If you’re facing a divorce, your financial rights are of primary concern, and protecting your assets is key. The State of Texas has strict laws in place about how marital property is identified, how separate property is identified, and how marital property must be divided in the event of a divorce.
A respected Round Rock property division attorney with an impressive range of experience handling complex cases has the legal insight and drive to help you adhere to the law without sacrificing your financial rights.
Understanding Community Property
Texas is a community property state, which means—with very few exceptions—that everything you buy, your spouse buys, or you and your spouse buy together during your marriage is community property that you both own equally.
It doesn’t matter who made the purchase, whose name is on the title or deed, or who uses the asset—if you came to own it while you were married, it’s very likely a marital asset.
The Exceptions
The very few exceptions to the rule that all assets obtained during marriage are marital include the following:
Anything that either of you inherited in your name alone
Anything that either of you was gifted in your name alone
The pain and suffering component of a personal injury claim that either of you filed in response to an accident that occurred during the marriage
These assets remain the separate property of the recipient.
Property Division
In Texas, marital property is divided in a manner that the state considers just and right – or fair. The presumption is that these assets – as offset by marital debt – will be split evenly between the divorcing spouses, but the unique circumstances involved can support an unequal distribution. Some of the factors Texas turns to when making determinations about property division include the following:
The size of the marital estate
Each spouse’s separate estate
The duration of the marriage
The best interests of the couple’s shared children
Each spouse’s contributions to the marriage, including in terms of homemaking and childcare
Whether either spouse engaged in financial fraud on the marital estate, such as by spending down, wasting, hiding, or giving away marital assets
The tax consequences of the proposed property division
Whether either spouse’s wrongdoing played a role in the breakdown of the marriage – even in no-fault divorce cases
Each spouse’s income
Each spouse’s age, level of education, and overall mental and physical health
Separate Assets
When it comes to the division of marital property, it’s important to understand the role that separate assets play. If you, your spouse, or both of you come into the marriage with assets in tow, those assets remain the separate property of the original owner – as long as they were kept separate throughout the years of the marriage.
Proving the Separate Nature of Your Assets
Texas courts begin with the supposition that all the assets you and your divorcing spouse have are marital and are, therefore, subject to a just and right division in your divorce. This means that, if either of you – or each of you – claims separate assets, you’ll be responsible for proving their separate nature with clear and convincing evidence.
The more separation you maintain between your separate and marital assets, the less challenging this task is likely to be, but working closely with a seasoned property division attorney is always to your advantage.
Commingling
When separate assets are kept strictly separate from marital property, establishing their separateness can be straightforward. Over the course of your marriage, however, this dividing line can erode, which can make demonstrating that an asset belongs to you alone far more difficult.
A primary issue that often arises when identifying separate assets is commingling, which refers to the many different ways that separate assets can be treated like marital property and can make drawing a clear line back to separate ownership more complex.
When the spouse who is claiming an asset as separate can’t clearly demonstrate their direct ties to separate ownership of all or part of the asset, the presumption of community property will hold.
As such, the asset will be included in the just and right division of the marital property. Losses like this can diminish your financial rights in divorce, which makes having a knowledgeable property division attorney in your corner from the start the best path forward.
Increasing Value
The value of a separate asset also plays a significant role in property division. The value of the asset at the time of the marriage is separate in nature, but any increase in its value throughout the years of the marriage is marital.
For example, if you marry with a retirement account, its value at the time of your marriage is your own separate asset. The amount that the account increases in value during your marriage, however, will very likely be treated as a marital asset, which means it will be divided between you fairly.
Strategizing Asset Protection
As you move through the divorce process, it’s important to have a plan for protecting your assets and your financial rights, and a practiced property division attorney can help you with that. Protecting your assets is important, but doing so within the letter of the law is paramount.
Engaging in practices that afford you an unfair advantage over your spouse is considered fraud on the marital estate and can support your ex receiving a more substantial portion of your marital assets. When it comes to protecting your financial rights in a Texas divorce, proceeding with caution is always advised.
The Line Between Legal Practices and Fraud
Fraud on the community estate refers to actions like the following that are intentionally designed to keep more than one’s fair share – while depriving one’s spouse of theirs:
Transferring community assets, such as repaying debts that aren’t legitimate
Generating immense debt in the buildup to divorce
Wasting community assets, such as by spending them down artificially
Hiding assets, such as by distributing them to relatives or friends
Employing financial tools that make it more difficult for one’s spouse to accurately assess the size of the marital estate
Lavishly spending on an extramarital affair in the buildup to divorce
Engaging in any practice with the intention of cheating one’s spouse out of assets they have a right to can come back to haunt the perpetrator. Ultimately, spouses have a responsibility to each other’s financial well-being, and Texas courts take a dim view of any action by either party that smacks of financial shenanigans.
That said, however, there are steps you can take to help ensure that you receive your fair share of community assets and that you protect your separate property in your divorce.
Protecting Your Assets through Trusts
Trusts can help you safeguard your assets throughout your marriage and in the event of a divorce. A trust refers to a financial relationship in which another person or entity holds title to assets that belong to you and has a financial obligation to keep or use the asset in a manner that benefits you.
Trusts are formed under state law and have careful restrictions and requirements that guide them.
Creating a Trust
When you include an asset in a trust, you transfer ownership of the property to the trust, which is then under the management of a trustee. By doing so, you help clearly identify separate assets as just that – before their separate nature comes into question.
It’s important to note that assets included in a trust prior to marriage are generally clearly established as separate property, but anything transferred to a trust during a marriage is likely to come under more careful scrutiny by the court in the event of divorce.
Avoiding Excess Scrutiny
While you are entitled to include assets that you can prove belong to you alone in a trust during your marriage, proceeding with the guidance of a skilled property division attorney upon divorce is in your best interest.
Generally, rushing to start a trust or to grow a trust right before filing for divorce or while a divorce is pending is going to attract more scrutiny than a trust that you’ve carefully maintained over the years would.
Avoiding commingling
Any inheritances or gifts that are given to you alone are your separate property, but it’s your responsibility to keep them separate from your marital assets. When separate assets and marital assets are combined, it can seriously weaken – or even void – the division between them.
For example, depositing a financial gift in a marital account can lead to serious complications when it comes to the division of property, and at some point, proving that you have a separate stake in the matter may no longer be possible.
Documenting Assets
When it comes to proving that separate assets are, indeed, separate, documentation is paramount. The more documentation you have regarding each of the following, the better prepared you’ll be to present the court with clear and convincing evidence that the asset is your separate property:
Proof of original ownership
Proof of the asset’s value at the time of your marriage
Proof of how the asset was treated during your marriage
The kind of evidence that generally comes into play when proving separate ownership includes titles and deeds, bank statements, records of inheritance, and beyond.
Obtaining a Fair Division of Your Marital Estate
In addition to protecting your separate assets, it’s important to pursue a fair division of your marital estate. Factors that tend to complicate property division in divorce include:
High assets overall
A long marriage
Complex financials
If you have significantly more wealth than your spouse, the matter of alimony is more likely to apply than it is in many other divorces, and this fact can also support a more generous share of the marital assets for your soon-to-be ex.
Protecting your financial rights in this context is critical, and the surest way to do so is to have a savvy property division attorney on your side.
Proceeding Fairly and Carefully Forward
Just because your divorce involves complex assets doesn’t mean that it is destined for court. In fact, mediation is often the method of choice in these challenging cases. Demonstrating that – while you are intent on protecting what’s yours – you’re committed to proceeding fairly and in accordance with the law, sets the stage for effective mediation.
The Mediation Process
At mediation, you and your practiced property division attorney and your divorcing spouse and theirs will come together with a professional mediator who – in their capacity as a neutral third party – will guide the negotiations forward.
When high assets, complicated assets, or both are involved, each side is also likely to be accompanied by professionals with financial expertise – or by their professional findings regarding your assets.
The mediator will go back and forth between each side in an attempt to bolster the compromises you’re able to reach. With the skilled legal counsel of a determined property division attorney at your side, you can rest easy in the knowledge that your financial rights are well accounted for.
The Outcome of Mediation
Mediation is only legally binding if you and your spouse negotiate terms that you can each live with and that you’re both willing to sign off on. If not, your case will likely proceed to court.
Look to an Experienced Round Rock Property Division Attorney for the Help You Need
Brett Pritchard at The Law Office of Brett H. Pritchard is a formidable Round Rock property division attorney who cares about you and your case and is well-prepared and well-positioned to fiercely advocate for your financial rights.
For more information about what we can do to help you, please don’t wait to contact or call us at 254-781-4222 to schedule your free consultation today.