Divorce often brings unexpected challenges, and financial issues in a Texas divorce can catch many off guard. From hidden costs to overlooked assets, what seems straightforward can quickly become complicated. Knowing what to watch out for could help you avoid costly surprises and make informed decisions during the process.
Retirement and Social Security Surprises
Social Security Benefits You Might Not Have Considered
Social Security can play a significant role in a Texas divorce, especially for individuals nearing retirement. If you’re over 62 and were married for at least 10 years, you may qualify for benefits based on your ex-spouse’s earnings. These benefits become available if your ex is eligible for retirement or disability payments, and your own benefits are lower. Understanding these rules can help you maximize what you receive in retirement.
Teacher Retirement Plans and Delayed Payouts
Dealing with a Teacher Retirement System (TRS) pension adds complexity to a divorce. Unlike 401(k)s, TRS pensions cannot be accessed until retirement. If your spouse is a teacher, you won’t be able to cash out a share of their pension immediately. However, TRS pensions often provide higher monthly payouts than typical retirement accounts, making them valuable long-term assets. It’s important to request a percentage of the pension, ensuring you receive your share when the time comes.
Tax Consequences You Didn’t Expect
Tax Implications of Dividing Property and Assets
Dividing property in a divorce often comes with unexpected tax consequences. Understanding the tax basis of assets like real estate or investments is crucial. The tax basis is the asset’s original value, which affects how much tax you’ll owe when selling or transferring property. Consulting with a tax expert can help you avoid mistakes that could significantly reduce the value of what you take away from the divorce.
Handling Prepaid Credit Cards During Divorce
Prepaid credit cards can complicate a divorce. Some spouses may use these cards to hide money by depositing large amounts into them. It’s crucial to examine all financial accounts, including prepaid cards, during the divorce process. Requesting detailed statements ensures transparency, making it harder for your spouse to conceal assets. A thorough review of these cards helps guarantee an accurate division of funds.
Hidden Costs and Credit Card Issues
Prepaid Credit Cards as a Financial Strategy (or Trap)
Some spouses prepay credit cards to hide cash during a divorce. By depositing extra money into a card, they can reduce their apparent cash reserves while still maintaining access to the funds. Requesting full credit card statements during discovery helps you uncover this tactic. If ignored, you might miss out on your fair share of assets hidden this way.
The Consequences of Unpaid Debts After Divorce
Unpaid debts often become a problem after a divorce. Even if the court assigns the debt to your ex-spouse, creditors will still hold you accountable if your name is on the account. Failing to monitor this can lead to financial harm. Stay vigilant and follow up to ensure debts get paid according to the divorce agreement. Consulting with your attorney can help protect you from ongoing debt-related issues.
Conclusion
Divorce in Texas comes with many financial surprises, from Social Security benefits to hidden credit card funds. Being aware of these issues allows you to make better decisions during the process. Work with your attorney and financial advisor to ensure you address every potential complication. Proper planning helps you avoid unwanted surprises and secure a more stable financial future.
Other Related Articles:
- Financial Issues to Consider in Divorce, Part Two
- Considering a divorce? Think about these financial issues first
- How to approach issues related to children in your Texas family law case
- How to handle issues in valuing property during the coronavirus pandemic
- Insurance issues related to Texas divorces
Bryan Fagan, a native of Atascocita, Texas, is a dedicated family law attorney inspired by John Grisham’s “The Pelican Brief.” He is the first lawyer in his family, which includes two adopted brothers. Bryan’s commitment to family is personal and professional; he cared for his grandmother with Alzheimer’s while completing his degree and attended the South Texas College of Law at night.
Married with three children, Bryan’s personal experiences enrich his understanding of family dynamics, which is central to his legal practice. He specializes in family law, offering innovative and efficient legal services. A certified member of the College of the State Bar of Texas, Bryan is part of an elite group of legal professionals committed to ongoing education and high-level expertise.
His legal practice covers divorce, custody disputes, property disputes, adoption, paternity, and mediation. Bryan is also experienced in drafting marital property agreements. He leads a team dedicated to complex family law cases and protecting families from false CPS allegations.
Based in Houston, Bryan is active in the Houston Family Law Sector of the Houston Bar Association and various family law groups in Texas. His deep understanding of family values and his professional dedication make him a compassionate advocate for families navigating Texas family law.
