Assets and Debts Division During Divorce

Going through a divorce can be an emotionally and financially challenging time. When a marriage ends, one of the most complicated issues to resolve is how to fairly divide assets and debts acquired during the marriage. This is an understandably painful process, especially when significant joint assets like a house or retirement funds are involved. However, understanding Texas divorce laws around property division can help you protect your rights and achieve an equitable settlement.

If you are experiencing a divorce or need support with family law issues, don’t hesitate to contact our family law attorneys at Bastine Law Group at 281-784-3222. 

Facing the Financial Realities of Divorce

Ending a marriage often means facing major changes to your financial life. You may need to split savings, investments, and real estate that you once shared. Outstanding debts like mortgages, car loans, and credit cards also have to be divided somehow. It’s normal to feel anxious about how you will support yourself after divorce if assets are divided or if you become responsible for new debt payments.

While divorce inevitably brings financial challenges, you have legal options to protect your interests. Working with an experienced Texas divorce attorney can help you understand state laws and negotiate a fair property settlement. There are effective strategies to minimize the economic impact of divorce and achieve financial stability on your own.

How Texas Courts Divide Marital Property in Divorce

Texas is a “community property” state, which means courts will usually split marital assets and debts equally between spouses. This is based on the principle that property acquired during marriage is jointly owned by both partners. Exceptions may be made in certain cases like proven infidelity or fraud. Otherwise, judges aim for a 50/50 division of marital property.

Marital property includes:

• Income earned during marriage

• Bank accounts opened during marriage

• Cars, houses, or other assets purchased during marriage

• Retirement funds like 401(k)s and pensions accrued during marriage

Courts will also assign responsibility for debts acquired during marriage, such as:

• Mortgages and equity lines

• Credit card balances

• Car loans

• Student loans

Judges have discretion to make an unequal division in some situations, like if one spouse deliberately mismanaged finances against the other’s wishes. But in most cases, Texas courts will start property division negotiations from an even 50/50 split.

The Role of Property Division Lawyers

Navigating the complex process of identifying, valuating, and dividing all marital assets and debts requires legal skill. An experienced divorce attorney knows how to secure a fair settlement according to Texas law. A property division lawyer can:

• Determine exactly what is considered community vs separate property

• Obtain accurate appraisals of all major assets

• Argue for an unequal division if justified

• Negotiate settlement of joint debts

• Draft an enforceable divorce decree

Without proper legal advice, you risk accepting an agreement that does not protect your rightful interests. Your divorce lawyer will handle communication with your spouse’s attorney to negotiate a complete financial settlement.

Strategies for Dividing Specific Assets and Debts

While Texas generally defaults to equal division, there are some strategies in the state’s divorce laws that may help you negotiate a favorable settlement:

The Marital Home

For many couples, the family home is their most valuable shared asset. There are a few options for dividing it:

• Sell and split proceeds: The most straightforward approach is to sell the home and evenly divide the profits. This gives both spouses funds to secure new housing. However, selling can be complicated if the market is down.

• Buy out spouse’s share: One spouse keeps the home and buys out the other’s equity. This avoids selling but requires financing the buyout.

• Delay sale: If selling immediately would cause hardship, spouses can delay sale until a fixed date or future event like the youngest child turning 18. This provides housing stability.

Retirement Accounts

Retirement funds accrued during marriage are communal property. Possible ways to divide them include:

• Cashing out and splitting current value

• Transferring a portion to the other spouse’s account

• Assigning ownership percentage (like 60/40) without current payout

Avoid early withdrawal penalties and preserve tax benefits by keeping funds in retirement accounts.

Credit Card and Personal Debt

Texas law does not distinguish between “his” or “her” debt. All debt acquired during marriage is communal. Some strategies for handling debt division:

• Each spouse takes responsibility for individual credit cards.

• Debt payments are split for a fixed time period.

• Debt is consolidated before dividing payments.

• Spouse who primarily benefited from debt takes responsibility.

Tax Debt

Joint tax return debt is communal, but debt from separate returns is assigned individually. Strategies include:

• Split joint return debt evenly.

• Negotiate uneven split based on who contributed more to tax liability.

• Hold spouse responsible for separate return debt.

Alternative Financial Solutions Beyond Divorce

While divorce often seems like the only option, some couples pursue alternative paths to resolve marital problems while maintaining financial stability:

• Legal separation - Spouses remain married but live apart and divide property. This provides financial clarity without finalizing divorce.

• Postnuptial agreement - Spouses negotiate a new contract for property rights while staying married. This avoids court intervention.

• Debt management counseling - Financial advisors help negotiate debt payments or consolidation. This prevents debt from exacerbating marriage problems.

• Marriage counseling - Resolving communication issues may remove financial stressors impacting the marriage. Many relationships improve with effort.

Frequently Asked Questions About Property Division

How are assets divided in a Texas divorce?

Texas is a community property state, so marital assets like houses, cars, and bank accounts are generally divided 50/50 between spouses. Retirement funds are also split equally.

What debts are divided in divorce in Texas?

Texas courts assign responsibility for all debts acquired during the marriage like mortgages, credit cards, car loans, and tax debt. These are divided equitably, often 50/50.

Can a judge order an unequal property division in a Texas divorce?

Yes, in certain cases like proven financial misconduct during marriage, a judge can order an unequal property split, such as 60/40. But unequal division requires specific cause.

Who gets the house in a Texas divorce?

The marital home can be sold and proceeds divided, or one spouse can buy out the other's share. Spouses may also delay selling if needed to avoid hardship.

How are retirement accounts divided in a Texas divorce?

Retirement funds accrued during marriage are marital assets. They can be cashed out and split or divided by awarding each spouse a percentage share.

Moving Forward After Divorce

While dividing marital assets and debts during divorce presents challenges, Texas property laws aim to make the process equitable. An experienced divorce attorney can guide you through property division negotiations and represent your best interests for a financial settlement. With proper legal advice and a fair agreement, you can look forward to moving on in a stable financial position.