Dividing Your Property and Debt in a Divorce

Dividing community property is often one of the most challenging aspects of a Texas divorce. While property division is a common issue in divorce cases across the country, it’s important to understand the unique nuances of community property laws in Texas. Unlike many other states, which follow equitable distribution principles, Texas operates under community property laws, where most assets acquired during the marriage are considered jointly owned. Despite differences in legal frameworks, real-life concerns between spouses remain constant. Ultimately, the goal—regardless of Texas law—is to achieve a fair outcome that fully protects each spouse’s individual interests.

This is where your attorney comes in. We will cover the basic process of dividing property and deaths in a Texas divorce in this blog post. However, the subject matter related to this topic can get much more complicated and in-depth than we can go in this blog post. Therefore, if you believe you have a complicated state or simply the most significant shape, you should follow up with one of our licensed family law attorneys. We can walk you through what it looks like to go through a divorce, specifically related to property and debts. You don’t need to wonder about this subject or have concerns over how your life may change due to the divorce. You can reach out to one of our experienced attorneys to better understand how the law would treat you and your family, given your specific circumstances.

A few words on Community property in Texas

As we have discussed, Texas is a community property state. As it happens, the subject of Community property division frequently becomes one of the most contentious and highly debated topics in a divorce. Understandably, this is the case, given the high dollar amounts that are often at stake. For instance, who wouldn’t want to understand their chances of retaining the family home valued at over $1,000,000? An attorney experienced in family law cases can adeptly address such questions.

Property ownership in divorce: understanding community vs. separate

You might also wonder if you can retain property acquired before marriage after the divorce. An example of this relates to real estate from prior marriages or simply from your days as a single individual. If you bought a home before your wedding to your current spouse, then that house should theoretically be able to remain in your name after a divorce, given its separate property nature. However, there may be questions surrounding possible reimbursement of community property income that went towards the development or improvement of this property. Therefore, even a pretty cut-and-dry issue may have elements that can be confusing or difficult to wade through if you do not have someone by your side to help you determine what Community property is and what may not be classified as Community property.

As mentioned earlier, Texas operates under community property laws. This means that all income earned and property acquired during the marriage belongs equally to both spouses, regardless of whose name is on the title or who contributed to its purchase. This differs from states where property ownership is more separate. The same principle applies to debts incurred during the marriage.

Understanding property division in divorce trials

If your divorce proceeds to trial, the family court will be responsible for dividing the property in accordance with a fair and equitable distribution. A proper and correct division may be based on case law and statutes but frequently rests on the personal biases and experiences of the family court judge. Moreover, the specific circumstances of your case will heavily influence the division of both assets and debts. Therefore, you need to understand what a judge would likely do with your case so that you can negotiate more intelligently throughout the divorce case itself.

One of the things that many people do not realize about their divorce case is that it is much more likely for you and your spouse to negotiate a conclusion to your divorce rather than for a judge to decide closing out matters. Whether it be through informal settlement negotiations or in a formal setting like mediation, you and your spouse are more likely to arrive at a conclusion together rather than have a judge decide if she’s related to the division of your community estate.

Importantly, this means that any legal standards how to judge will use in terms of dividing up your community state likely will not matter much. Instead, it is much more likely for you and your spouse to negotiate throughout the case, which leads to a resolution. I was hoping you wouldn’t focus too much on the semantics and instead address the division terminology I’ve used. Instead, you should become familiar with your case in terms of property and debts so that you can better negotiate as your case moves forward.

Community property division in Texas divorce

The last thing that I will mention about this subject is that what ends up happening in these cases is that your circumstances can end up mattering more than the law in many regards. For example, the judge needs to consider the Texas family code and apply it to your case regarding subjects like specific grounds for divorce. For example, if marital infidelity led to the divorce and you cite it as a reason, you might be entitled to a larger portion of the community property. With that said, learning as much as you can about the Community property division process in your case is incredibly important.

Doing what you are doing right now is a great place to start. Trying to obtain general information that can apply to your family is essential, but being able to take public information and the laws of Texas and apply them to your case is even more critical.

For that reason, I would recommend that you contact the Law Office of Bryan Fagan today to go through the circumstances of your case and for you to be able to learn more about how the law figures to factor into your life, specifically by attending one of these free-of-charge consultations with an experienced attorney you will be provided with information based on what you talked to our lawyers about. You can then utilize this information about deciding whether to hire a lawyer at all and what the best course of action may be in terms of developing a strategy for your case regarding a division of Community property and debts.

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Property is presumed to be part of the community estate in a Texas divorce

One of the most critical pieces of information regarding this topic relates to the presumption that all property owned by you and your spouse at the time of your divorce is a community in nature. Some of you may be shaking your heads in wonderment at this statement, given what we have just talked about regarding there being such a thing as separate property. The reality is that particular property is an integral part of your divorce case. Still, divorce courts start from the presumption that the property relevant to your lives is a community in nature.

Undoubtedly, either you, your spouse, or both of you will allege that particular property is separate. In that case, your spouse is free to agree with you, and they would then stipulate this assertion. There would not have to be any additional discussion in court, as it would not be able to divide that property.

However, if your spouse disagrees with your classification of a particular piece of property, then the burden would be on you to prove that the property is separately owned. This may mean showing proof in a trial of receipts, title documents, or simply relaying the transactional history of a piece of property. In incredibly complicated situations, such as those involving complex financial instruments or accounts, you may even need to hire a forensic accountant to go back and trace the history of a particular piece of property. However, for the most part, this should not be necessary.

What is separate property?

The separate property would include any property that belonged to you or your spouse before your marriage and was not placed into the community estate during your wedding. Other examples of separate property include income from a particular property, property that was gifted solely to you or to your spouse, as well as an inheritance that you or your spouse received from a relative.

Suppose you receive money in a personal injury settlement or verdict, then that money is also classified as separate property. However, the exception to this rule would be if a portion of that verdict or compensation was supposed to be allotted towards loss of income. As we have already covered, income during the marriage is Community property and thus subject to division in Texas divorces. Therefore, income from a motor vehicle or workplace accident would be treated the same way. However, I cannot emphasize enough how important it is for you to speak with an experienced family law attorney, Internet to rely upon this piece of general information.

What about dividing up retirement accounts?

When I’m talking about retirement accounts for a divorce, I discuss 401 K, individual retirement accounts, and pension benefits. These could be benefits that you contributed to during your marriage or contributed to during the wedding and before your marriage. Once the divorce occurs, a family court would need to evaluate all these accounts and determine how much of it belongs in the marital estate. For this reason, the court will likely ask you to inventory any retirement accounts and to appraise those accounts to determine their approximate values both before your marriage and during the wedding itself. This is important for discussions about dividing these accounts, which can be extremely valuable.

What factors will a court consider when determining how to divide up Community property?

Ultimately, your family law judge will have the discretion to distribute your community property in whichever way it believes is fair, right, and just. However, there must be a reasonable basis for the judge’s determination. They cannot simply divide the property however they see fit based on no specific rationale. Instead, objective factors and the subjective opinions and experiences of the judge will factor into how they divide up your property should your case make it to a trial. The presumption that an equal division of property should be had will be based on several factors that we will go over right now.

The educational differences, if any, between you and your spouse will be essential to consider. For example, suppose you have a master’s degree and earn a six-figure income while your spouse has only a high school education and has not worked in some years. In that case, this will surely factor into that edge’s consideration of dividing up the Community property. The judge would likely award a disproportionate share to your spouse in this scenario, given that it would probably be more difficult for them to earn that share of their state back on their own.

Considerations for age and health in divorce

The ages of you and your spouse will be necessary for a judge to consider. If you and your spouse are going through a divorce while you are young, then it could be that a judge finds other circumstances more so than your age. On the other hand, if you are going through a divorce and are in your golden years, the judge may be greatly concerned with your age, given that retirement may be around the corner or even staring you in the face right now. In that case, the judge may want to pay special attention to how they divide up your estate from the standpoint of making sure both you and your spouse have sufficient property to subsist upon as you head into retirement.

Next, your health would be a factor that the family court judges would consider. This topic is not dissimilar from what we have just finished discussing regarding your ages. The healthier you are, the more likely you can go into the economy and work on rebounding financially from the divorce. On the other hand, if you are in poor health and have not performed in some time, the judge will be especially keen to award you the property in this divorce.

Financial considerations in property division after divorce

Given the difficulties, you would have entered the workforce and early in a similar amount of property. Remember that a family court judge would be concerned with your well-being in the period immediately following the divorce. Therefore, meeting your financial obligations after the divorce will be difficult based on your health. Then, the judge may consider this factor a great deal more than any other that we have discussed. Long-term chronic illnesses and impairments can be critical in this regard.

When it comes to dividing your property, a judge will consider your respective abilities to reenter the workforce post-divorce and sustain independent livelihoods. If both spouses have historically contributed equally to income, this may not significantly influence the outcome. However, if one partner has been a stay-at-home parent while the other has been the primary breadwinner, this dynamic can heavily influence property division decisions. Factors such as your spouse’s business connections, opportunities, and marketable skills can significantly impact the division of community property.

Conclusion

In conclusion, understanding community property laws in Texas is essential for anyone going through a divorce in the state. These laws dictate how assets and debts divide, making it crucial for individuals to understand their rights and obligations. By navigating the complexities of community property laws in Texas, both spouses can strive for a fair and equitable property division, ensuring they protect their individual interests as they move forward. Consulting with an experienced family law attorney can help clarify any uncertainties and guide individuals through the process with confidence.

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 an excellent way for you to learn more about the world of Texas family law and how your family circumstances may be impacted by the filing of a divorce or a child custody case.

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