Frisco, Texas Divorce Attorneys
In the state of Texas, property acquired during marriage is considered communal property. Here, commonly held assets, real property like a home or cars, or value in a closely held business is considered communal property. Property that is brought into a marriage, inherited, gifted, or is part of a personal injury settlement is usually considered separate property and is not subject to division. If separate property is co-mingled with communal property – if, for instance, inheritance money is used to remodel your home – it may be considered communal property. If a closely held business is in the name of only one spouse, the court will have to determine if communal assets were used to start the business, maintain it, or increase its size. As a result, the division of marital property can be quite complicated, at times requiring forensic accountants, business evaluators, and property assessors.
Dividing Marital Property – Is Everything Cut Down the Middle?
Some people are under the mistaken impression that property is divided 50-50 – straight down the middle – in a divorce. In Texas, the court will assign an “equitable” division of communal property which may be a 45-55, 40-60, even a 30-70 split. In order to determine what is an equitable division, the court considers the work history of each spouse, their earning potential, who stayed at home, whether one spouse worked to put the other through college, the life style each spouse is accustomed to, and other factors as well. In this way, and “equitable division” essentially means what the court believes is fair and warranted given certain facts about each spouse.
What about Retirement Plans and 401k’s?
Any retirement plan governed by the Employee Retirement Income Security Act (ERISA) is subject to division during divorce. In order to receive monies from a spouse’s retirement plan, a Qualified Domestic Relations Order (QDRO) must be filed with plan administrator of the retirement plan in question – regardless of whether it’s a company pension plan, IRA, or 401k. If you and your spouse decide use the collaborative law divorce process, you can negotiate whether or not you want to divide a retirement plan. For example, you may want the house or prefer immediate access to savings funds. In exchange for these assets, you can agree to relinquish your claim on his or her retirement funds.
What about Marital Debt? Who Pays for Credit Cards and Car Loans?
While the division of marital property is important, so is the division of marital debt. Here, it’s important to remember you are legally responsible for any lines of credit your name appears on. As a result, if your name appears on credit card accounts you never use (or used) or on your spouse’s car loan, creditors can initiate collection actions against you if the balance on them isn’t paid. That means if your spouse defaults on these accounts you can still be held legally responsible for them. In this regard, even if your divorce settlement indicates these debts are assigned to your spouse, if he or she doesn’t pay them creditors will come after you.
In order to protect yourself, you can negotiate the transfer of certain assets to you in exchange for paying off the debt owed on jointly held accounts.
Frisco, Texas Family Law Attorneys at Pfister Borserine & Associates
The division of communal property can be quite complex and fraught with tension. Learn how we can help protect your rights and financial future - contact Frisco, Texas family law attorneys at Pfister Borserine & Associates today.