The property division process is often the most contentious part of a divorce. During property division, the parties divide marital assets and liabilities.
Needless to say, how assets like the marital home, retirement benefits, properties, cars, etc. are handled in your property division case can impact your financial outlook for the rest of your life. Knowing how to prepare for your property division case ahead of time can help you navigate the process with more confidence.
How Does Property Division Work in Texas?
Unlike many states in the US, Texas operates under "community property" laws, instead of "equitable distribution" laws.
In Texas, spouses are required to "equitably" divide community assets and liabilities during the property division process. In contrast, parties do not have to split separate property. Community property is property that both parties have meaningfully contributed to.
For example, let's say a person starts a business before they get married. Throughout their marriage, their partner never contributes to the business. The court will probably consider that business separate property, and allow the business owner to retain complete control of the business post-divorce.
However, if the business owner's spouse contributes meaningfully to the business, increasing its value, it will probably be considered community property. In that case, the court might ask the business owner to buy their spouse out or offer them stock in the business post-divorce.
The court takes multiple factors into account when determining how to divide property, including the circumstances of the divorce. Texas recognizes fault-based divorce, meaning a party can file for divorce by citing grounds such as adultery, cruelty, etc. The court can (and often does) take these factors into account when dividing property. For example, the court may decide to award a party less than a 50% share if they commit an act like domestic violence or child abuse.
Your 2020 Property Division Checklist
If you're preparing for a property division dispute, here are some steps you can take to prepare:
- Inventory all your personal property. At some point, the court will ask you to present a list of your personal and community properties. Omitting any property you own can result in legal penalties. From gifts to personal acquisitions, track down everything you own and itemize it. Consider hiring a Certified Public Accountant (CPA) to help you value all your assets and liabilities. The more knowledge you have about the value of your separate property, the better you'll be at arguing for an equitable split.
- Collect (and make copies of) personal financial records. Income statements, tax returns, benefits, insurance policies—you should have all of it ready to go for the court.
- Inventory all your community property. Make copies of relevant documents such as loans, deeds, etc. Keep track of any joint bank accounts. Neither party is allowed to tamper with, sell, or otherwise affect community property in any meaningful way during the divorce. Keep tabs on community assets and liabilities to make sure your soon-to-be-ex isn't trying to hide them.
- Know where your liabilities stand. Debts often play a considerable role in property division cases. Courts might decide to have one party pay off a majority of community liabilities, especially if that party is the breadwinner or the reason for the divorce.
- Consult a financial professional. A property division lawyer or financial professional specializing in asset valuation can be a phenomenal tool during a property division case. They can work with you to predict a likely outcome for your case and help you brace for the financial impact.
At the Law Offices of Mark M. Childress, PLLC, our lawyers can help you navigate your property division case.
To learn more about our firm or arrange a consultation with our team, contact us online or via phone at (817) 497-8148.