How Is Property Divided During a Divorce?

In every divorce, the property that’s owned by the divorcing couple needs to be divided fairly. In Texas, the Family Code directs judges to divide up this property in a way that the court sees as “just and right”, and that means it’s somewhat subjective. Your divorce lawyer is an important player here and will make sure your rights are protected throughout this process.

From a Divorce Lawyer: Dividing Property in a Texas Divorce

“Just and Right” Standard

What’s considered “just and right” is obviously going to vary depending on the specifics of your situation. A lot will depend on the contributions of both parties to the marriage, your financial situations, and the presence of children. In general, though the court can look at absolutely anything as it considers this issue, there are certain factors that are almost always considered:

• If it is a fault-based divorce, who is at fault and what are the specifics
• Each spouse’s unique financial obligations as well as mutual debt
• Whether either spouse has significant separate property or expectations of inheritance
• Whether either spouse wasted some of their shared property
• The education levels of both spouses
• The earning capacity of both spouses as well as their employment history
• The health and general physical condition of the spouses and any children
• Whether there are any adult children dependent on either spouse
• The overall tax implications for either spouse 
• Whether any fraud has been committed
• If there’s something about a certain piece of property that might make it more beneficial for one spouse over the other
• Who will have custody of the children
• How separate and community property may have been mixed during the marriage
• How the two spouses behave during the proceedings
• Contributions to the marriage (such as if one parent sacrificed a career to care for children or put their own career on hold to help the other advance)

It’s important to understand that the “just and right” standard very specifically does not mean a 50/50 split: it means that the court wants to make the split fair and equitable given the specific circumstances of each spouse.

What Property Gets Divided?

In any divorce situation, there are two types of property: community and separate. Community property is generally anything that was acquired during the marriage and which you and your spouse have at the time of the divorce. Separate property is anything that one of you brought to the marriage separately and which has not been mingled with the community property. Separate property might include, for example, a gift or an inheritance that was given during the marriage, a piece of real estate that one of the partners owned outright before the marriage, or capital gains on a property investment that is owned entirely by one of the spouses. You will have to prove that property is separate to the satisfaction of the court, and this can be tricky. It’s always wise to consult your divorce attorney at this point.

Most of the time, the family home, any cars, all money and retirement accounts, everything purchased during the marriage – such as furniture – and often a business will be considered community property. It doesn’t matter whose wages were used to purchase the property or whose name is on the title: if it was acquired during the marriage, it is community property. For example, even though one spouse may own a business which they started on their own, if it began during the marriage, the court will assume that the other spouse contributed to the owner’s ability to start and maintain the business, even if they did not work at the business or invest in it directly.

Community and Separate Debt

It’s not just property that is divided. Debt will be divided as well, if it is community debt. Community debt is any debt that was acquired by either spouse during the marriage. Separate debt is any debt espouse brought to the marriage but which was acquired before you got married, like student loans.

Again, it’s important to understand that though your separate property and debt remains yours, the court will take both into account as it decides how to divide the community property. For example, if one spouse has been given a significant financial gift or valuable piece of property by a relative, the court will consider this an important asset and is likely to divide the community property in a way that gives more to the spouse who does not have that kind of asset to rely upon.

Figuring It All Out

Together with your divorce lawyer, you will want to sit down and identify all the property that you and your spouse have. Your lawyer will help you to make sure nothing is missed and also assist you if you believe your spouse may be attempting to hide assets. Together, you will characterize whether the property is separate or community and, for any separate property, gather everything that’s needed to prove that the property is separate. The last step is doing an accurate valuation of the property.

It’s always easiest when the two spouses can agree. If you and your spouse get along well enough to do this, your lawyer can facilitate negotiations and ensure that everything that’s decided will be fair and equitable. You will have to get the judge to sign off on your agreement, so you do need a lawyer to help you hammer out the details and make sure that the final agreement will pass muster with the judge.

What About Retirement Benefits?

In many cases, retirement benefits are actually one of the most valuable assets a couple owns. These are normally considered community property and can be divided even if neither of you has reached retirement age. Retirement benefits include not just a 401(k) but also military retirement, pensions, any stock ownership plans that you might have an employee, profit-sharing plans, IRAs, annuities, annuity life insurance, 403(b) accounts, and more. Be aware that dividing retirement benefits can be very tricky, since some of what goes into it is estimating the value into the future. A good divorce attorney will have financial experts they can call on to assist in this evaluation.

It’s also important to know that if you cash out any retirement benefits, even if this is for the purpose of dividing assets in a divorce, the tax implications can be enormous. In some cases, it may not be in your best interests to divide things by cashing them out, so be sure to talk with your lawyer and think carefully through the financial implications of these decisions before you ​come to an agreement with your spouse.

There’s a lot that goes into dividing assets in a divorce, and it’s key that you work with a divorce attorney who understands Texas law and the local courts and who has plenty of experience in ​every aspect of divorce: including dividing property. Contact Hoelscher Gebbia Cepeda PLLC in San Antonio, TX now for strong, compassionate counsel.