As we all know, divorces involve property division. People often assume that when the court awards you property, you can simply take that property without any further complications. In a community property state like Texas, this scenario is not always true.
There is still more work to do before you can fully own your assets. This article discusses property division in Texas and what it can cost to keep what’s yours.
An Overview of Texas’s Community Property Division Laws
Texas is one of a handful of U.S. states that follows community property division laws.
The community property system (sometimes called “equal property division”) attempts to split all marital assets equally. Both spouses should walk away with 50%.
Marital property, generally, is anything that either spouse purchased during the marriage. This standard applies to all property, from a video game to acres of land. The law assumes that the couple is a family, so it gives each spouse equal ownership over these assets.
Separate property is not subject to division, as it belongs to only one person. These assets include anything you own before the marriage, property you inherit, or gifts from someone outside the marriage.
Owing Your Spouse Half of a Property’s Value
When the court allows you to keep assets in a community property state, you could still owe your spouse money. Remember, the goal is to make sure that each partner walks away with 50% of the overall marital property.
The Problem with This Financial Obligation
Let’s imagine the court gives you the home in your divorce, and that house is worth $400,000. According to Texas’s community property laws, you might be required to pay your spouse $200,000. This expense creates a problem.
You may not have the liquid assets to pay your spouse half of the property’s value. You may have something worth $400,000, but that doesn’t mean you have immediate access to $200,000. All that money is in the property itself.
To achieve an equal property division, it may be necessary to:
- Sell the property and split the profits
- Trade more property until you meet the required expense
Deciding Whether to Keep, Sell, or Trade Property in a Community Property Divorce
The choice will largely depend on how the property was acquired and who wants to keep it.
For instance, if you and your spouse jointly own a house, you may prefer to sell it and split the proceeds, with each of you taking half.
However, if you really want to keep the house, you may be able to trade other assets or make a cash payment, buying out the other share.
Ultimately, you should base your decision on practical considerations, such as your finances, current financial situation, and goals.
Make sure to consult with a trusted attorney before you finalize your decisions. Law Offices Of Mark M. Childress can help you negotiate a fair deal, and we may be able to offer alternatives to help you keep your treasured property.
Minimizing Risk When Keeping Property in a Texas Divorce
- Make sure all your separate property is only in your name. Doing so will help make sure your spouse has no claim to it.
- Keep detailed records of all property acquired during the marriage. If possible, find and copy receipts, purchase agreements, and appraisals. The more detailed your records, the harder they are to dispute.
Negotiating a Fair Property Division Agreement Outside of Court
Fortunately, you do not have to follow Texas’s division rules or go through the court system. Couples are free to create an asset division agreement that works for them.
Divorce mediation is a useful negotiation tool. During this process, a neutral third helps facilitate discussion and compromise between the spouses. Within the meeting, both parties have an opportunity to share their concerns and communicate their needs. These talks can lead to a customized agreement that works for everyone involved.
Mediation allows for a more amicable separation, and it can save couples time, money, and stress.
To meet with our team and discuss property division in your divorce, call our office at (817) 497-8148.