In divorce cases, there are two different areas of the case that you need to be familiar with period the first area involves children in child custody. The second involves the parties' finances, such as your family home, your business, and your retirement accounts. For today's blog post, we will focus our energy on discussing what financial components you need to be aware of when it comes to a divorce case. Not every divorce is exactly similar, but I would like to share my thoughts on topics related to some of the more common and universal subjects that may relate to your finances.
Your family home
The central component to your short-term financial life is the family home. For most of us, we will not make a larger expenditure in our lives than the purchase of a home. Even though you may only live in the home for one, 2, or five years, it is the focus of your financial life as well as the focus of your family life. It would help if you made some important considerations about the home, both as far as how the home will be characterized in the divorce and what to do with the home after your divorce ends.
It would help if you determined whether or not your family home is Community property. If the house was purchased during your marriage, it is likely to be classified as Community property. Thus, the house can be divided into the divorce between you and your spouse. It doesn't matter if your name or their name does not appear on the note or deed to the home. As long as the home was purchased during your marriage, then it still counts as Community property.
On the other hand, if the house was purchased before your marriage, it is separate property that is not divisible in the divorce. Keep in mind that if Community property income was utilized to pay the mortgage or make improvements on the home, your spouse might have potential reimbursement claims for you to consider. Otherwise, prepare for the house to be an issue that you must deal with financially during the divorce itself.
Once the house has been determined to be Community property, you should consider your options as far as what to do with the house during the divorce. In most divorces, one spouse will leave home while the other remains in the house. Oftentimes the spouse who chooses to remain in the house will do so and raise the children in the house for the duration of the divorce. If you have children and are interested in keeping the divorce and maintaining primary custody of the kids after the divorce, my advice would be to remain in that house as long as possible. Choosing on your own volition to leave home may indicate to some judges that you are less willing to care for the children on of full-time basis and are not as interested in Bing in the house after the divorce, either.
Another aspect of homeownership that is relevant in a divorce is the decision to remain in the house after the divorce or sell the home as part of the divorce proceedings. Typically one spouse will move out of the house as a condition of the divorce. The spouse who chooses to remain in the house or is awarded the house in the divorce is responsible for making any mortgage payments on the home after the divorce has concluded. This presents several different financial issues that you need to be aware of as you finish out your divorce case.
If you are awarded the house in a divorce, can you afford to remain in the house? You often may ask for something in the divorce and not be prepared to deal with the consequences of actually getting what she asked for. The family house is something that many people would like to be able to maintain and live in after the divorce is over with period; it may be that you have received primary custody of the kids and want to stay in the house to increase the stability of your children's lives after the cases come to a close. I can't say that I would blame you on many levels for having this feeling.
However, this is an entirely different subject when you consider that the payments on the House have typically been made in tandem with your spouse period now that you and your spouse are getting a divorce in your income will be cut down significantly you have to be able to run a budget and determine whether or not you can afford to make those payments on just your income. The last thing you want to do is put yourself in a position where you are pushing your budget to the limit when you have not even begun to live your life as a single person on a brand new budget.
As a result, you and your attorney should perform a somewhat detailed analysis of your finances after the divorce to determine whether or not it is in your best interest to remain in the house after the divorce. Even if you desire to remain in the house and you think a judge would award the house to you, that does not mean that it is in your best interest. On the contrary, it may be in your best interest to have the house sold in the divorce and to take the cash you make off the sale to fulfill some other financial obligation that you have.
If you are going to stay in the house, then two documents need to be executed as a part of your divorce proceedings. The first would be a deed of trust to secure assumption. This document would be executed by your spouse in signed by you, and then. The deed of trust to secure assumption is completed to allow your spouse to protect themselves after the divorce if you stopped making payments on the home. For example, if your house were to go into foreclosure after the divorce, this deed of trust is a secure assumption that would allow your spouse to secure the home and make payments on it. They would be able to take an ownership interest in the house and not have their credit ruined by you not making payments on a home that bears your name and your spouse's name on the note.
The other document that I think will be wise to execute in this scenario would be a special warranty deed. The special warranty deed would benefit you in that your spouse would deed over to you all of their interest in the home moving forward. This would prevent them from getting in your way if you wanted to sell the home or otherwise income for the home with a home equity line of credit or perform any other action with the house. Both of these documents are essential to the proper handling of a family home after a divorce. Do not let your case conclude without asking your family law attorney about the significance of these documents.
How to divide your community estate
we have already discussed Community property to a certain extent in this section on your marital residence. Community property is divisible in a Texas divorce. You should expect any property or debt accumulated during your marriage to be on the table as eligible for division. Your house likely represents a good chunk of your community state along with personal property, vehicles, investments, and simple checking or savings accounts.
Once your community estate has been defined, you and your spouse will need to negotiate how the property contained in your community estate will be divided. If fault grounds for the divorce or not being asserted in your case, then other factors that may influence how your Community property would be divided in a trial are you and your spouse's ages, educational backgrounds, work history, your health, and the number and amount of separate property items you own.
These are the factors that a family court judge would look to when dividing up your property. However, it is unlikely that your divorce case will reach a judge to discuss this topic. That should tell you that you should be anticipating the negotiation session with your spouse rather than preparing to make arguments with a judge. You and your spouse are fully capable of creating your outlook and method for distributing and dividing your community into a state. As long as the method you choose doesn't violate basic issues of fairness, it is likely that a judge would approve those methods.
If you become the primary conservator of your children in your divorce case, you will also be entitled to receive child support from the possessory conservator. Child support is paid as a function of how many children you and your spouse had together under the age of 18 or who have not yet graduated from high school. For starters, the court will assess how many children you have before it and apply that against a range of different factors in your case. The Texas family code contains guidelines for child support that would dictate 20% of your expenses net monthly income going towards child support each month if one child were before it.
That percentage would increase up to 50% for every additional child before the court. However, the Texas family code guidelines are just guidelines and do not have to be utilized by you and your spouse. However, from my experience, the guidelines are widely used and accepted by most people going through a divorce. Of course, if you have specific factors that should cause you to deviate from the guidelines, then you almost certainly should do so. Additional factors may be related to the health and well-being of your child, logistical factors related to travel for your ex-spouse to be able to visit with the children, or other costs that are not typically seen by families going through a divorce.
You and your spouse know your family circumstances much better than anybody else. As a result, you all should feel motivated to negotiate with one another over any subject, specifically child support. This can be a very personal subject since it involves receiving money from an ex-spouse to help support your children. It is best to look at a way to support the kids and not exact any "payback" against your spouse. It may be that you will need to re-enter the workforce after your divorce. This may be your reality but is not something that child support is intended to assist you with.
Spousal maintenance/Contractual alimony
Spousal maintenance and contractual alimony are two forms of financial assistance that you may be able to receive after your divorce. In many states, these forms of assistance are known as alimony. In Texas, the state divides alimony into two categories. Let's walk through what each of these categories is and how a person becomes eligible for them.
Spousal maintenance can only be ordered by a judge after a divorce trial. A. judge will look to determine whether or not you have the ability to provide for your minimal, basic needs after a divorce. If you do not, and your spouse can assist you financially, then they may order that you be paid spousal maintenance for some time. Typically, 20% of your spouse's gross monthly income can be paid to you every month in spousal maintenance.
On the other hand, if you and your spouse in your negotiations determine that financial support for you after the divorce is appropriate, then you all can agree to contractual alimony payments. Contractual alimony is more akin to elements of contract law rather than family law. As such, a family court judge would be limited to enforcing the terms of your final decree of divorce as it pertains to alimony. If your spouse does not pay you contractual alimony, the judge can only order these payments to occur so long as their amount is less than what they would have ordered in spousal maintenance.
A judge would assess whether you have a property in your separate estate or have available community property that could be awarded to you when determining whether spousal maintenance should be ordered. A judge will only award you spousal maintenance if no other sources of income are available for you. If you have available property that could be sold to keep your head above water after the divorce, then it is unlikely that spousal maintenance would be awarded.
The key point is that unless domestic violence is in the picture, you and your spouse needed to have been married for at least ten years for spousal maintenance to be ordered. The longer your marriage, the longer the spousal maintenance can be ordered.
Final thoughts on the finances involved in a Texas divorce
As you can see, many areas of your finances are impacted by divorce. By the same token, a divorce opens up other financial concerns that were likely not present in your pre-divorce world. This shouldn't intimidate you, however. What it should do is motivate you to prepare as best you can. Preparation, being intentional about completing the goals of your case, and negotiating with your spouse is critical to your being able to navigate a divorce successfully. Having a focus on what is important to you while having organized thoughts and plans for your finances is important.
If you want to create goals for yourself, you need to be knowledgeable about the financial consequences of your decisions. This is where having an experienced family law attorney comes into play. If you can hire an attorney who knows your case and your life backward and forwards, you will be in an advantageous position relative to many people who go through divorces in Texas. When there is so much at stake in your divorce, it is worth your time to reach out and speak with experienced counsel in the area of Texas family law.
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 via phone, online, and in-person meetings. These consultations are a great way for you to learn more about the world of Texas family law and how your family may be impacted by the filing of a divorce or child custody case.