One of the most complicated and contentious aspects of getting a divorce is deciding who gets what. The presumption under Texas law is that spouses are entitled to a “just and right” division of their assets. However, figuring out what exactly is “yours, mine and ours” gets tricky. Deciding what constitutes a “just and right” division can be even more complicated.
If you are considering ending a marriage, contact an experienced Austin divorce lawyer for guidance on the property division process. It is crucial to understand how property division is determined in Texas to protect your interests.
Texas Property Division Laws
Texas is a community property state. In simple terms, this means that a couple’s assets and debts acquired during the marriage belong to both spouses. This is called community property. Community property must be divided and distributed by the court in a divorce.
All property is presumed to be community property until it is shown to be otherwise. If one spouse can provide clear and convincing evidence that some property is theirs alone, it becomes separate and not subject to division.
Separate property is property that was:
• Owned by a spouse before the marriage.
• Given to a spouse specifically as a gift during the marriage.
• Inherited by a spouse during the marriage.
• Awarded to a spouse in a personal injury case during the marriage for damages, apart from any money for lost wages and medical expenses.
Contrary to popular belief, community property division laws are not a blanket 50/50 rule where everything is split evenly between the spouses. The actual standard that courts apply is a “just and right” division. In some cases, the court will decide that equal division is what is just and right, but this is not always so.
The Process of Property Division
There are four steps to dividing property in a divorce. First, each party must identify all the assets and debts that they have. Next, each item on the list is classified as either separate or community property. Then each item is assigned a worth based on its fair market value.
Factors Affecting Property Division
While the Family Code requires that division be equitable, it does not have to be equal. Courts consider multiple factors when dividing a marital estate, which may influence how much each spouse receives.
• Child Custody – Couples who share minor children will need to determine a custody arrangement after a split. Depending on how that is decided, the children’s primary caregiver might receive more community property to maintain a standard of living to which the children are accustomed.
• Disparity of Earning Capacity – If there is a large gap of economic opportunities available to the spouses, a disparity in incomes or a significant difference in earning capabilities, a court may award a large portion of the community assets to the spouse who will have a harder time making that money back after the divorce.
It can be difficult for a person who has taken an extended time away from their career to reenter the workforce. This is especially prominent when a spouse has been a stay-at-home parent while the other worked. Contributions to the marriage and family that are not financial are important and valuable. Their effect on the working spouse’s ability to work and potential harm to the non-working spouse’s future job prospects are both considered.
• Education – Similar to differences in earning capacity, a disparity in the levels of education in the spouses will affect property division. For example, if one spouse has an advanced degree and the other does not, they will likely have far different opportunities in the job market.
• Health – The physical health of one spouse may affect the overall division of the community estate, such as when one spouse’s health affects their ability to work and earn a living, and the other’s does not.
• Fault – When one spouse is at fault for the divorce, the court might grant the other a disproportionate share of assets. This could happen in cases that involve adultery, family abuse or domestic violence.
• Waste – Sometimes, one spouse will spend community assets recklessly while a couple is considering or in the process of divorcing. This could be done out of spite, as an emotional reaction to the dissolution of the marriage or as an attempt somehow to get more of the property in the end. Whatever the reason for excessive or unnecessary spending, a judge could decide to award the other spouse a larger share of the divided property to make up for the loss.
• Reimbursement – If one party used their separate property funds to benefit both partners at some point, a court might award them more of the community property to compensate for their loss of separate property. For example, if one spouse used a large inheritance to purchase a house for the couple.
Special Property Division Considerations
A couple’s marital estate will include several types of assets and debts, some of which are harder to divide fairly. Property that can be complicated to split includes real estate, retirement benefits and debt.
• Real Estate – The home shared by a couple is often their biggest asset and most contentious divorce battle. Splitting shared interest in community real estate is done differently depending on the couple’s unique circumstances. A judge could award the shared home to one spouse or order that it be sold and have the couple split the sale proceeds.
• Retirement Benefits – Another sizeable asset for many is retirement benefits and investments. Even when these have been earned through the work of only one spouse, retirement funds accrued during the marriage are community property. A determination of how much each spouse contributed to their retirement accounts while married gets made, and the money is split with the rest of the community property.
• Debt – Debt is just like property in a divorce. It is considered community debt when it was incurred during the marriage. Debt that one spouse acquired before the marriage would be separate. Community debt is also split in a way that is just and right.
Divorce does not affect a creditor’s right to collect a debt. If one spouse is ordered to repay a debt that is in both names but fails to do it, the creditor can pursue repayment with the other spouse.
Spousal support is money paid to one spouse by the other so that the recipient can meet their basic needs after a divorce. Texas courts award spousal support conservatively. The spouse who is requesting the support needs to show that they cannot support themselves financially. The reasons could be due to the spouse staying home with children and not entering the workforce for a long time, a disability, or because they are caring for a disabled child. In marriages that last more than ten years, a spouse can be considered for support if they cannot earn an adequate income on their own.
Spousal support is awarded for a specific amount of time. The person receiving the support is expected to earn enough to support themselves eventually. If they cannot do that, the court will reconsider the length of the marriage, their needs, their earning capacity, the ability of the paying spouse to continue making payments and other factors that influence the need for spousal support.
Mediation vs. Court
Having a judge decide how property will be split up is not the only option for divorcing couples. Mediation is a good choice for some—in fact, it’s the most common way that couples work out the terms of their divorce. This is a process in which a divorcing couple meets with a neutral third-party professional to negotiate the terms of their separation. Mediation can be done at any point and is sometimes ordered by the court as a first step.
Mediators are trained to help couples manage conflict. In many cases, mediation facilitates effective and productive communication despite the emotional nature of a divorce. A judge will often sign off on a final divorce decree based on a mediated settlement agreement. When mediation is unsuccessful, and an agreement cannot be made, the parties will have to take their case to trial and have a judge decide how assets are divided.
Finding the right divorce attorney for you and your unique situation is important. They will be able to guide you through the divorce process so you can know what to expect at every step. Trusting the knowledge, experience and understanding of your lawyer can put you at ease during what is often an otherwise stressful time.
To get in touch with the Law Office of Jason Wright, give us a call at 512-884-1221 or submit the form below. Our goal is always to find the best solution for you and your family, and we will work hard to do so.
To get in touch with us, give us a call at 512-884-1221 or submit the form below. We are committed to zealously working to find the solution that is best for you and your family.