Even if you and your divorcing spouse are in nearly perfect unison regarding your divorce, you can expect complications. Further, divorce rarely sets the stage for perfect unison. In other words, even peaceful divorces tend to have their rocky moments.
The division of marital property is likely to be one of the most challenging divorce determinations you face, and the dividing line between separate and marital property can become especially murky if your finances are complicated.
Whatever your questions and concerns regarding the division of your marital assets, a dedicated Killeen divorce attorney with considerable experience favorably resolving cases involving the complex division of property can help.
In the State of Texas, marital property is everything you, your spouse, or both of you together come to own during your marriage. It can also be called community property. There are two main exceptions to this classification:
Any property that either of you owned prior to marriage and brought with you into the marriage will be classified as separate property – but only if the separate owner can maintain its separate nature over the course of the marriage, which is not an easy feat.
The division of marital or community property in a Texas divorce must be “just and right,” which means it must be fair in relation to a wide range of factors deemed relevant by the court. While just and right can mean an equal division of assets, this is not necessarily the case.
Here are some examples of the kinds of factors that the court takes into consideration in the division of marital property:
It’s important to note that even in no-fault divorces, which make up the vast majority of divorces in this country, the matter of wrongdoing can play a role in the division of marital property in Texas.
Many divorcing couples prefer to retain the authority to make decisions about the division of their assets between themselves – and out of the court’s purview. For this reason and others, most divorces in Texas are settled out of court.
However, it is far more likely that the matter of dividing your marital assets will require the court’s intervention if the two of you disagree regarding the separate nature of specific assets.
While anything that you keep strictly separate throughout your marriage should remain clearly separate, any intermingling of assets can tarnish this distinction – and you might be surprised how challenging it can be to keep separate assets strictly separate. In such situations, the court’s intervention is more likely to be required.
If you’re trying to keep your divorce out of court, enlist the help of a divorce attorney. He or she can help you move through your negotiations more smoothly to ensure a cleaner resolution of your case.
If you have a prenuptial or postnuptial agreement that addresses property division, there will likely be far fewer obstacles involved. Such agreements can directly address the matter of separate assets, the division of marital assets, and a range of additional financial issues.
Clearly identifying an asset as the separate property of either spouse helps to ensure that difficult complications in relation to property division do not arise.
There are a number of assets that are more likely to complicate the division of your marital property. Review the items below and contact a divorce attorney for more information about your specific circumstances.
Your family home is likely a primary example of community property, and divorce negotiations can prove exceptionally challenging when it comes to the division of this asset.
Beyond the financial aspect, there are emotional factors to consider. Your family home is where you raised or are raising your children, and the emotional impact of walking away should not be discounted.
Further, divorce is hard on children, and being able to maintain the status quo for them by remaining in your family home as the primary custodial parent post-divorce can go a long way toward helping them adjust to the difficult transition they are experiencing.
Finally, even if your kids are grown and out of the house or you do not have children, the stress of moving during a divorce can make it that much more difficult to cope. In other words, there are many reasons why you may want to retain ownership of your family home.
If retaining ownership is your goal, you have several options:
The other option is selling your home and dividing the equity between you according to a just and right distribution, but this may or may not be a sound financial move – depending upon the market at the time.
Making the right decision for you regarding your family home must be based directly on your financial situation, your priorities in relation to your home, and the circumstances at hand.
If you own investment properties, the matter can be even more complex. For instance, if you owned a home prior to marriage that you turned into a rental property upon marriage, it began as your separate asset. If you strictly maintained its separate nature throughout your marriage, it may retain its classification as separate, but this can be tricky.
Any of the following factors can blur the line between an investment property that is separate in nature and one that is a marital asset:
Any increase in the home’s value over the course of your marriage will be considered marital, and if marital assets went into paying the mortgage on the property, into making improvements on the property, or both, your spouse will likely be entitled to fair reimbursement – at the very least.
When it comes to complications related to the division of marital property in a divorce, few are as challenging as business ownership. To begin, the value of a business is often hotly contested, and obtaining a valuation that you both find acceptable can be next to impossible.
The best path forward tends to be agreeing to a reputable business valuator who is a neutral third party in the matter and accepting their findings. Generally, selling a business for the purposes of divorce is not an economically sound approach, which means obtaining a valuation may be just the tip of the iceberg.
If one of you owned the business prior to marriage, it may be a completely separate asset, but there are considerations that you will need to factor in, including:
If you and your spouse or one of you on your own started or purchased a business during your marriage, it is a marital property, but this does not lessen the complications related to dividing a business in a divorce.
If, for example, your spouse runs the business, they have far more working knowledge of the enterprise, which makes hiding assets or obfuscating value far easier. When you compound this with the fact that your spouse may feel more entitled to ownership, it can set the stage for a battle.
There is also the matter of dividing the business’s value fairly upon divorce, which can become another major roadblock. Consider the following potential options:
If both spouses work at the business, the one who walks away, if that is how the matter is resolved, also loses their job and primary source of income in the process – regardless of ownership. In other words, there is a lot to consider.
If your spouse handles the finances of the business in question, they have ample opportunities to hide assets, cook the books, undervalue the business, and more, and the stress of divorce can push those who ordinarily conduct themselves in a forthright manner into less than honest practices.
If you believe that your spouse is attempting to deceive you concerning business ownership during your divorce, bringing in a forensic accountant to get to the bottom of the matter is almost certainly in your best interest.
Retirement accounts can be another sticking point in the division of marital property. If you, your spouse, or both of your retirement accounts were initiated after your marriage, they are marital property.
This concept feels very alien to many people, but those assets that you acquire while you are married – regardless of how you acquire them – are community property that must be divided equitably upon divorce. If, on the other hand, either of you – or both of you – bring a retirement account with you into marriage, they are separate assets, but any increase in their value is marital.
Because cashing out a retirement account upon divorce is generally not feasible, the matter of dividing the asset will need to be addressed in relation to the unique situation at hand.
Brett Pritchard at The Law Office of Brett H. Pritchard – proudly serving Killeen, Texas – is a well-respected divorce attorney with a wealth of experience helping clients like you favorably resolve the divorce term of dividing marital assets, and he is here for you too.
This division will guide your financial future, which makes it paramount, and having focused legal guidance in your corner can make a considerable difference in the outcome of your case.
