Property Division Can Affect Your Future
You and your ex built a life together. You made major purchases, borrowed money, and probably shared more than a few sleepless nights worrying about your finances. But what about the property you bought together? What qualifies as marital property? How do courts divide debt? What happens to assets you owned before your marriage? Property division can affect your future.
These and others are common questions we hear at Sean Lynch + Associates law firm. We know how stressful and confusing the property division process can be given its impact on your future. We can help to shed light on this complicated and emotionally wrought subject.
Protecting Your Rights In A Community Property State
Texas follows the community property system. In community property states, any property or assets you and your spouse acquire separately or together counts as joint wealth. That means that while you are married, your salaries belong to both of you, even if you keep them in separate accounts. The same is typically true for your debts, though there are possible exceptions, such as:
- Anything you owned or owed separately before marriage
- Property inherited individually before or during your marriage
- Items received as gifts
- Some recoveries from legal claims
To understand the nuances of property and debt division, we’ll carefully analyze your finances to obtain the fairest outcome for your case.
Community Property States vs Equitable Distribution States
In a community property state, property division laws require that community property, or marital property, be split equally between the spouses after a divorce. Each spouse will get to keep their separate property which will not be split. However, the court will retain the right to divide property between the parties in a way that it deems equitable and fair. Sometimes, this can mean a 60/40 or even 70/30 division.
In equitable distribution states, the court does not start from the presumption of a 50/50 division of assets. However, the division must be equitable. Courts in these states will take into account a number of factors such as each spouse’s income, debts, assets, age and health before dividing property according to the principle of equitable distribution. The court can also ask one spouse to use their separate assets to make the divorce settlement fair.
Separate Property vs Marital Property
It’s important to understand the difference between separate and marital property. You often get to keep your separate property after your divorce. However, any marital assets will be divided equally according to Texas family law during a divorce process.
Separate property includes any income or assets that you acquired before your marriage. However, if these assets increased in value while you were married, the courts can consider the amount of the increase in value as marital property. Separate property generally does not include any assets accumulated when you were married. Exceptions include any inheritances or gifts you received from third parties.
The definition of separate property can be a tricky legal issue. You may need to engage the help of an attorney to prove any assets you believe should be considered as separate so that they will not be divided during the divorce process in accordance with the law.
Marital property may include all assets that were acquired by either spouse during marriage. For example, this can include your retirement account and bank account even if these accounts are in your name only. Income earned by either spouse will also be considered marital property. Texas law also considers pets as property which will have to be divided during the divorce process.
If one spouse used money from their separate property such as an inheritance to purchase marital assets, the courts may consider the assets as community property and include it in property division after a divorce.
Factors Affecting Property Division
The best outcome for a family is an amicable agreement on how to divide up the assets between spouses during a divorce. However, if spouses cannot agree on property division, the court may step in. Here are some factors that the courts will use to determine property division.
If you and your spouse signed a prenuptial agreement before the marriage, the agreement will typically determine how the assets are divided during a divorce. It is possible to dispute a prenuptial agreement only under certain conditions.
Age And Health
The younger you are, the less financial support you may need in the future even if you did not work while your spouse brought in the bacon. However, if you and your spouse are older, your earning potential may be less. You may also have serious medical issues that affect your ability to work while having a greater need for funds to pay for medical expenses. This can impact the division of assets. The court may also order one spouse to pay alimony to the other spouse.
If there is a sizable income disparity and you earn less, the court can take it into account because of the financial impact that the divorce will have on you.
You may also have given up your previous career to raise the children which can lower your employability if you were to return to the workforce. This will be a consideration during property division.
The spouse with children may get certain property such as the family home. The court may order this to reduce the disruptive impact of the divorce and to safeguard their future, especially if the children have specific medical or extracurricular needs. This is in addition to any child support requirements that the court can impose on your spouse.
Your spouse may have transferred funds or assets they acquired to their family members to avoid division. In another example, they may have paid down large items for third parties outside the marriage using marital funds which can affect the share of property that you receive. Your attorney can make the case that you should receive a larger share to make you whole again.
The courts will divide up debts to be paid by either you or your ex after the divorce. If you will be required to pay much larger bills or debts, you may be awarded more assets. The person awarded the family home typically also has to pay down the mortgage loan and any maintenance expenses associated with the house.
Federal And State Tax Laws
Federal and state tax laws can create penalties for dividing a certain asset or retirement accounts. The spouse receiving the payout may have to pay income tax or capital gains tax. The court can consider any tax consequences of property division and its impact on your financial situation.
Don’t Settle Without Consulting Us
It is crucial that you don’t settle a property or debt division without consulting an attorney or law firm for help with the process because it can affect your future. The court will consider a wide range of factors when dividing assets and debts, including the disparity in your incomes, your age and health, and sacrifices one spouse may have made, such as giving up his or her career to raise children or pay off the other spouse’s student loans.
Our family law attorneys at Sean Lynch + Associates have decades of experience dealing with property and division, and we’ll tenaciously advocate on your behalf. Call our Fort Worth offices at 817-668-5879 for a no-cost 30-minute consultation with an attorney who will listen to your concerns and offer legal advice on effective options for your case. You can also email us directly for help on the legal process.