The end of a marriage involves both opportunity - the chance to regain your independence, the ability to again chart your own destiny - and letting go. Letting go not only of the past, but also of the physical objects that threaten to keep you symbolically shackled to your former spouse.
When it comes to property division, ask yourself, "What do I want?" Some individuals feel (often rightly so) that they deserve the greater share of the marital property. For others, it would be preferable to simply cleave the marital estate in two and be done with it. The legal strategy you employ in your divorce should certainly cater to your ultimate goals in property division. But, whatever those goals are, you should recognize that for many divorcing Texas couples, property division can become much more complicated than either former partner could have foreseen.
Essentials of Texas property division
Texas is a community property state, meaning that property acquired by either spouse during the marriage is generally considered community property subject to division upon divorce. Property acquired by one spouse before the marriage belongs solely to that spouse, and is not subject to division. There are also limited exceptions to the broad community property rule; for instance, property inherited solely by one spouse during the marriage or property received as a gift by only one spouse during the marriage is considered separate property.
So how will all that community property be divided? Under the Texas Family Code, judges are tasked with dividing marital property in a manner that is "just and right." This does not necessarily mean 50-50.
Judges look to many relevant factors, including the age and earning capacity of each spouse, the respective contributions to and responsibility for depletion of the marital estate, and, when applicable, fault for the deterioration of the marriage. Although many Texas property divisions are close to a 50-50 split it is not unusual for judges to approve divisions of 55-45 or 60-40.
Complex assets require complex solutions
Knowing what will be included in the marital estate and the factors a judge will consider if asked to decide on property division is important. Yet, there is one more critical piece to the puzzle, and that is grasping the complicated nature of many non-liquid marital assets.
The value of real property, whether residential, commercial or unimproved, is determined by establishing its fair market value at the time of the marital dissolution. Valuation is most often accomplished through the comparable sales approach which looks at the price fetched by recent sales of similar property. Likewise, personal property can be valued based on its fair market price, although when a market value is not available, the price of personal property is based on its intrinsic value, which can be highly subjective.
Closely held business interests that are part of the marital estate present their own challenges in property division. As with other assets, market value is the preferred valuation method - but establishing market value for a business can be difficult, and when there is no comparable market for the business in question or a second method must be employed to ensure more reliable results, an asset approach (based on the assets and liabilities of the business) or an income approach (based on the economic stream provided by the business) will be employed.
When dividing certain type of retirement benefits, most notably a 401(k) or private pension plan, a document known as a Qualified Domestic Relations Order is required to guarantee the recipient spouse's interest in the plan. For a defined contribution plan, a lump sum payment, rollover to an IRA or creation of a separate account within the plan may be an option, while the form of payments from defined benefit plans can vary based on the needs of the parties and the stipulations of the plan itself.
It can be difficult to know where to begin when you are facing a complicated divorce. Fortunately, a Texas attorney experienced with complex property division can handle the heavy lifting on your behalf.