Protect Your Finances before, during, and after a Texas Divorce

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Brett Pritchard Law

Updated on August 24, 2022

If you are facing or considering a Texas divorce, financial issues are likely one of your top concerns. However, you may not realize just how deep you will need to dig to ensure that your financial situation is accurately represented and documented.

The fact is that divorce is often overwhelming, and attending to all the financial details is not always a straightforward task. Using a financial checklist can help you better protect your finances throughout the divorce process. You can also contact an experienced divorce attorney for more personalized financial guidance throughout your divorce case.

The Division of Marital Property

Upon divorce, those assets that you and your spouse acquired during your marriage must be divided in a manner that is equitable (or fair) given the circumstances of your marriage and divorce. This division of marital property is often one of the most hotly contested divorce issues.

In fact, some less than scrupulous spouses are motivated to hide, offload, give away, or otherwise disappear assets in the heat of divorce, which means that the sooner you focus your efforts on preserving your financial documents, the better protected you will be.

A couple's finances are an important component of every divorce. Focusing carefully on the financial element is critical to your financial future, and an experienced Killeen divorce attorney can help.

Your Home

For many divorcing couples, the family home is their most significant investment, and it becomes the focus of the division of marital assets. If you and your divorcing spouse purchased the home while you were married, it is very likely that it is marital property, which means its value will need to be divided equitably—or fairly given the circumstances—upon divorce.

Generally, to deal with dividing a home in divorce, this means that you and your spouse will take one of the following actions:

  • Both of you will sell the home outright and divide the proceeds.

  • One of you will remain in the home and provide the other with his or her share of the equity (either with other marital assets, with funds from a loan taken for the purpose, or with payments over time).

If one of you owned the home prior to marriage, it may qualify as separate property, but any increase in value since your marriage is likely to be considered marital (and will need to be divided accordingly). The value of your home can also be complicated by the fact that one—or both—of you may be vying to remain in it (as the primary custodial parent) with your children.

Additional Assets

Additional assets include anything of value that you and your spouse acquired over the course of your marriage. Examples include the following types of assets:

  • Any additional properties

  • Vehicles

  • Your financial portfolio

  • Your bank accounts

  • Your retirement accounts

The division of marital assets can become very complicated very quickly and will require careful consideration from the outset. For example, if your divorcing spouse has a robust retirement account that he or she brought into the marriage with him or her, the value of the account when you married is likely separate property, but the increase in value may be marital property.

Financial Complications

Typically, the financial component of a divorce involves the family home, both spouses’ earnings, retirement accounts, and the couple’s financial portfolio. While determining an equitable division of these assets can be complicated, the financials themselves generally are not.

There are factors, however, that tend to make a couple’s finances more difficult to fully comprehend—and, therefore, far more difficult to divide equitably, including the following circumstances:

Preparing Financially for Divorce

If you have been served divorce papers or have come to the difficult decision that you need to file for divorce, but you also recognize that you do not know much about your marital finances, you have some work to do. If you do not know your family’s financial worth, it makes advocating for your financial rights very difficult, and you will need to take some important preliminary steps.

Begin with a List

Even if you do not know what anything you own is worth or even how connected you and your spouse are to an asset, you do have an idea of what your assets are, and you probably have a pretty good idea about what you have ownership in.

This makes the first order of business simply starting a list in which you write down everything that you know you own, that you think you might own (or have ownership in), or that there is a possibility you own (or have ownership in). Your dedicated Killeen divorce lawyer can help you flesh out the list from here, but having this foundation in place can prove invaluable.

Gather and Make Copies of Your Financial Documents

You cannot begin making copies of your financial documents too soon. If you are not familiar with your marital finances, it puts you in a one-down position, but making copies of whatever financial documents are available to you can help you get up to speed.

Start at the very beginning by compiling your important financial documents together in one place, including the following information:

  • Your tax returns for at least the previous three years, along with any other relevant IRS-related documents, instruments, tools, or invoices

  • Your will and any trusts, along with all attachments

  • Invoices and current bills from all your marital liabilities, such as your mortgage, credit cards, car loans, personal loans, and anything else

  • Property tax statements and any other related documents

  • Current documentation of all of your marital property, which should include your home and any vacation or timeshare properties

  • Current titles and loan statements for all of your vehicles, such as cars, motorcycles, RVs, boats, trailers, and mobile homes

  • Current documentation of all your cash assets, such as checking accounts, savings accounts, commercial accounts, credit union holdings, IRAs, CDs, pension plans, and any other kind of retirement account

  • Investment account statements

  • Insurance policies

  • An accurate representation of your financial portfolio in its entirety

Providing your knowledgeable Killeen divorce attorney with this financial documentation will allow him or her to develop an accurate working knowledge of your marital and personal finances and to strategize about how best to protect your financial rights throughout the divorce process and beyond.

Ultimately, your divorce attorney will request the full scope of financial documentation you need through the discovery process, but having this blueprint of what to look for can help ensure that you do not lose sight of assets in the process.

Document Your Separate Property

In the State of Texas, the property that you accrue together as a married couple is generally considered marital property, which should be divided in a manner that is considered just and right in the event of a divorce.

However, property that belonged to you when you entered the marriage and that you kept separate throughout the marriage will generally remain yours alone upon divorce. Things like your inheritance, family heirlooms, and gifts to you alone can also be classified as separate.

Establishing that property is separate is an element of your divorce that can become very complicated very quickly—especially in high asset divorces and divorces that involve businesses—and working closely with an experienced divorce attorney is imperative. Contact a divorce lawyer for additional information about identifying your separate property.

Additional Financial Considerations

In addition to the basic financial documentation discussed, you will need to consider the full scope of your finances, which can include the following extras:

  • Business inventories

  • Debts held by your spouse alone

  • Valuable household furnishings, furniture, and fixtures

  • Art

  • Jewelry

  • Valuable equipment and tools

  • Items in a safe deposit box

  • Items in a storage facility

  • Travel awards

  • Burial plots

Defending Your Finances during Divorce

One of the most important things to maintain throughout the divorce process in Texas is your financial welfare. If you and your spouse are considering dissolving your marriage, it’s crucial to move quickly and to take the necessary steps to ensure that you are protected and that your financial standing will be good when your divorce is finalized.

Here are a few things you can do that will help you protect your finances and ensure the best start to your separated future:

Take a Thorough and Detailed Inventory of Assets and Debts

Texas is a “community property” state, which means that all marital property is shared fairly between both spouses. Individual claims to possession of any assets or debts that were acquired during the marriage aren’t usually taken into account, so you’ll want to make sure you keep a thorough and accurate inventory of what you own and what debts you have.

This inventory can help protect you from any outstanding credit debt that may be obtained in the weeks or months leading up to the finalization of your divorce, so it is essential to compile your inventory as soon as possible after filing for divorce.

Organize Your Finances

The best way to avoid credit difficulties during the divorce process is to pay close attention to that credit that is in your name alone and to your joint credit. While your divorce will ultimately sort out which marital assets and debts belong to whom, you do not want to lose sight of these accounts in the meantime.

Creating a chart of those accounts that are in your own name and those that are in both of your names and keeping track of all payments as they are made will give you the peace of mind that comes from knowing you are being proactive when it comes to your post-divorce credit. Online payment systems make it much easier to be sure that the necessary payments are being made.

Open Accounts in Your Name Only

Start building a financial history without your spouse. While the two of you together may have built a substantial credit history through your mortgage and credit card payments, you’ll need to start an independent credit history of your own in order to have a stronger score and to be able to obtain things like mortgages and loans when you no longer have your combined records.

Sort Out Your Mortgage or Rent Payment

Your landlord or mortgage lender isn’t going to care about the state of your marriage—they just know you owe them money for the month. You shouldn’t hesitate to work out what will happen with your home early on in your divorce. That way you have plenty of time to sell it and split the assets, negotiate your property division, or determine how payments will be handled.

Determine If You Are Eligible for Alimony

While many divorce terms do not include alimony, it can play an important financial role in those divorces in which one ex experiences a significant financial downturn and the other has the means to help.

Except in highly specific situations, alimony is generally intended as a temporary fix that allows the recipient the financial boost he or she needs to become more financially independent through either education, job experience, or job training.

If you will face a significant financial downturn upon your divorce, you may be eligible for alimony. Contact a Killeen divorce attorney to learn more about the requirements for alimony.

Hire an Attorney

You shouldn’t hesitate to reach out to a divorce attorney as soon as you decide to pursue a divorce as well. An experienced Killeen divorce attorney can help ensure your rights are protected throughout the process and that your financial standing is preserved to give you the best possible chance of a positive beginning to your new, independent life.

Hire a Forensic Accountant

In some situations, your divorce lawyer may suggest hiring a forensic accountant to help you understand your divorce finances.

When Do I Need a Forensic Accountant?

If your financial situation is complex and the matter is less than transparent, working closely with a forensic accountant in addition to an experienced Killeen divorce attorney may be necessary in order to obtain a fair division of marital property.

A forensic accountant is also essential to your case if you believe your spouse is meddling with your marital property. If your spouse believes that he or she is more entitled to certain assets, there are a variety of less-than-honest practices he or she may engage in that can help keep you from what is rightfully yours, including taking any of these actions:

  • Hiding assets outright

  • Funneling funds through a business

  • Devaluing properties or other assets

  • Giving assets away

  • Spending down funds

If your spouse begins such practices quietly and systematically, they can be very difficult to spot without a forensic accountant in your corner.

How Can a Forensic Accountant Help Me?

A forensic accountant has the ability to dive more deeply into your complicated finances. It is your forensic accountant’s job to sift through all your financial information in an effort to put together an accurate picture of your complete assets and liabilities. This typically involves sorting through all of the following information:

  • Tax returns that go back several years

  • Bank accounts and other financial statements

  • Stock certificates and other investment account statements

  • Retirement accounts

  • Employee benefits

  • Property deeds

  • Business holdings

In essence, your forensic accountant will run an audit of your family’s financials to help ensure that everything is accounted for and that there are no financial inconsistencies to investigate. If your divorce presents financial complications, or if you have concerns about how financially forthright your divorcing spouse is, hiring a forensic accountant may be necessary.

Protecting Your Finances Post Divorce

Divorce is often a major financial hurdle that can be extremely difficult to recover from. When you compound this with the high cost of divorce and the fact that many divorces are predicated on finances, it highlights exactly how financially difficult divorce can be. There are, however, things you can do to help you stay on top of your finances and recover financially post-divorce.

Safeguard Your Credit

It is important to understand that your divorce itself will not affect your credit score. Divorce is not a credit event—such as a missed payment or bankruptcy, for instance—that will show up anywhere on your credit score. However, the financial repercussions of divorce can wreak havoc on your credit and credit score.

Staying on top of your finances throughout the divorce process can help you ward off dings to your credit. If your divorcing spouse is not cooperating, however, staying on top of your finances may be easier said than done.

Finalizing your divorce will establish which of you is responsible for which credit accounts, but this does not mean that your credit is ultimately protected from your ex’s actions. Your first order of business after finalizing your divorce should be to remove your name from any accounts that are no longer yours and to remove your ex’s from any for which you are ultimately responsible.

Divorce can be exceedingly hard on your credit, but an experienced Killeen divorce attorney has the skill and dedication to protect your rights and your credit score. To get the financial guidance you need to protect your credit, schedule a consultation with an attorney.

Create a Spending Plan

The first step in conquering any financial setbacks is to create a spending plan that balances your income against your expenses. This involves calculating your total income, including income from the following sources:

Once you have established your monthly income, calculate your monthly expenses. After your divorce, you are likely to have expenses you may not have considered before, so it is important to track them closely. Now is the time to consider where you can cut expenses and ensure that you stay within your spending plan.

Update Your Beneficiaries

While you were married, your spouse was probably the beneficiary of your life insurance policies and your retirement accounts. Once you are divorced, however, you will likely want to change this status, and it is something you should not lose sight of. Until you remove your ex's name, he or she will remain on those financial tools.

Even if your divorce decree says that your spouse has waived the right to the benefits in your accounts, you need to formally remove him or her from the form with each financial institution, or the benefits will be paid as listed.

Further, check to ensure that your spouse follows through with any directives he or she is meant to comply with. For example, if your spouse is required to keep you on his or her life insurance policy, that does not mean that he or she is actually following through with that.

Update Your Will

Since you are already updating forms, it is a good time to revise your will. In some cases you can remove your spouse with a simple modification known as a codicil, but a complex will that includes your spouse for many different aspects may be easier to revoke entirely and rewrite anew.

Carefully go over the legal ramifications of the changes you are effecting, and make sure they comport with your divorce settlement agreement or divorce decree. A skilled Killeen divorce attorney can help you here and ensure that you are not violating your divorce terms.

Have an Emergency Plan

When you are part of a married couple, you have each other to fall back on in a financial emergency—if one of you loses your job, for example. When you are divorced, you will need to face financial emergencies on your own. This makes having a financial emergency plan imperative.

Your plan can be as simple as putting away a portion of your income each month, but there are other options. Choose a method that works for you and build an emergency plan that will effectively safeguard your financial future.

Protect Your Finances in Divorce by Contacting an Experienced Killeen Divorce Attorney

Divorce financials are often complicated, but attorney Brett Pritchard at The Law Office of Brett H. Pritchard in Killeen, Texas, has extensive experience effectively advocating for the financial rights of clients like you. We are here to help, so please do not hesitate to contact us online or call us at (254) 781-4222 for more information today.

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