The question of dividing up 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, issues having to do with property division are the most important in your entire divorce. If you don’t have children the issues 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, at a certain point a divorce just becomes a business transaction.
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 with a little time and effort you can learn the basics of property division in your divorce without paying anyone any money?
The next thing that 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 for an attorney who has taken multiple divorces all the way to a trial. This may be more difficult than you would anticipate given that very few divorces actually 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 are the essential pieces of information you need to be successful?
- Texas is a community property state. This means that all property that you acquired during the course of 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. Rather, both of you own the full 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 be in agreement 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. The reason for this is that from a cleanliness standpoint it muddies up the divorce and makes it more difficult to 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 and everything on this side is to be considered separate property is much easier.
The other part of purchasing 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 think too much about debt in context of a divorce it is certainly an important 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.
- At the conclusion of the divorce, any large asset that changes hands (in terms of ownership) must have its title changed in order 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. Rather, you will need to execute a special warranty deed whereby your share in the home is deeded to your spouse. Property would then be in his name 100%. The deed 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, there are additional steps that 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 are possible. It is an extremely dangerous proposition for you to still owe money on a house that 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 bee all that separate after all. Even though a judge does not have authority to divide any property that is properly classified as being your or your spouse’s separate property, it is still possible for you to owe your spouse money in the divorce as a result of community funds having 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 prior to 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 home prior to your marriage. However, you may be surprised to learn that while it is properly classified as separate property you may owe your spouse a reimbursement towards the money he contributed to the home through mortgage payments and his direct labor.
Essentially, what you would need to do is 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 benefit only you from a financial perspective 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 then you should prepare for high emotions and difficult negotiations. There is no rule that you will have to deal with a knock down, drag out fight but it is possible. Emotions often times 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 cool 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. Many times you will overestimate your ability to pay a mortgage and will run into trouble months down the road when the mortgage seems to become more burdensome than it previously was.
What happens, on the other hand, 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 with before making this purchase. A seller has made her a counter offer on a home that she simply cannot refuse. How will the law treat this new purchase?
Ass we mentioned previously, all purchases made during the course of 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 obviously is not intended to be a residence where you have any actual ownership rights. This is not an insurmountable 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 the separate property of your spouse.
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 home is part of the community estate. This situation requires a great deal of communication between your spouse, you, and the title company who is 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 in relation to property issues after a divorce? Not a whole lot.
The bottom line is that you cannot do much in relation to 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 attempt to re-divide the community estate- even if additional information has come up after the divorce has been finalized. You may file a motion for new trial within thirty days of the judge signing the judgment, however.
A motion to new trial would likely need to be based on the discovery of new evidence that you had no ability to have come across during the divorce that would have likely led to the rendition of a different judgment. From my experience, however, this type of motion does not stand a great chance at 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 a great opportunity to learn more about our office and to receive feedback about your particular circumstances.