People in Texas who decide to divorce may realize that the financial effects of the end of a marriage can be far more long-lasting than the emotional and practical aspects of the split. Indeed, many people planning for divorce feel intense stress about how their finances will change. However, by reviewing their assets, liabilities, income and expenses, people can make a plan for their post-divorce financial future that can help to improve their peace of mind moving forward.
During the divorce process, it is important to fully establish both parties' financial assets. When a couple has significant wealth, the complexity of a high-asset divorce can come into play. Assets can include savings and checking accounts, investment funds, real estate investment trusts and similar accounts. When dividing marital assets, it is important to properly value each asset rather than simply exchanging one for the other. For example, a traditional investment account with the same amount of funds as a 401(k) may be more valuable as money can be withdrawn from it without a tax penalty. Even without penalties, distributions from a retirement fund may be subject to income taxes while taxes were already paid on the money held in a savings account or investment fund.
Real estate can also be a concern. While both parties often have an emotional connection to the house, there may be a significant outstanding mortgage. If one party will retain the home, the mortgage will need to be refinanced into that person's name alone.
Additional financial issues can also be part of a divorce, from dividing up debts to dealing with past and future tax returns. A family law attorney may work with a divorcing spouse to advocate for his or her interests, protect key assets and strive to achieve a fair settlement in terms of property division and spousal support.