As well-seasoned divorce attorneys here at Orsinger, Nelson, Downing & Anderson, LLP, in Texas we have witnessed firsthand the complexities involved in the division of property during divorce. Our extensive experience in this field equips us to guide you through avoiding the potential pitfalls involved in dividing your property, ensuring you have the best possible outcome in your case.
Texas is a community property state, which comprises a system designed to ensure theoretical fairness in marital property division. This means that most property acquired during the marriage is considered community property (“what’s mine is ours, what’s yours is still ours”) and should be divided equally upon divorce. However, separate property—property owned before the marriage, acquired as a gift, or inherited—can be retained by the individual outside of the overall property division (think: a side pot in a poker game). This distinction is the first critical step in avoiding division mistakes.
Mistake 1: Not Properly Identifying Separate Property
One of the most common mistakes is failing to correctly identify and prove that property is separate. Documentation is key. A party must provide clear and convincing evidence (a slightly higher standard than normal) that the property was acquired before the marriage, through inheritance, as a gift solely to that party, or one of the other forms of separate property acquisition. Without proper documentation of the underlying transactions, you risk having what should be treated as separate property divided as community property.
Mistake 2: Underestimating the Value of Non-Monetary Contributions
In Texas, a court considers not only one’s financial contributions; non-monetary contributions such as “homemaking” and raising children are heavy considerations when dividing property. Failing to account for these contributions can result in an unfair division—or at least one that could have been better for one party. Ensure that all contributions to the marriage are recognized and presented during the divorce proceedings.
Mistake 3: Overlooking Tax Implications
Property division can have significant tax implications, particularly concerning the division of retirement accounts and larger assets, such as real estate. Not considering these can lead to unexpected financial burdens later on down the line. It is important to consult with a divorce attorney who understands the tax consequences tied to various types of property division—or one who can work with your trusted CPA.
Mistake 4: Assuming a 50/50 Split Is Always Equitable
While Texas law starts with a general presumption that community property should be divided equally amongst the parties, this is not always the most equitable solution. The court considers many factors, including the earning capacity of each spouse, their current and future health, future needs, the size of separate property, and fault in the marriage’s breakdown when making its just and right property division.. Assuming you will automatically receive half of all assets can be misleading and result in inadequate preparation for negotiations.
Mistake 5: Forgetting About Debts
Just as community assets are divided, so too are the liabilities of the parties. Failing to address and allocate debts appropriately can result in one party unfairly bearing a higher debt burden—and necessarily the other party getting a property windfall. Make sure that all debts are disclosed and considered in the property division process because no one wants to divide marital property years down the line or end up with a division that didn’t account for a specific item that causes them grief.
Mistake 6: DIY Property Valuation
Attempting to value assets without professional help can often lead to undervaluation or overvaluation, potentially jeopardizing your financial future. This is particularly true for complicated assets like businesses, stock options, or niche antiques. Professional appraisals are crucial for an accurate and fair division of property, providing both parties with the security of knowing the assets are being accurately valued.
Mistake 7: Letting Emotions Lead the Way
Divorce can be an emotionally charged process, and that makes it easy to make big decisions based on feelings rather than cold, hard facts. This can lead to poor choices, like fighting over assets that might have value only in memory but are easily replaceable and worth very little in terms of money. It’s important to stay objective and focus on your long-term financial health because spending four hours in attorney’s fees fighting over an asset replaceable with two hundred dollars and a trip to the local retailer.
FAQS About Property Division In Texas
What Is Considered Community Property In Texas?
Community property includes all earnings and assets acquired by either spouse during the marriage, except for separate property.
What Is Considered Separate Property In Texas?
Separate property includes anything one spouse owned before the marriage, gifts, and inheritances received by only one spouse during the marriage, certain types of disability payments and personal injury payouts, and some other special exceptions.
How Are Retirement Accounts Handled In Texas Divorces?
Retirement accounts are considered community property to the extent they had contributions during the marriage. They require a Qualified Domestic Relations Order (QDRO) to divide.
Can Fault In The Marriage Affect Property Division?
Yes, fault grounds such as adultery or cruelty can impact the division of assets in Texas, potentially leading to a more favorable division for the “no-fault” party.
What Should I Do If I Suspect My Spouse Is Hiding Assets?
If you suspect your spouse is hiding assets, inform your divorce attorney immediately. They have discovery tools they can use to uncover hidden assets and ensure a fair division.
Contact Our Dallas Divorce Attorney For Experienced Representation
Handling the complexities of property division requires a clear understanding of your rights and the pitfalls to avoid. If you’re facing a divorce in Texas, contact our Dallas divorce attorneys at Orsinger, Nelson, Downing & Anderson, LLP at (214) 273-2400 for a free consultation. We will provide the guidance and advocacy you need to ensure your assets are protected, and your divorce settlement is fair and equitable.