is not subject to division in a divorce. This type of property is known as separate property.
Separate property is any property acquired by you or your spouse before your marriage. Additionally, property acquired during the marriage by gift or inheritance is also considered to be separate property. However, bear in mind that to overcome the community property presumption evidence is needed. Specifically, clear, and convincing evidence is needed to show that particular property is separate rather than community property. You won’t necessarily be pushed to that point for all your separate property but for some, it may be relevant.
How to organize your life and develop a property division strategy
These are the basics of community property law in Texas. There is more to it than this, however. With any system in the law, there are always consequences and specifics that take more time to explain. For today’s blog post, however, we’ve covered what we need to do as far as the basic division of the property in your life. For a more detailed and thorough explanation of issues contact the Law Office of Bryan Fagan today. We can arrange a free initial consultation for you with one of our attorneys. There, you can ask for whatever you want as far as additional information about your case.
Once you begin to understand that different property is subject to different rules you need to start developing a strategy of where to go from here. Begin by organizing your property. This means taking inventory of the property you and your spouse own. As anyone who works or has worked retail jobs can tell you this is not going to be easy. Typically, the older you are the more “stuff” you have. Therefore, once you understand a divorce is on your horizon it is time to begin organizing.
This does not have to be complicated. Take out a piece of paper and draw three columns on the page. One column is for your separate property, the next is for your spouse’s separate property and the third column is for community property. Using the rules outlined for you above begin by dividing up the property as best you can. To the best of your knowledge, where should the property end up? Go through your home first, take photos of closets, bedrooms, drawers, etc. Now think about your garage, vehicles, the house, and any investments.
Prepare early when it comes to property division
The more expansive and complicated your financial life is the more complicated this process gets. Married for a short period? Then it’s likely this process will be simpler. Also, the earlier you can perform this step, the better. One of the things people do not think about at the beginning of a divorce is the likelihood that they are not guaranteed access to their home after a certain period. You may decide to leave the house. Or your wife may be awarded the house during the divorce. In any event, consider planning these steps as early as possible.
Once you have all your property inventoried come up with different scenarios as far as dividing the property. Start by thinking about all the property which matters most to you. Retirement accounts, the house, and specific community property items. Keep what you want in this ideal scenario. However, you need to give up something of value to retain something of value. It is unrealistic for you to keep all the property you want and give up nothing in return. Rather, start to contemplate a realistic property division arrangement.
The better you think through these issues the better off you will be. There are tradeoffs associated with property division that are not always considered in a divorce. Taking on the responsibility of keeping the house is a major one. Many people want to keep the family house after a divorce. There are sentimental, emotional, and financial reasons for this. However, that does not mean that keeping the house comes without risks. Let’s spend some time considering how keeping the family home can impact your divorce and your post-divorce life.
The family home as a marital asset
For many of us, the family home is our largest asset. With real estate prices seemingly increasing every year this shows no signs of stopping. Not only is the family home an asset as far as dollar value is concerned it is also an important part of our lives from an emotional standpoint. The memories made in that home over time cannot be understated. Think about birthdays, Christmases, good times, and not-so-good times. All those memories occurred within those four walls. It’s a lot to consider.
This is what makes dealing with the family home in a divorce especially challenging. Being objective is important when trying to divide property. Take the emotion out of the discussion. That’s what many people do their best to do when dividing marital property. However, this is a challenge when it comes to your family home. There is not much you can do when it comes to the emotions in your home. Most of us are not able to do it completely.
The bottom line is that balancing the emotional and the objective in the family home is important. Skewing yourself too far one way or the other makes it difficult to manage. You need to consider the emotional tugs that the house has on you. However, you also need to consider the practical and financial components of the discussion. Here are some factors to think about as you ponder what to do with the marital home.
Factors to consider when thinking about the marital home
Most people going through a divorce have debt on their house. For some people, it’s a home mortgage. Still others have a mortgage and a Home Equity Line of Credit (HELOC). All this debt comes with the house. The mortgage payment you have is likely pegged to your income and that of your spouse. Meaning that when the loan was made the bank or lender thought about your joint income first. The lender may not have approved the mortgage based solely on your income.
Now you are in a position where you are considering taking on that mortgage payment alone. The mortgage payment may have been 30% of your joint income. If your spouse is not there to contribute their income that may jump up to 50% of your take-home pay. Now the margins are getting tighter. Is this a position you want to find yourself in? Refinancing the loan is not a given, either. Maybe you can talk your lender into turning your 15-year note into a thirty-year note. However, at that point, you’re kicking the can down the road.
Repairs, maintenance, homeowner’s insurance, and the list goes on and on. Homeownership is expensive. Being prepared for homeownership after a divorce is challenging. You have little time to prepare for these costs. Before deciding about what you want to do with the house, consider your circumstances. If you are not in a financial position to take on the house payment, then don’t let emotions sway you one way or another.
Debts are divided too
Nobody likes to think about debt, but it is a relevant topic in a divorce. Most of us have some debt to our name. The days of just having a credit card balance to consider are over, mostly. The vast majority of us have a credit card (or six), a home mortgage, a car loan, student loans, and the list goes on. These debts may not end up exchanging hands in a divorce. However, they need to be accounted for. You or your spouse need to have the responsibility of paying the debt.
I recommend to clients that they go onto one of the major credit reporting agencies and look up your credit report. This can usually be done for free once or twice a year. Look through all your credit accounts. Make sure that each is familiar to you. It is not uncommon to find an account or two on there you don’t recognize. Sometimes your spouse will have opened an account without your permission. Either way, it’s good to check to make sure you know what is out there.
Then, make sure that you bring these account names and balances with you to mediation. Work with your attorney and your opposing party to account for each of these accounts in the divorce decree. The last thing you want is to wake up the morning after your divorce was finalized to see that there is a credit card that was not divided in the divorce. Rather, take the time to divide these accounts now. Doing so ensures a smoother landing after the divorce. The last thing you need is a financial anchor around your neck.
Fairness in dividing marital property
Working through property and debt division in a divorce takes time. Do not wait until the last minute to start thinking about these subjects. Working with an experienced family law attorney helps to maximize your time and opportunities in a divorce. Thank you for spending part of your day with the Law Office of Bryan Fagan. We hope you join us tomorrow here on our blog for more informative and entertaining content.
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. Interested in learning more about how your family is impacted by the material in this blog post? Contact us today.
Evan Hochschild was raised in Houston, TX and graduated from Cypress Creek High School. He went on to graduate from Southwestern University in Georgetown, TX with an undergraduate degree in Political Science. While in college, Evan was a four-year letterman on the Cross Country team.
Following in the footsteps of his grandfather and uncle before him, Evan attended law school after he completed in his undergraduate studies. He graduated from St. Mary’s University School of Law and has practiced in a variety of areas in the law- including family law.
Mr. Hochschild is guided by principles which place the interests of clients first. Additionally, Evan seeks to provide information and support for his clients with the heart of a teacher.
Evan and his wife have four small children together. He enjoys afternoons out and about with his family, teaching Sunday school at his church and exercising. A veteran attorney of fourteen years, Mr. Hochschild excels in communicating complex ideas in family law simply and directly.
