Almost all marriages will involve a division of property. This often leads clients to ask, how can they make sure that they get all of the property that they are entitled to in the divorce? This article explains how that happens in a Texas divorce.
Only Community Property Is Divisible
Texas is a community property state and there is a presumption that all property the spouses own is community property. Separate property would be any property that a spouse owned prior to marriage, received as a gift, or acquired through an inheritance.
Only community property is divisible in divorce. This means that a court cannot award any part of a spouse’s separate property to the other spouse as part of a final decree of divorce.
Just and Right Legal Standard
When dividing property in a divorce, courts apply the “just and right” legal standard as set forth in the Texas Family Code.
While there is no magic number assigned to that “just and right” legal standard, most people agree that it generally starts at a 50/50 split. The court will then consider dozens of factors that might move the needle in favor of one spouse or the other.
Common examples of factors that might result is something other than a 50/50 split include: fault in the breakup of the marriage, disparity in earning power, size and value of each party’s separate estate, as well as the age and physical condition of each spouse.
The Process of Dividing Property
Now that you have some background on what property is divisible and the legal standard a court applies when dividing that property, let’s discuss the process.
There are four steps:
- Identify the Property;
- Characterize the Property;
- Value the Property; and
- Divide the Property,
Identifying the Property
The first step is identifying the property. It seems simple enough, right? If you don’t know that a piece of property exists, then you cannot divide it as part of the divorce.
In most cases, property is identified through a combination of a spouse’s knowledge of the marital property, discovery, and a sworn inventory & appraisement.
In complex cases, or cases where one spouse is suspected of hiding assets from the other, we may need to bring in professionals such as forensic accountants and private investigators.
Characterizing the Property
Once property is identified, we then move on to characterizing the property. This is the process of determining whether the property is community property or separate property.
This is a critical step in the process because only community property is divisible. However, it is important to get an accurate picture of each spouse’s separate estate since that is a factor a court may consider in dividing the community property under the just and right legal standard.
Valuing the Property
Once property is identified and characterized, we then move on to valuing the property. How that property is valued will depend on the type of asset.
Simple items such as personal belongings and household furnishings may be valued simply by each party stating what they believe the property is worth.
Real estate is usually valued through appraisals.
Businesses can be more complicated and often require the use of a business valuation expert.
Dividing the Property
The last step is to actually divide the property.
A judge will render a decision on how the community property should be divided between the spouses or the spouses will come to an agreement on property division.
The parties then have to go through the process of actually changing title to the assets involved. Again, the particular type of asset will determine what is involved in transferring title.
For example, real property may require execution of a deed from one spouse to the other.
Bank accounts may require a court order to remove one spouse from the account or transfer the account balance to the other spouse.
Retirement accounts may required a special type of order called a Qualified Domestic Relations Order.
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