How is Property Divided in a Divorce?

When it comes to your divorce, a judge will decide on how the property of the marriage will be divided. Chapter 7 of the Texas Family Code requires that judges divide property in a "just and right" manner, one that considers the rights of each spouse and that of any children.

But what makes up the estate of the parties? Generally, property falls into two categories — separate property and community property. The court must divide the community property at the time of divorce, but cannot divide or award a spouse’s separate property to the other spouse. Therefore, it is vital to differentiate between community property and separate property. Divorce attorney Michael Von Blon has handled hundreds of these cases for his clients over the last 35 plus years. Mike’s knowledge of Texas Family Law is unsurpassed in Houston.

Separate vs. Community Property

Property owned by a spouse prior to marriage is considered separate property in Texas. This can include things like a car, real estate and investments such as stocks and bonds. In order to support your claim of separate property, it’s imperative that you have documentation such as a bill of sale or transfer of ownership for your car, a warranty deed for your vacation home and stock or bond certificates for investments in order to trace the origin of the property.

 

Community property is defined as any asset acquired by either spouse while being married.  Further, all assets start with a presumption that they are community property. These assets are divided as part of the divorce process by a judge who, by order of the court, divides the property in the estate equitably. The most common assets acquired during marriage are your family home, vehicles and 401k savings.

There are, however, a couple of important exclusions to community property whereby assets acquired by a spouse during marriage can be considered separate property. They include;

  • Property acquired by gift or inheritance. If a spouse were to inherit tangible property like their parent’s family home or ranch house through an estate, that would be considered separate property--even if that property was liquidated, turned into cash and deposited into an investment account (so long as it is traceable back to its origin).

  • A financial recovery for personal injuries sustained by a spouse during a marriage. For instance proceeds, from a settlement with an insurance company for a spouse who was injured in a car accident or at work due to the negligence of another party. The law requires, however, that you exclude from the settlement any claim for loss of earnings during marriage.

The task of unravelling community property and identifying separate property is a difficult one; that’s why you need to work with an experienced and proven divorce lawyer. Michael Von Blon has worked with many clients facing this situation and he can help with your divorce.  Contact Michael through his website or call 713-681-5288.

How is Property Divided in a Divorce?

In your divorce, the judge has the final say in how assets are divided. A judge may consider numerous factors in deciding to award one spouse a greater percentage of the community estate. If you’re in this position, the advice of a seasoned divorce lawyer can make all the difference in the world and ensure that you leave the marriage with what you deserve.

In most situations, the judge doesn't simply divide community property equally down the middle. The judge strives for an "equitable and just" division of assets that often ends up with one spouse getting a disproportionate share of the property. The factors in determining the division of a marital estate may include:

  • any disparity in earning of one spouse over another, now and in the future; 

  • benefits that a spouse, not at fault for the break-up of the marriage, would have derived from a continuation of the marriage;

  • education differences between spouses;

  • different business opportunities, now and in the future, of the spouses;

  • disparity in ages;

  • relative financial condition and obligations of the spouses, for example whether one spouse has substantial separate property;

  • relative physical and health conditions of parties; and

  • to whom primary conservatorship of the children is awarded.

How are Assets Valued in a Divorce?

Calculating the value of an asset to be divided upon divorce can be as easy as looking at a bank account statement, but many times valuations can vary depending on the type of asset, the manner the money is invested and the methodology a retained expert utilizes to arrive at the value.

 

Take for example, IRAs. Although you may have a Roth IRA that reflects a value of $100,000 and a traditional IRA with that same value, don’t be misled-- they're not of equal value.  While contributions in both a Roth IRA and a traditional IRA grow tax deferred, the withdrawals from each are treated differently. Withdrawals from a Roth IRA, after a certain designated age, are taken out tax-free and without penalty. This is because the original contribution into that IRA was made with after-tax dollars.

Since contributions made to a traditional IRA were made with pre-tax dollars, the withdrawal at a later date will be taxed. Therein lies the difference in value between the two assets. The Roth IRA with a $100,000 value on the bank statement is actually worth more than the traditional IRA showing a $100,000 value.  Therefore, you might want to retain an expert to calculate the tax consequences of the traditional IRA so you can impute that number into the value of the asset. Otherwise, you may not be comparing apples to apples.

 

Similarly, if you or your spouse own an interest in a closely held business, calculating the true value of that asset usually requires hiring a business appraiser.  Even then, the methodologies used by such an expert, and the various assumptions an appraiser makes in arriving at their valuations, can vary widely. To make sure you have a value that will withstand scrutiny, and meets with acceptable standards, you and your attorney will want to retain an expert who is qualified, has experience testifying on such matters and has been previously recognized as an expert in that particular industry.

Once you have done so, your expert will be able to not only provide a valuation that will be viewed as reliable by the court, but may also assist your attorney in undermining the methodology and technique used by the other expert, thereby negating or severely undermining the credibility of their valuation.

DISCLAIMER

The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation.

The LAW OFFICES OF MICHAEL P. VON BLON proudly serves clients throughout Texas, including Houston, Pasadena, Galveston, Beaumont, Sugar Land, Missouri City, Baytown, Texas City, League City, Pearland, Richmond, Conroe, The Woodlands, Rosenberg, Katy, Harris County, Galveston County, Fort Bend County, Brazoria County, Waller County, Austin County, Montgomery County and Washington County.

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