How to Separate Assets and Debts in a Divorce in Texas

It is a known fact that divorce can be both emotionally and financially challenging, let alone having to go through the challenges of dividing your marital assets. If you have children, one of the major issues you’ll need to deal with is creating a custody arrangement. Coupled with that, you’ll have to divide most of your marital assets (if not all), which may include bank accounts, vehicles, and your home.

Besides assets, you and your spouse may also share financial responsibilities such as loans, credit card debt, or a mortgage. Just like assets, these marital debts must also be fairly divided during the divorce process.

You may be wondering how your assets and debts will be split without you feeling cheated. This article will give you a better understanding of the process and how best it will work for you.

Texas, being a community property state, holds that assets and debts acquired during the marriage are generally split equally between spouses. This simply means that in the course of a divorce, the court will divide everything acquired while still married equally, unless there is a prenuptial agreement. However, there are some exceptions. Texas law requires that a court divide marital assets and debts in a “just and right” manner, and a “just and right” division is not always a 50/50 split of assets and debts.

What Assets and Debts Are Divided in a Divorce?

In a Texas divorce case, community assets and debts are typically divided between the spouses, while separate assets and debts are left solely to the rightful owner.

After the divorce case, the judge will issue a “Final Decree of Divorce,” which legally lays out how assets and debts are distributed.

This Final Decree will:

• Specify which community property each spouse will retain. In some cases, it may order the sale of certain community property (such as a home) and describe how the proceeds should be divided.
• Identify the separate property (if any) belonging to each spouse.
• Detail which debts each spouse is responsible for paying.
• Address the division of community property retirement benefits, either awarding 100% to the spouse who earned them or dividing them between both spouses.

Take note that, while the Final Decree of Divorce legally divides assets and debts, additional steps must be taken to formally transfer ownership of certain assets, such as vehicle titles, real estate deeds, mortgages, etc.

How to Separate Assets and Debts in a Divorce in Texas

Definition of Community Debt and Separate Debt

Community Assets and Debts

Determining how to divide assets and debts starts with identifying whether the assets and debts are part of the marital estate. Texas is a community property state, which means that most assets and debts obtained during the marriage are jointly owned by both spouses.

The marital estate includes both assets and debts. This means that assets and debts accumulated during the marriage—such as cars, loans, or a mortgage—are generally considered community property (i.e., jointly obtained) and must be divided between the spouses in a divorce.

Separate Assets and Debts

Separate assets and debts are not included in the marital estate and remain the sole responsibility of the spouse who acquired them. An example of this is assets and debts acquired before the marriage.

A prenuptial agreement is often used by couples to define what is considered separate and community property. These agreements can also clarify that certain assets and debts acquired during the marriage are to be treated as separate.

It’s important to note that assets and debts being in just one spouse’s name does not automatically make them separate. If the assets and debts were incurred during the marriage, they are likely considered community property, regardless of whose name is on the account.

Factors the Court Considers When Dividing Assets and Debts

The court will consider various factors when dividing marital (or community) property and debts, including:

• Length of the marriage
• Each party’s financial standing
• Each party’s business opportunities and earning capacity
• Each party’s age
• The size of each party’s separate estates
• The type and nature of the property in question

Key Steps Before Dividing Property in a Texas Divorce

People are often unsure of what all the marital assets and debts are when the divorce begins. They might also feel less concerned about what they’ll get or which assets they should demand. That’s why it is in the best interest of such a person to work with a divorce lawyer who knows how to handle property division. A well-experienced attorney can help you figure out what is yours, what it’s worth, and how it should be divided. This alone can help you make smart decisions and ensure the final agreement fits your needs and protects your interests.

Here are the key steps to consider before property division:

1. Identify all assets and debts – List everything owned and owed by both spouses.
2. Classify property – Determine what is community property (to be divided) and what is separate property (not divided).
3. Determine value – Accurately assess the worth of all property and debts.
4. Consider special factors – Take into account things like income differences, child custody, and fault in the breakup.
5. Propose or negotiate a division – Spouses can agree on a split or let the court decide.

Factors That Could Lead to a Disproportionate Division

Sometimes, one spouse may get more than half of the assets, even though assets are often divided 50/50 in a Texas divorce. This is known as “disproportionate division,” and it often happens when such division is fair and reasonable based on the situation.

These factors help the court decide what is “just and right,” which isn’t always an equal split.

Factors the Court May Consider:

• Each spouse’s income, job skills, and financial needs
• One spouse’s age, health, or education level
• Whether a spouse has more separate property
• If one spouse wasted or misused marital assets
• Fault in the breakup (e.g., infidelity or abuse)
• Gifts received or given during the marriage
• Tax effects of dividing the property
• Who will care for the children
• What the other spouse would have gained if the marriage continued

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Final Words on How to Separate Assets and Debts in a Divorce in Texas

Dividing assets and debts can be one of the most stressful parts of the divorce process in Texas. Seeking support from a reliable divorce attorney can be a huge weight off your shoulders. No matter the complexity of your case, it’s important to meet with an experienced divorce attorney as soon as a divorce becomes imminent. A trusted divorce attorney will give you support, protect and preserve your separate assets, and help you divide any community property in a professional way that best suits your needs and serves your best interests.