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 we make sure clients get all of the property they deserve 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 is 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 considers dozens of factors that might move the needle in favor of one spouse or the other.
Common examples of factors that a court considers in ordering 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, we identify property through a combination of our client’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 we identify the property subject to division in a divorce, we move on to characterizing the property. When we characterize property, we determine whether the property is community property or separate property.
This is a critical step in the process because a court only has jurisdiction to divide community property in a divorce. However, it is important to get an accurate picture of each spouse’s separate estate since that is one factor a court may consider in dividing the community property under the just and right legal standard.
Valuing the Property
Once we have identified and characterized all of the spouses’ property, we move on to valuing the property. How we value that property depends on the type of asset.
Simple items such as personal belongings and household furnishings may be valued by each party stating what they believe the property is worth.
We usually retain appraisers to value real property.
We also retain business valuation experts to value businesses that the spouses own.
Dividing the Property
The last step is to divide the property.
In most cases, the spouses reach an agreement on property division. If the spouses do not agree on the property division, then the judge renders a decision dividing the property.
Once the parties agree or a judge decides how to divide the property, the parties must then go through the process of actually changing title to the assets involved. Again, the particular type of asset determines what is involved in transferring title.
For example, real property may require a spouse to deed his or her interest to the other spouse.
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 require a special type of order called a Qualified Domestic Relations Order.
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