Divorce and Splitting Assets: What You Need To Know
One of the more complex aspects of any divorce is the division of assets and liabilities. The procedures involved in dividing property and assets is much more than a simple "this is mine" and "that is yours." In order to ensure an equitable distribution, Texas has certain laws and regulations that must be followed.
How Property is Divided in Texas Divorces
Texas is a community property state. Community property is defined as all property and debt acquired/earned from the date of marriage up until the divorce that isn't considered separate property. Texas law states that community property is subject to equitable (just and right) division, but not necessarily equal division. This means that the assets and property do not have to be split fifty-fifty. For property to be considered separate property, you must prove it as separate property by clear and convincing evidence. Separate properties are properties acquired prior to the date of marriage or acquired during the marriage by gift or inheritance. It is very crucial to prove separate property by clear and convincing evidence.
Assets subject to equitable division include the following, but not limited to:
- Real Property- Real estate owned by the spouses such as houses;
- Personal Property- Moveable property, furniture, tools, equipment, vehicles, boats, personal effects, jewelry, etc.
- Financial Assets- bank deposits, investments or retirement accounts, annuities, etc
- Business Assets- Can range from cash on hand to buildings or patents, logos, valuations and goodwill.
- Liabilities – taxes, credit cards, mortgage, personal loans
Divorce and the Division of the Home
For many couples, their greatest asset is their home. There are several questions that arise when dealing with a marital home during a divorce. Who will remain in the home? Should the home be sold? What happens to the proceeds from if the house is sold? There are several options when it comes to the equitable division of a home.
- Buyout- One spouse may be awarded the house and associated liabilities, while the other party will be compensated with other assets from the marital estate.
- Sell- Since Texas is a community property state, the proceeds from the sale of a home would be subject to an equitable distribution. That does not mean that each party would receive half of the profit received. It is possible that one spouse would receive a larger amount of the proceeds, while the other gets a smaller amount but may receive additional compensation in the form of other property or assets.
Divorce and the Division of a Business
When dealing with the division of a small business (or big), partnership, or professional practice it is important to obtain a proper valuation. The type of business, when the business was started, who started the business, and how the business is run are important factors in determining the valuation and the equitable distribution of the assets. In cases where both parties want the business to continue, it is possible to come up with arrangements that are agreeable to everyone. The spouses can decide to continue to co-own and operate, or structure a buyout to allow one party to continue to operate. One example of a creative solution would be to negotiate a buyout over time, allowing both parties to continue to have a source of income, even if they are unable to continue to operate the business together.
Divorce and Retirement Benefits
Pensions and retirement plans can be considerably large assets in a marriage and furthermore complex to divide in a divorce. There are strict rules and regulations that must be followed and these requirements can differ greatly from one area of employment to another. For example, teacher benefits have their own rules and regulations that vary greatly from the regulations that govern Military benefits. Generally, retirement plans (401(k), 403(b), pensions, etc.) each function differently and are valued and divided differently.
Lawyer Up – Houston Divorce Attorneys
With over 150+ years of combined legal experience in family law and business law, our Texas divorce attorneys have the knowledge, resources and commitment to excellence to help protect what is most important to our clients. We recognize the tremendous trust our clients have in us, and we take that responsibility very seriously. Contact us today to see how we can help protect you and your future.