Divorce and Property Improvements in Texas

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 How Are Assets and Debt Divided in a Divorce in Texas?

Texas is one of nine community property states in the U.S. In general, this means that any property that a couple acquires while they are married, with a few exceptions, is equally owned by both spouses. Thus, it is divided equally between the spouses if they get divorced in a community property state.

Property that one spouse owns before they get married is their separate property. In addition, property acquired during marriage through inheritance is their separate property.

Community property and debt are divided between the spouses in a Texas divorce. Separate property and separate debt are not divided. At the end of a person’s divorce case, a judge orders the division of property and debt in a final decree of divorce. This final decree may address other issues as well, such as the following:

  • A list of the community property that each spouse is to keep, or in some cases sell, along with a statement of how the proceeds of any sale should be divided;
  • A list of the separate property of each spouse;
  • A list of the debts each spouse is ordered to pay;
  • An order that the community property retirement benefits of each spouse are either awarded in whole to the spouse who earned the benefits or divided between the spouses, and if divided, what the division should be.

Keep in mind that a final decree divides the spouses’ property and debt. However, the spouses may need to take additional steps after the divorce to transfer vehicle titles or real estate deeds or otherwise put the decree into effect.

Community property includes all property that a person and their spouse possess at the time of divorce, except property that a spouse can prove is the separate property of one spouse.

May Spouses Agree That Certain Property Is Separate Property?

Spouses may also agree that certain property is the separate property of one of them. Their community property may consist of real estate, houses or land, a business, cars, bank accounts, retirement accounts, furniture, and other things acquired or purchased by either spouse during their marriage. It does not matter which spouse’s earnings were used to purchase the property or which spouse’s name is on the title.

Additionally, community debt is any debt a person or their spouse obtained during the marriage. Texas law states that community property and debt should be divided in a way that is “just and right” when they get divorced. This does not necessarily mean 50/50, but it often is.

Furthermore, Separate property includes the following:

  • Property that one spouse owned before marrying;
  • Property that one spouse received as a gift or inheritance while married;
  • Money that one spouse receives as settlement of a personal injury claim during the marriage, excluding money received for lost wages or medical expenses and;
  • Any returns realized on a separate property investment made by one spouse before marriage.

Unless both spouses agree that certain property is separate property, a spouse who claims separate property has to prove that the item is separately owned. The standard of proof is “clear and convincing evidence.” If a spouse cannot prove that an item is their separate property, it is determined to be community property.

Separate debt is debt one spouse incurred before the marriage. The law states that separate property cannot be divided. Once something is proved to be separate property, the judge must confirm it as the separate property of that spouse.

Can One Spouse Be Reimbursed for Improvements to the Other Spouse’s Separate Property?

Money earned by one spouse during the marriage is sometimes spent to make improvements to separate property owned by the other spouse. If this happens, the spouse whose earnings were used may be able to argue that they should be reimbursed for at least a portion of the money spent. A person should consult with a Texas divorce lawyer if this is an issue in their divorce.

A judge usually approves an agreement made by the spouses on how to split their property and debt unless it is patently unfair to one spouse. The agreement, if approved, is incorporated into the final divorce decree.

What if My Spouse and I Cannot Agree on How to Divide Property and Debt?

If a person and their spouse cannot agree on how to split their property and debt, a judge divides the community property and debt in a way that the judge decides is “just and right.” This typically means 50/50, but not necessarily in every situation.

Moreover, a person also needs to consider how divorce affects the spouse’s debts. A creditor’s right to collect a debt is not affected by a final decree of divorce.

So, the judge may order a person’s spouse to pay a debt that is in the name of both spouses, e.g., a car loan or mortgage, and a person’s now ex-spouse does not pay the debt as ordered. In this case, the creditor can still seek payment from a person. A person should speak to their lawyer about strategies for protecting themselves in this situation.

Once a couple decides to divorce, one of the biggest issues that arises is the property and how it should be distributed equally to both parties. Therefore, if spouses own any property together, it is important to involve an attorney to ensure the property is divided fairly in the divorce.

What Is Real Property?

Essentially, real property is land and anything permanently attached to it, such as a house or other structures. Real property does not include mobile homes. The “legal description” is used to officially identify a piece of real property. A final divorce decree should include the complete legal description of the property affected by it. If it does not, the decree would not be sufficient to pass title to the property.

The legal description is not the physical address of the property. The legal description may define the property by its lot number, block, and subdivision. Or it may describe the property in metes-and-bounds or references to a county clerk’s records. The important point is that the description in a divorce decree should be a legal description.

Can Retirement Benefits Be Divided?

Generally, retirement benefits earned by either spouse during their marriage are considered to be community property that can be divided by the court. This applies even if a person and their spouse have not yet retired.

Retirement benefits may be one of a couple’s most valuable assets. Retirement benefits include pensions, 401(k) accounts, Keogh plans, individual retirement accounts (IRAs), annuities, and the like.

If a person needs a judge to divide retirement benefits as part of their divorce, the final decree must include specific information about the retirement benefits. A person must also ask the judge to sign an additional form called a “Qualified Domestic Relations Order” (QDRO). A person or their lawyer would prepare the QDRO for the judge to sign before they attend court so the judge can sign it when they issue the final decree.

After the judge signs the QDRO, a certified copy should be sent to the retirement plan administrator. The retirement benefits will only be divided when the plan administrator receives a certified copy of the QDRO that a judge has signed.

How Do I Protect Myself Financially in a Divorce?

People are sure to receive lots of advice in the event they get divorced. One thing to do is to give oneself time to adjust and to make decisions on the basis of reason and not emotion.

In addition, experts recommend the following:

  • Avoid Social Media: It is best for a person not to comment on their divorce on social media;
  • Avoid Bad-Mouthing the Other Spouse: A person does not want to add fuel to the fire. Bad-mouthing their spouse can have a negative effect on a person’s interests in their divorce. If a person belittles or derides their spouse to their children, it might affect a person’s ability to get custody or visitation;
  • Avoid Moving in With a New Partner: In some states, taking up residence with a new partner could be considered a marital fault, i.e., adultery. It might give the court grounds to deny the spouse an award of alimony.
    • Precipitously starting a new relationship might not only have a negative effect on negotiations with the other spouse but might also affect a judge’s decisions on the issues of property division and child custody;
  • Avoid Wasting or Hiding Marital Assets: In the course of a divorce, a person has to provide the court with a sworn statement of all their assets. If a person does not do this, they can be held in contempt of court, which could mean going to jail.
    • Judges in most states have the discretion to shift marital assets away from spouses who do not make an honest and complete disclosure. So, a person should make an honest disclosure;
  • Avoid Spending Lots of Money: Engaging in extravagant retail therapy is a bad idea. A judge may regard this as a misuse of marital assets and make the spendthrift spouse reimburse the other spouse;
  • Try to Agree on a Temporary Housing and Custody Plan: Consider entering into a temporary agreement with the other spouse about sharing the family home until the custody and divorce issues are worked out. Neither spouse has the right to take the children and leave the family home. A person should let their spouse know that if they want to leave, they may, but the children stay.
    • Again, try to get an agreement about temporary sharing of the home and custody until the divorce is finalized;
  • Learn about Divorce in Texas: It pays to know what to expect from the divorce process in Texas;
  • Try to Settle: It is best to work out issues through negotiation. If this is not possible, then issues may have to be decided by a judge. But if a person can get a reasonable agreement with their spouse, this is best. It saves a lot of time, money, and stress;
  • Get Organized: Make files for all documents relating to the divorce and make a calendar of court hearings, appointments, and the like;
  • Get a Credit Report: A credit report may display a person’s assets and accounts and can be helpful for this reason.
    • In addition, having solid information about a person’s current credit score can help them plan their financial housekeeping when they are on their own;
  • Safeguard personal papers: Gather up personal records, such as their birth certificate, diplomas, and all other personal documents. Make 2 copies of joint records such as bank statements, real estate records, titles, deeds, tax returns, and W-2s. A person should make a copy for their spouse and store their own copy in a safe location;
  • Get a P.O. Box: Or a person might make another arrangement for a separate mailing address to ensure that the person is the only one to receive their mail;
  • Cancel Jointly Owned Credit Cards: Of course, a person wants to let their spouse know that they intend to do this. It may take time for each spouse to obtain new cards in their own names first;
  • Make a Record of All Personal Property;
  • Secure Valuable Personal Property: Find a safe place away from the home to secure valuable personal property, perhaps with a trustworthy parent or sibling;
  • Reduce Unnecessary Expenses: It is a good idea for a person to review their expenses and eliminate anything that is unnecessary, e.g., streaming services and subscriptions that the person does not really use. A person may find that their finances are changed by a divorce. They may want to rein in their spending;
  • Do Not Sign Anything: It is best for a person to have a family law attorney review anything presented to them for their signature. It is perfectly reasonable to tell a spouse who presents something for a person’s signature that they want their lawyer to review it. Then, they should have their lawyer review it;
  • Report Domestic Violence/Get a Restraining Order: If a spouse has been the victim of domestic violence, they want to report it to law enforcement. Then they should discuss getting a restraining order with their lawyer.

When Do I Need To Contact a Lawyer?

You reside in Texas and are going through a divorce. In this case, you want to consult a local Texas divorce lawyer, especially if you have property issues such as what to do with retirement benefits, e.g., a pension or significant savings in retirement accounts.

LegalMatch.com can connect you to a lawyer who can protect your interests in your retirement benefits and your separate property as well. You will get the best outcome if you have an experienced local Texas divorce lawyer on your side.

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