The question of dividing your marital estate in a divorce should be posed to your attorney early and often in your Texas divorce. The reality of the situation is outside of issues related to your children; problems with property division are the most important in your entire divorce. If you don't have children, the problems related to asset, debt, and property division should jump to the top of your priorities list. As a friend of mine is fond of saying, a divorce becomes a business transaction at a certain point.
Fortunately, you do not have to go into the divorce process without assistance. You can do two things to guide yourself and prepare yourself for divorce. The first thing is to do exactly what you are doing right now- read as much as you can. Blog posts, news articles, and information provided by the State Bar of Texas are great places to start your search. Did you know that you can learn the basics of property division in your divorce without paying anyone any money with a bit of time and effort?
The next thing you can do to prepare for asset division in a divorce is to hire an experienced family law attorney. This means that your attorney should not only be licensed to practice law in Texas but should also have experience as a family law attorney. Specifically, you should interview an attorney who has taken multiple divorces to a trial. This may be more difficult than you would anticipate, given that very few divorces go all the way to a trial stage.
To sum up my initial points of advice on this subject: 1) learn as much as you can about the law and divorce on your own. It costs nothing to do so other than some self-discipline and some time. 2) Interview multiple family law attorneys who not only have handled many divorce cases before but have taken those cases to trial when the need to do so has arisen. You have nothing but options before you at this stage in your case. Take your time, consult with the people in your life that you trust and make decisions that are in your best interest now and years into the future.
Asset division in a Texas divorce: What is the essential information you need to be successful?
- Texas is a community property state. This means that all property you acquired during your marriage is presumed to belong to both you and your spouse 100%. You don't own half, and your spouse doesn't own half. Instead, both hold the total amount of the car, boat, chair, house, or whatever asset you are talking about. With some exceptions, the same can be said for the debts associated with these pieces of property.
The presumption that all property acquired during your marriage is community-owned means that you and your spouse would need to submit evidence to a judge to counter that presumption if the need to do so arises. Usually, you and your spouse will agree on most of the property in your divorce (whether it is separate or community-owned). However, if there is a point of conflict in this area, you need to be prepared to trace its origins and show proof of ownership one way or the other.
- I will almost always advise a client against purchasing property during the divorce. From a cleanliness standpoint, this is because it muddies up the divorce and makes it more difficult for clients to divide up the community estate. Drawing a line in the sand and saying everything on this side of the line is fair game to be considered community property. Everything on this site is to be regarded as separate property is much easier.
The other part of purchasing the property after the divorce has started is that invariably in today's day and age, debt is associated with that purchase. While we do not ordinarily overthink about debt in a divorce, it is undoubtedly an essential part of the case. With that said, you need to consider how debt interacts with the property that you own. Temporary orders in most Texas counties bar one party from incurring debt after the divorce has been initiated unless that debt is associated with legal expenses.
- After the divorce, any enormous asset that changes hands (in terms of ownership) must have its title changed to reflect that arrangement. For instance, if you deed your spouse the family home in the divorce, then it is not enough to have that stated in the final decree of divorce. Instead, you will need to execute a special warranty deed whereby your share in the home is deeded to your spouse. The property would then be in his name 100%. The act would then be filed with the county clerk.
This is a very delicate process. Note that despite the change in ownership of the house, deeding the home to your spouse and a delicately worded final decree of divorce does not absolve you of future liability under the mortgage to your home. On the contrary, additional steps would need to be taken to remove your name from your mortgage. Depending on your situation, you should choose wisely with your spouse which one to take advantage of.
Those options include executing a deed of trust to secure assumption, having your spouse attempt to refinance the home, so a new loan results bearing only his name, or having the house sold if neither of those two options is possible. It is a difficult proposition for you to owe money on the house still you no longer own. The orders in your final decree of divorce for your ex-spouse to make payments on the loan are a pretty flimsy guarantee from your perspective.
- Your separate property may not be all that separate after all. Even though a judge does not have authority to divide any property that is appropriately classified as being your or your spouse's individual property, it is still possible for you to owe your spouse money in the divorce as a result of community funds have contributed to the debt payment or otherwise increasing the value of the asset.
The most obvious example that I can point you towards is that of your home. Suppose that you owned a home before your marriage to your spouse. After you and your husband got married, you all moved into the house. The house still had a mortgage on it, and community funds from your jointly held bank account were used to pay the mortgage on the home. Additionally, your husband utilized his contractor skills to renovate the kitchen and the master bathroom.
When you filed for divorce from him, you were under the impression that the home would be your separate property since you owned the house before your marriage. However, you may be surprised to learn that while it is appropriately classified as individual property, you may owe your spouse a reimbursement towards the money he contributed to the home through mortgage payments and direct labor.
Essentially, you would need to reimburse the community estate for the funds utilized to benefit your separate property. This would allow your spouse to be compensated for his monetary and physical benefits put towards an asset that can only help you financially after the divorce. This sort of analysis would need to be done during the divorce. Your spouse cannot come back after the divorce and asset a reimbursement claim on the house.
Real estate transactions in Texas divorce cases
If you are engaged in a divorce where a primary residence, rental home, or other property is at stake, you should prepare for high emotions and complex negotiations. There is no rule that you will have to deal with a knockdown, drag-out fight, but it is possible. Emotions often run high, and people are not at their best during the final stages of a divorce.
You will need to rely on the help of your attorney to keep your composure and maintain your calm when negotiating on your home or another piece of real estate. Many times people make short-term trade-offs that are not in the best interests long term. For example, if you are a mother who would like to keep the family home for stability's sake, I would think twice about doing so. Often, you will overestimate your ability to pay a mortgage and run into trouble months down the road when the mortgage seems to become more burdensome than it previously was.
On the other hand, what happens if your spouse's attorney contacts your lawyer and says that your wife wants to purchase a new house during the divorce. She wants to start over new right away and can't wait for the divorce to be done before making this purchase. A seller has made her a counteroffer on a home that she cannot refuse. How will the law treat this new purchase?
Ass we mentioned previously, all purchases made during your marriage are presumed to be community property. Given that your divorce has not yet been finalized, the new purchase of the home would be owned by both you and your wife, although it is not intended to be a residence where you have any actual ownership rights. This is not an impossible issue. You all can agree in your final decree of divorce to make a special provision for this house and its debt to be classified as your spouse's separate property.
The real problem will be whether or not the mortgage lender on that home requires your spouse and you to be present at closing and for both of you to sign on the paperwork. From their perspective, they are merely ensuring that the lien on the home for the mortgage company is valid against any assertion that you may make that the house is part of the community estate. This situation requires a great deal of communication between your spouse, you, and the title company looking over the closing process. Again, your best bet would be to wait until your divorce has concluded to commence any large purchases.
What can you do with property issues after a divorce? Not a whole lot.
The bottom line is that you cannot do much with property issues after a divorce. For instance, you cannot come back to your ex-spouse and attempt to be awarded spousal maintenance payments after the divorce has been finalized. You cannot go back and try to re-divide the community estate- even if additional information has come up after the divorce has been completed. However, you may file a motion for a new trial within thirty days of the judge signing the judgment.
A motion to a new trial would likely need to be based on discovering new evidence that you could not have come across during the divorce that would have probably led to the rendition of a different judgment. However, from my experience, this type of motion does not stand a great chance of being granted by the judge. Judges, understandably, are hesitant to re-open a divorce for anything short of an extraordinary reason.
Questions about property, debt, or divorce? 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. These consultations are an excellent opportunity to learn more about our office and receive feedback about your particular circumstances.